What it is: Apple retail are stored dedicated to selling Apple products from Apple employees.
Back in the 90’s, almost everyone used a Windows PC and one of the most popular windows PC vendors was called Gateway Computers. In every issue of PC World and PC Magazine, you could see full page ads from Gateway advertising some of the best prices for PCs in the world. Gateway further cemented their stellar reputation by shipping PCs in whimsical boxes decorated with spots like a cow.
Since Gateway Computers was so popular, the company decided to open their own retail stores where people could see and test Gateway computers. Within a few years, Gateway shut down all their retail stores. As their market share further deteriorated, Gateway soon shrank and became a shell of their former selves. Today, hardly anyone thinks of Gateway when they think of buying a Windows PC.
Back in 2001 when Apple opened their first retail store, David A. Goldstein of Bloomberg Businessweek said, “I give them two years before they’re turning out the lights on a very painful and expensive mistake.”
Cliff Edwards in Bloomberg Business also wrote an article with the headline, “Sorry, Steve: Here’s Why Apple Stores Won’t Work.”
Why were so many people sure Apple’s retail stores would fail? They had several reasons. First, they believed that a company store would compete against other retailers. If Apple tried selling products through their own stores, then other stores would simply stop selling Apple products. If other stores stopped selling Apple products, then Apple’s distribution would shrink even further. Therefore, Apple risked antagonizing other stores.
Second, the cost of retail space was too expensive. Apple products already held a minority share of the market, so how could Apple possibly sell products that few people even used?
Third, several Macintosh-only computer stores had opened, only to fail shortly afterwards. If Macintosh-only stores run by other companies couldn’t succeed, then why did Apple think they could succeed as well?
It turned out that Apple’s retail stores did not flop, did not close, and actually succeeded in bringing hordes of people to every new store opening along with every new product announcement. Apple Stores also earn the highest profits of any retail store. How did Apple succeed when so many people were certain they would fail?
The answer was that Apple’s network of store distributors was actually so small that competing against them wasn’t a problem. In other words, Apple had nothing to lose. At the time, most computer stores sold Windows PCs because that’s what most people were familiar using at work.
So rather then try to sell Macintosh computers, most stores spent the bulk of their time and energy trying to sell Windows PCs. Therefore Apple had nothing to lose by upsetting retail stores since the retail stores weren’t interested in selling Macintosh computers in the first place.
While retail space was expensive, Apple sold mostly premium-priced products to customers willing to pay more for better service and products. Despite capturing such a low percentage of the computer market, profits from the Macintosh were actually much higher than similar Windows PCs. When Apple introduced the iPod, suddenly the company had little competition. When Apple introduced the iPhone, they also had almost no competition. When Apple introduced the iPad, once again they had little competition.
The real genius of the Apple Stores wasn’t the expensive retail space, but the fact that you could buy products that other retailers weren’t selling, you could get help from a real human being (as opposed to calling a toll-free number to talk to someone in another country who tried to turn you into your own computer technician to troubleshoot your PC), and you could see and try all of Apple’s products in a clean, inviting setting without any pressure from sales people to buy anything.
In comparison, buying a Windows PC was often a horrible shopping experience. Windows PCs confused and intimidated people with a laundry list of technical specifications. To lower costs, PC manufacturers booby trapped their computers with bloatware, software from third-parties that often slowed down a computer and took up space while being difficult for the average person to uninstall and delete. Buying a Windows PC was an exercise in frustration.
On the other hand, buying anything through the Apple Store was fun, easy, and far less intimidating. You saw a product you liked, you could try it for as long as you wished, and you could buy it without having to wait in line at a cash register. If you needed help, you could bring it back and talk to an expert at the Genius Bar who would stay with you until the problem was fixed.
The secret to Apple Stores was having products that people wanted, making the shopping experience fun and easy, and providing customer service to reduce any sense of frustration.
Within a few years, Apple Stores now earn the highest profits per square foot than any other retailer on the planet. Apple is now opening stores all over the world, despite having a minority share of the computer market, a minority share of the smartphone market, a majority share of the tablet market, and possibly a majority share of the wearable computer market.
The key to Apple Stores is the same key to their success in their other products. Solve the customer’s problems easily, make the experience enjoyable, and make them feel they got value for their purchase no matter how much it might be.
On the other hand, buying a Windows PC means dealing with pre-installed bloatware that will slow down your computer and technical support that’s frustrating and time-consuming to use. The only redeeming factor of Windows PCs is their low prices that made you feel you got a bargain until you needed customer service.
Apple Stores simply worked to keep customers happy so they could become repeat, loyal customers. Over time, this small group of happy Apple customers became a global army of happy Apple customers, all because Apple focused, not on deceiving and cheating the public, but by making the customer happy.
Curiously, that’s one feature of Apple that rivals have yet to copy.