When planning an Apple-branded line of retail stores, Apple put together a list of nine “success factors” needed for a retail operation to succeed, Apple CEO Steve Jobs said. The company felt it already had the first six in place. They are:
“We have a great concept and are selling billions of dollars of product,” Jobs said. “That is our concept, and we’re extending it to the digital hub we’ve discussed before.”
New product pipeline:
“We have over 2,000 folks in our engineering groups who do nothing but work on new and exciting products,” Jobs said. “Apple is a pretty good new product company.”
With over $4 billion in the bank, the company has the necessary financing.
Apple spends a “few hundred million a year on advertising” and has one of the most recognizable name brands in the world.
Supply chain management:
“Apple is one of the best companies in the world at supply chain management and logistics, and we know how to extend into retail,” he said. The retail stores would be viewed as extra warehouses in the current system, so there would be one supply chain group for the whole company.
Apple has already built an IS system for its stores on top of its global ISP system.
However, there were three “success factors” at which Apple had no previous experience: real estate, store design, and store operation. Regarding real estate, Apple knew that the old adage of “location, location, location” was on target and the company realized that “destination” locations (such as Best Buy and Office Depot) won’t work for the 95 percent of non-Mac computer users.
“We’ve got to ‘ambush’ that 95 percent by being where they’re already at, by locating in high-traffic gathering places, such as malls, hip streets, and the new lifestyle centers, such as coffee shops,” Jobs said. “We’re going to put our Apple stores in top tier locations.”
Regarding store design, Apple wanted a concept that would fit the needs of its customers and would showcase its products, but which would also be flexible enough for change and growth. To come up with the best concept, Apple actually built a prototype in a warehouse. The result, according to Jobs: a solutions-focused store.
When it comes to store operations, Apple realized it had to deliver a “fantastic experience,” the CEO said. That meant the “right stores at the right place with great merchandise, incredible employees, and operational excellence,” according to Ron Johnson, Apple’s new senior vice president of retailing.
The new retail stores will carry, not surprisingly, Apple’s entire product line and the “best” (as determined by Apple) third party products and peripherals. Apple also plans for its stores to have the very newest technology products on the market.
“We want to carry a great selection of third party software to showcase the range of solutions available for the Mac platform,” Jobs said. “We’ve chosen products we think are the right ones to start with. We’ll edit and re-edit the selection as new products come out. Obviously, we’re putting our judgment on it, but we’ll rethink things as time goes by and we see what our customers are buying.”
Every Mac in the retail stores will be connected to the Internet, will come fully loaded with software, and will be designed to showcase the platform’s integrated solutions. This will “set us apart” from competitors, Jobs said.
The retail stores will handle service for all Mac systems, no matter where you bought them. They’ll also take returns on any products bought from Apple (whether at the retail or online stores), but not from other stores.