The fanfare surrounding Apple’s Covent Garden store is the latest example of how it is not only driving technological innovation but transforming retail as well. By George MacDonald
Apple’s Regent Street store is already the most profitable shop in London. And the tech firm’s biggest shop yet, in Covent Garden, may do better.
Ahead of the Covent Garden store’s opening last Saturday, there was the excitement with which the brand has become synonymous. The first customer was waiting outside 24 hours before the doors were unlocked .
From having no stores a decade ago, Apple now has 300 globally and the opening in Covent Garden brought its count to 28 in the UK. The company is transforming retail in the same way as its innovative products have shifted the technological landscape.
And as with its products, Apple attempts to make improvements with each landmark store it opens. That approach is evident at Covent Garden in the building itself - which includes a spectacular courtyard spanned by a skylight - and in tweaks to the offer.
Apple has also typically made a big splash with the design of its signature stores - whether it’s with a glass cube on New York’s Fifth Avenue or the largest piece of curved glass ever manufactured, which will feature in the Shanghai store due to open this year.
Apple senior vice-president of retail Ron Johnson has led the company’s charge into retail since joining the business in 2000, having been vice-president of merchandising at US retailer Target. The company is helped by demand for its products (see box, p22), but Johnson points out that its flagship stores, unlike those of some brands and retailers, are big moneyspinners.
Its bricks-and-mortar presence in Covent Garden or the 28,000 sq ft Regent Street store - which generates £60m a year, equating to £2,000 per sq ft - work as shops even though they share the characteristics of a showroom.”Our significant stores are our best stores,” says Johnson. “That’s the biggest surprise to me as a retailer.
Explaining the stores’ appeal he says: “10 years ago, we decided that, as a company that wanted to win in innovation, we wanted customers to experience the product at first hand.”
The rationale is equally valid today, despite the increased take-up of Apple products. “Most people have never seen the iPad,” he points out. “They’ve heard about it, but the chance to touch it is a pretty neat thing.”
That meant the creation of a “gold standard” for Apple stores. While many retailers view stores by measures such as square footage and sales, Apple takes a different approach. “Our primary objective is to create a place that people will love,” says Johnson. Covent Garden is the most significant iteration yet of that attitude. “We’ve not only created a store, we’ve created a place for people to be,” he says.
“Regent Street taught me the most,” he says. “It was a big bet to put in a big store like that, but it worked. Today, Regent Street is our highest traffic store in the world.”
At Covent Garden, the effort to create a “place for people to be” is reflected in dedicated spaces for each product range. In these ‘rooms’, consumers can try out products such as the iPad.
Johnson says the three levels of the Covent Garden shop have more touchpoints than any other Apple store - with 56 Macs, 30 iPads, 40 iPods and 30 iPhones. All are simply displayed on oak tables in a building that dates from 1877 and which was previously live music venue the Rock Garden. It has been painstakingly restored, right down to the dismantling, photographing and numbering of brick arches in order to lower them by four inches.
A ‘genius bar’ provides technical support, there is a ‘community room’ where people can learn together, and a ‘briefing room’ is available for business technology workshops and advice - a first for the retailer.
As at other Apple stores across the world, there will be high-profile events. Stars such as Clint Eastwood, Spike Lee and Nigella Lawson are among those who have appeared.
By using the latest technology, staff can sell products to customers anywhere in the shop, removing the need to queue at a till. Johnson says high-pressure sales techniques are alien to Apple’s philosophy - and, in any case, the enthusiasm for Apple’s goods from both customers and staff means there is no need for the hard sell. He says staff are taught “to look in the heart, not the pocket book” when dealing with customers. Staff, he says, are there “to help you buy”.
Unique selling points
Bernard Dooling, founder of strategic design consultancy 20/20, says the Apple way of doing things has distinguished it from rivals since it entered the retail sector. “The greatest single thing Apple did was it recognised the function of the store,” he says.
He says Apple’s status is such that stores can rely on customers who are turning up to buy, and that they are almost “acolytes worshiping at the altar of the brand”. However, Dooling maintains that Apple has not taken its customers for granted, and that the attention to detail in service, or look and feel, in its stores is outstanding.
“You just don’t see other big brands getting their product in front of the customer with such conviction,” he says. “The big lesson for retailers is how Apple has understood customer engagement. Today, multichannel is the norm. Somebody will twig that the future of brick stores will be more experiential, and fulfilment might be done elsewhere. It’s about building new levels of customer engagement.”
As is the case with more conventional retailers, location is central to Apple’s store strategy. “The first thing people like about our stores is where they’re located,” Johnson says. “If you’re located where people live their lives, you can be part of their lives. We’re on the most popular entrance to Covent Garden. When your address is No 1 The Piazza, it’s easy to find your store.”
The mix of Covent Garden, with its street performers, destinations such as the Royal Opera House and its small businesses - which Apple is targeting as customers - also clicks. “Our hope is that we’ve captured the spirit of Covent Garden through our store,” he says.
Shop of the new
Away from its statement stores, the company is rapidly expanding its retail presence. As well as stores in shopping centres such as Brent Cross in north London, Apple has other retail interests. It has 38 shops-in-shops in stores operated by electricals group Dixons Retail, such as Currys, and smaller areas in 23 of that group’s stores. The shops-in-shops are staffed by Apple ‘sales colleagues’, as they are known, who also provide training to Dixons staff. Dixons, along with Best Buy’s handful of UK stores, had a 60-day exclusive deal to sell the iPad following its UK launch.
Retail has become big business for Apple. Its retail division turned over $2.6bn (£1.6bn) in the three months to June 26, and further growth is planned. Apple now has more stores in the UK than anywhere other than its domestic US market and, says Johnson, international growth is top of its retail agenda. “Our priorities now are outside the US,” he says. “We’ll continue to invest in the UK. We’re going to open stores throughout western Europe - we’re putting the finishing touches to one in Spain.”
Apple has emerged as one of the most powerful forces in retail - both as a product innovator and for the new purposes to which it has put its stores. Its impact is likely to help shape the future of other stores in the multichannel world.
Always innovating: Apple’s Core Business
More than almost any other company, Apple has caught consumers’ imagination, and their money, with innovation after innovation.
The iPod, iPhone and iPad have flown off the shelves, despite occasional glitches. These proprietary products help power the strategy of the retail arm, so continued innovation is key.
Apple’s third-quarter figures showed few signs of any problem. In the period to June 26, it sold 8.4 million iPhones and the iPhone 4 was the most successful product launch in Apple’s history. Sales of the iPad, which made its debut in the period, were 3.3 million, although iPods were down 8% by unit at 9.4 million.
Bernard Dooling, founder of design consultant 20/20, sees little likelihood that Apple will lose its innovative touch. He says of Apple boss Steve Jobs: “He’s not, per se, looking at product - he’s looking at the future.”
The only danger, says Dooling, would be if Apple were to become arrogant, there is no evidence of that. Like Tesco, it may be number one but it thinks like a number two.