The unlikely success story of the Apple retail store
"Sorry, Steve: Here's Why Apple Stores Won't Work," proclaimed a headline in Businessweek in May 2001. Published the day after Apple opened its first retail store in Tyson's Corner, Va., the opinion piece argued that Apple's focus on a few products and a "perfectionist attention to aesthetics" would limit the company's appeal.
"Apple's problem is it still believes the way to grow is serving caviar in a world that seems pretty content with cheese and crackers," the article quotes former CFO Joseph Graziano as saying.
The author was not the only naysayer when it came to Apple's new store idea. At the time, Apple's strategy of opening expensive, airy retail stores to display just a handful of products seemed incredibly profligate for a growing brand with no retail experience - especially when more established consumer electronics chains were in decline. Gateway closed a chain of 188 consumer electronics stores in 2004, while CompUSA, one of Apple's main retailers before it opened its stores, said it would shutter its stores in 2007.
Even in hindsight, it's kind of crazy that Apple pulled off its unique store strategy - but clearly, it did. The company has 265 stores in the U.S. and more than 400 worldwide. According to research company eMarketer, Apple's stores generated sales of $5,009 per square foot in the 12 months leading up to May 2015, more than any other brand in the U.S., including Tiffany & Co. and Restoration Hardware.
What was the secret to Apple's success? Part of the recipe was Apple's tendency to try things out over and over again and let its ideas evolve in a better direction - as it has also done with its products. Before Apple opened its first store in Virginia, the company trailed 34 outlets inside big-box electronics store in Japan to see what worked for the brand. They also built a complete mock-up of an Apple Store in a warehouse in Cupertino, just to test things out. The company was slow to open retail stores in China, even when it already had millions of customers in the country.
The other factor that helped to guarantee Apple's success seems to be that the brand envisioned its stores as much more than, well, stores.
In the 1990s, Apple was selling its products through Sears and CompUSA. Sales weren't that great, and Apple's products were buried among others in a way that Steve Jobs and other executives felt compromised the brand. When Apple finally designed its own stores, it left plenty of space for people to interact with the technology.
It also only used a fraction of its store to sell products. Apple designed their stores based not on product divisions, but what they called "solutions." A large part of the store was dedicated to letting people try out and learn about products, as well as ask questions at the Genius Bar, an idea similar to a concierge service at a nice hotel.
Jobs was famously detail-oriented; at one point, he even insisted that the metal bolts that held together glass panels in a store be replaced, says Tim Kobe, the store designer who worked with Jobs, says in an interview with Bloomberg. With his oversight, the company developed its trademark glass cube design, with a floating staircase and plenty of space for consumers to ask questions and play with products.
"I'm not even sure "store" is the right word anymore," Tim Cook, who took over Apple after jobs, said in 2013. "They've taken on a role much broader than that. They are the face of Apple for almost all of our customers."