At first, a brand-specific store just sounds like a crazy and expensive idea. Yet, all those norms for audio players, mobile phones, PC and mobile retail seemed to have been disrupted by Steve Jobs.
BKAV had recently taken a surprising yet understandable step in establishing the customer service center – Bphone Store in Cau Giay District, Hanoi. This step is one very much similar to the chain store strategy behind Apple Store, one set by Steve Jobs, and then followed by various big names in technology like Samsung, Microsoft, and Xiaomi.
So, what’s special about Apple Store that has brands, both large and small, rushing to follow?
In the same outlet as Windows, Macbooks will be “devalued” to the level of HP and Dell
Few people know the idea of Apple Store stems from the days when Apple were still struggling. While the firm had quite gone up with the successes of iMac and PowerBook, Apple was still a small firm that had just managed to avoid disappearance. Success stories are quite fleeting, and as such, Steve Jobs was force to find a lasting way: building customers’ love (or more accurately, loyalty) in the Apple brand.
And it was this that enlightens the founder of Apple on the most major problem of the Apple experience at the time: no matter how good a product you have, sales still largely depend on external retail chains. The employees of those chains do not “love” Apple, and also have no motivation on clarifying about the standout points of iMac in comparison to Windows. “The only thing they care about is the 50 USD commission”, said Job in his self-biography published shortly after his passing.
Therefore, in order to survive, Apple needed to first get control over the buying experience. In 1998, the newly-appointed CEO, Tim Cook, had promptly stated: “Apple will cease to cooperate with retails that cannot provide the buying experience that Apple requires.” This led to the number of Mac providers decreasing from 20,000 stores to 11,000 ones during the 1997-2000 period, even cutting off ties with the big names like Best Buy, Sears and Montegery. At the same time, Steve Job hired Millard Drexler, previously the CEO to the fashion brands Gap and Ron Johnson, as well as leader of Target. Together, they secretly built “testing” stores, and Jobs got as obsessed with the stairs’ wood and the color of the toilet tile as he had been over the Mac.
Apple Store: From the neglected idea of Steve Jobs…
There was little support for Jobs, as Gateway, a large company firm at the time, had collapsed in its attempt to open a store. Dell of the 1990s were still selling well via direct sales without any stores. And further, we cannot forget the boom of e-commerce sites like Amazon and eBay. Opening a physical store of time, in malls and expensive street fronts, is thus, of little difference to suicide.
The idea of Apple Store had faced strong opposition from the board, and one member of time even recalled: “It was crazy, we are but a little brand still, and we got no power for such a store.” The Apple Store disagreement was even said to be part of the reason to Ed Woolard’s resignment from Apple around 1998.
Yet, the achievements of Apple Store had quickly proved that Jobs was right. In the first 2 weeks, Apple Store had attracted 7,700 visits, earning 599,000 USD. The outlet had even broke the world record by earning 1 billion USD in 2004, being the quickest to earn such revenue. To 2006, Apple Store’s quarterly profit had reached 1 billion USD, and by 2011, the year of Steve Jobs’ death, one employee at Apple Store can generate 473,000 USD for the firm. Overall, the global revenue of this chain is 16 billion USD.
Even now, Apple Store is still generating the most revenue per foot square. In particular, each foot square of an Apple Store generates around 5,500 USD annually. And this had set a new standard for the world: HP Store, Dell Store, Microsoft Store, Samsung Store, Mi Store… were quick to pop up all around the world. This idea of Steve Jobs, once deemed to be crazy, is now the norm of the industry.
From the above information, we can clearly see how important physical stores are in generating benefits. First, there is the matter on long-term revenue: by ignoring costs and opening up at the most expensive and crowded locations, Apple Store had provided easy access to the Apple experience, especially aimed at users who might have grown up using Windows or Android. Funny how pulling itself off thousands of shelves had increased the number of Apple users, right?
Following customer attraction is making it hard for users to leave the Apple ecosystem. Regarding to this matter, Cnet had stated: “Once you have purchased a MacBook at Apple Store, you will never want to come back to BestBuy for a new laptop.” Professor Scott Galloway, Marketing Department at New York University also affirmed: “Apple Store brings about an unbelievably great experience. And the rest like AT&T and Verizon, where you buy Samsungs and other Androids, are suddenly mediocre.”
Yet the most important benefit is one for the Apple brand itself. The experience at Apple Store is an affirmation of the brand’s peerage, helping Apple to rule over the luxury segment of all its involved markets (the iPhone in particular, takes up 51% of the market for smartphones priced over 400 USD). The Apple Store experience has created such loyal fanbase for Apple – one that brands like Samsung can only dream of: Apple fans even camp overnight for a new Apple Store – to them, the appearance of the store by itself is already a rightful event. And these fans are also the ones that will queue for the new iPhone.
And it doesn’t stop there, but rather goes on with ideas like the “Genius Bar” and free workshops that teach people to use Mac/iPhone/iPad, as well as maintenance and repair services: at the moment, Apple’s services has achieved the quarterly revenue of 10 billion, surpass the entire revenue of Xiaomi. The image Apple Store is also becoming the dream workplace of many youths, helping Apple attract a high quality personnel, thus furthering the experience gap between Apple and other retail chains.
Learn from the best
It is thus not confusing when all opponents are starting to find ways to follow Apple and opening their own store. Microsoft Stores only display a few products out of its extensive ecosystem, so that users can have a comfortable environment to explore, much like iFans at Apple Store. Mi Stores, on the other hand, tries to be bright and neat (similar to an Apple Store), to erase the bad impressions that come with the firm’s cheap price tags. For the newly opened Bphone Store, BKAV aims to solve an important issue: opening a space for users to satisfy their curiosity about Bphone, without being distracted by the surround Samsung Galaxys or OPPOs.
And yet, in 1998, only Steve Jobs had seen these apparent benefits. It was only this lead that pioneered in various technological revolutions that saw the truth that: a good device is not enough, you also need to provide the best customer experience via physical stores.
Source: GenkRelated posts: