The last thing we need is another sermon on Apple’s success. It is the most valuable brand in the world according to WPP’s BrandZ ranking, climbed 21 spots to #35 on the Fortune 500, and has now usurped Microsoft on every conceivable metric of financial performance. But on the 10-year anniversary of the opening of Apple’s first two stores in Tysons Corner, Virginia and Glendale, California, I thought it would be worthwhile to explore the often-overlooked role of Apple’s pioneering retail experience in the brand’s resurgence and sustained momentum.
Legend has it that at the turn of the century, Steve Jobs hired McKinsey & Company – knowing full well they’d tell him retail stores were a terrible idea – just so he could prove them wrong. Whether or not it was intentional, he did. Apple now operates 324 stores in 11 countries, and in the 2010 holiday quarter alone, retail stores brought in 75 million visitors, nearly $4 billion in sales, and a $1 billion retail margin. Apple’s stores consistently account for 15-20% of the company’s total revenue, in effect writing the business case for their own existence.
Yet as marketers we know that more often than not, it is a great brand that lies at the core of a thriving business, and so it is also important to understand Apple’s stores from a brand-building perspective.
The stores are closed-off physical spaces over which the brand has complete control – every Apple product is carefully displayed in an environment that reflects the simple, intuitive elegance of everything Apple does but on a massive scale. Less a ‘touchpoint,’ the stores represent a kind of full-body acupuncture. The consistency of the Apple experience – from the packaging to the devices to the giant glass cube on Fifth Avenue – makes the brand simultaneously familiar and unattainable, and explains its unique magnetism.
Yet for all of its pre-planned precision, it is the dynamic, unpredictable elements of the Apple retail experience that ultimately lure us in. People are free to touch, hold, and use every product in the store, even if it’s to Google the nearest BlackBerry vendor. This seemingly minor act of self-assuredness, and the altruism that comes with it, compels people to engage with Apple’s products and transmits a cool, positive vibe that carries over to everything else the brand does.
And then there is, of course, the human element – the tireless geniuses at their bar, the bubbly, all-knowing store representatives, and the special events and training sessions that manage to use the brand as a means to a greater end: the fostering of social connections. The store thus becomes a place we go not to buy, but to discover, learn, play, interact, and, in the spirit of Apple’s brand ideal, to self-express. The purchase is merely a byproduct, but with half of new Mac sales in retail locations going to Windows switchers, it is a profitable byproduct indeed.
As Apple celebrates today, what are other brands to do? A quick look at the BrandZ ranking indicates that many brands are already on the right track, with nearly half of them operating dedicated physical retail spaces. The challenge for the rest – the beer, soft drink, and personal care brands of the world – is figuring out how to build the ‘human element’ when you’re one of hundreds of brands on someone else’s shelf. Procter & Gamble has found this human element in Mr. Clean carwashes and Tide Dry Cleaners, while Coca Cola has opened several successful pop-up stores around the world. In time, we may find ourselves spending happy hour in a Budweiser bar or asking for a shave at a Gillette barbershop.
What is ultimately remarkable about Apple’s retail revolution is its astonishing success in a world transfixed by hits, tweets, and ‘likes.’ It shouldn’t be, though. Humans have survived for millennia thanks to our ability to see, touch, hear, manipulate, and interact with our environments and each other. For brands in a crowded, competitive marketplace, the story of survival should not be much different.
Contributed to BSI by: Eric Tsytsylin, Millward Brown Optimor