The retail sector is not dying, but it does have to evolve and serve a bigger purpose than selling, according to Apple’s Angela Ahrendts.
Describing stores as Apple’s “biggest product”, the senior vice-president for retail outlined a clear and compelling business case for physical retail during her session the Cannes Lions Festival today (20 June).
“Experts say digital is going to grow at three times the rate of physical. In the next five years McKinsey says that 75% of people will shop online, but 75% of the business will still be done in physical stores and so retail is not going away,” Ahrendts explained.
“Retail is not dying, but it has to evolve. It has to continue to move and I think it has to serve a bigger purpose than selling, because anybody can do that faster, cheaper.”
She sees physical stores as space for human experience, a reason why typically a third of square footage in all new Apple stores is dedicated to the delivery of the brand’s year-old education programme, Today at Apple.
“We’re not opening small stores, we’re taking the small stores and doubling or tripling the size of them to accommodate a forum and we’re only opening big stores in the future that can handle it,” she said.
Don’t let anybody ever tell you that you can’t and you shouldn’t. Not in this day and age.
Angela Ahrendts, Apple
As a “brand purist” Ahrendts wanted to take the design at Apple Park in Cupertino, California and transplant it into every Apple store, meaning the flooring, glass, ceilings and even the furniture are the same as at the brand’s headquarters. The boardrooms at each individual Apple store have huge images of the interior and exterior of Apple Park, so it feels like you’re in the Cupertino boardroom.
Ahrendts believes that Apple’s purity of vision for retail and its commitment to carving out a role in the local community are characteristics that really resonate with customers.
“Apple is in a leadership position when it comes to environmental responsibility and we’ve said in retail that we have a human responsibility,” she explained.
“I often tease and I say, sometimes they think I’m nuts, but I think it’s important that the largest tech company in the world makes the largest investment in humans in the world.”
Hiring for empathy
Ahrendts describes her retail staff as “the secret sauce” that helps Apple stand out in a fiercely competitive market.
Seventeen years ago, late Apple founder Steve Jobs instructed his first retail employees simply to enrich people’s lives, which is why staff are hired for empathy and not to sell. They have no sales quotas and, unusually for retail, do not receive commission. Ahrendts is clear that she never regards the retail teams as a cost.
“They’re our ambassadors, they’re our greatest differentiator. This is something that Apple has that Amazon and Alibaba and nobody else has – people on the front line. And remember they’re hired to this day to enrich lives,” she explained.
“I’ve told them that my job is to enrich their lives as much as they do the customers they serve and so I want to unlock their creative thinking.”
To get to the heart of what the retail teams really think, Apple has expanded its internal social platform Loop to crowdsource opinions about how employees feel the stores are running. The retail staff are also entitled to the same $5,000 worth of teaching hours as every other employee at Apple and some 400 of them each year are chosen to work at head office.
“I think they feel mobile and energised and I always tell them, ‘whether you like it or not, it’s a Snapchat, Instagram, YouTube, WeWork world and we’ve got to keep pace and they’ve got to move’,” said Ahrendts.
“Our retention rates have never been higher, our NPS scores have never been higher and they’ve never felt so creatively empowered, they’ve never felt so connected.”
Supporting young leaders
Prior to taking over responsibility for strategy, real estate, development and operations of Apple’s physical stores in 2014, Angela Ahrendts served for eight years as CEO of luxury fashion brand Burberry, guiding the label to global success by embracing the digital world.
Reflecting on her decision to leave the fashion world, Ahrendts described initially “fighting” the urge to join Apple, because she thought she had the “greatest job on the planet” at Burberry.
“We were flying and life was incredible. It was the culture we had built and the values of the team at Burberry that were so brilliant. Tim [Cook, Apple CEO] kept saying ‘trust me, trust me’,” she recalls.
“You’ve been to an Apple store, you feel that energy. The values at Apple, the values of the store teams, the loyalty and the tenure – it’s a culture that is so aligned. The company values are my values and when you have that, it’s like ‘let’s go’.”
Ahrendts sees her roots as a “middle child from a tiny town in Indiana” as being at the core of her success and being raised in an environment that prioritised doing what you love, following your instincts and being your authentic self.
“My parents would say, ‘what are your God given gifts? What do you love to do?’. My dad was an avid reader and he would always say ‘to thy self be true’. Be your authentic self, be who you are and I don’t care how old I am I’ve always said I never want to forget where I came from,” she advised.
“So to young girls I’d say to thy self be true and use your instincts. Don’t let anybody ever tell you that you can’t and you shouldn’t. Not in this day and age.”
Read all of Marketing Week’s Cannes Lions 2018 coverage, sponsored by MiQ, here.