Apple’s Retail Secret: Full Service Stores

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By Yukari Iwatani Kane and Ian Sherr

Steve Jobs turned Apple Inc. into the world’s most valuable technology company with high-tech products like the iPad and iPhone. But one anchor of Apple’s success is surprisingly low tech: its chain of brick-and-mortar retail stores.

A look at confidential training manuals, a recording of a store meeting and interviews with more than a dozen current and former employees reveal some of Apple’s store secrets. They include: intensive control of how employees interact with customers, scripted training for on-site tech support and consideration of every store detail down to the pre-loaded photos and music on demo devices.

More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year, according to data from Apple and the Themed Entertainment Association. Apple’s annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. Add in online sales, which include iTunes, and the number jumps to $5,914. That’s far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates.

With their airy interiors and attractive lighting, Apple’s stores project a carefree and casual atmosphere. Yet Apple keeps a tight lid on how they operate. Employees are ordered to not discuss rumors about products, technicians are forbidden from prematurely acknowledging widespread glitches and anyone caught writing about the Cupertino, Calif., company on the Internet is fired, according to current and former employees.

Behind Apple stores is Ron Johnson, 52, who J.C. Penney Co. confirmed Tuesday would become its new CEO in November.

Apple’s retail success is fueled to a large extent by demand for the company’s products. Retail analysts say many of Apple’s advantages over rivals such as Best Buy are technical: It sells a single brand, has far fewer products and has only a few hundred stores compared to Best Buy’s more than 4,000. As the company continues to expand, some analysts expect it to face more pressure to consistently execute good customer service. Some former employees say they have already seen the quality of Apple retail staff decline as the retail network has expanded and has fewer enthusiastic fans to choose from.

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(Published June 15, 2011 on the front page of The Wall Street Journal.)