RETAIL is supposed to be hard. Apple has made it seem ridiculously easy. And yet it must be harder than it appears, or why hasn’t the Windows side of the personal computer business figured it out?
Of the many predictions in the world of technology that have turned out to be spectacularly wrong, a prominent place should be made for what the pundits said in 2001 when Apple opened its first retail store in Tysons Corner, Va. “It’s completely flawed,” one analyst said, and that was the conventional wisdom. Commercial rent and furnishings would be expensive, inventory tricky and margins slim. Experienced computer resellers were struggling, and no computer manufacturer had ever found success operating its own branded stores. Analysts predicted at the time that Apple would shut down the stores and write off the huge losses in two years.
That assuredly would have been the Apple store’s fate had Steve Jobs permitted aesthetic and design considerations to trump all else. But while guiding the planning for the stores in 2000 and 2001, Mr. Jobs took on a more ambitious challenge than building freestanding museums of design that would show the Apple flag and do little else. He set out to create the conditions most likely to convert museum visitors into actual customers, and then to make those customers feel that they were being pampered long after the sale was consummated.
At the time, retail stores seemed passé. Gateway Country Stores were trying to make a go of a combination of old and new, inviting customers to come in, touch, order — and then go home and wait patiently, because the stores did not carry any inventory. Dell’s build-on-demand model dispensed with stores altogether and seemed to embody the future.
Mr. Jobs understood, however, that his stores would sell not merely products but also gratification. He told the trade magazine Chain Store Age Executive in 2001: “When I bring something home to the kids, I want to get the smile. I don’t want the U.P.S. guy to get the smile.”
The stores were born fully formed and have not required any fundamental changes. The best innovation was present on Day One: the “Genius Bar,” with a staff of diagnostic wizards whose expertise is available in one-on-one consultations — free. Pure genius. More than half of the retail store’s staff is assigned to post-sales service.
Customer response is told in the numbers. Last month, Apple released results for the quarter ended March 31. More than 21.5 million people visited its stores, which now number more than 180. Store sales were $855 million, up 34 percent from the quarter a year earlier, and they contributed more than $200 million in profits.
For perspective, look at the parallel story of Sony, which in 2004 began its attempt to create a branded retail chain. That was the same year Gateway closed the remnants of its 188-store chain. Today, Sony has 39 Sony Style stores, built out from the flagship stores in New York and San Francisco. The company’s breadth of product lines in consumer electronics and related accessories, as well as computers, would seem to give it a significant advantage over Apple. But because Sony does not release data on the stores’ sales or profits, it is hard to assess how its retail venture is doing.
Last Sunday, I set out to have a look for myself. I began at Sony’s flagship in San Francisco, at the Metreon Center, the shopping and entertainment complex. The mall was crowded, but Sony’s store, measuring an enormous 20,000 square feet, was all but deserted. The two uniformed members of the store security staff matched the number of customers I could see browsing the store’s wares.
Then I headed for the Stanford Shopping Center in Palo Alto, where I could see a Sony Style store compete almost directly across from an Apple retail store. The weather was gorgeous, drawing the usual weekend throng to the shopping center.
Sony’s mall store was long and large — 6,000 square feet — and filled with curvy panels and chirpy taglines like “My Style” on the walls and plush theater nooks. Here, too, the sales staff seemed to outnumber customers.
A group of five young salesmen and saleswomen who stood near the door when I entered were so engaged in a private, and apparently amusing, discussion that my imploring presence failed to draw anyone’s attention. The only other customers in the store were at the far other end, near the PlayStations. I suppose that the employees near me had become accustomed to busying themselves with their own entertainments.
A few yards away was the Apple store, which is one of Apple’s newer “mini” stores, introduced in 2004 and only about an eighth the size of Sony’s Stanford store. It was simplicity itself: a rectangular space with products lining the two sides, laptops placed on a small table, open space taking up most of the room, and, of course, the Genius Bar. The store was packed, yet the sales people were alert and attentive.
Last week, I shared these impressions with Dennis Syracuse, senior vice president for Sony Retail, who assured me that Sony’s stores drew an average of 350,000 visitors annually per store. Mr. Syracuse rejected the idea that his store concept could be compared to Apple’s. His stores were conceived, he said, as a “fashion boutique for women and children” that incidentally happened to carry electronics instead of clothing.
When describing how Sony had entered a new retail world as “fashion merchants,” he pointed with pride to the choice spot he had secured for the first store, next to Gucci and across from Versace. Indeed, if you would like to accessorize an outfit with a color-coordinated laptop, the Sony Style store offers models in pink, violet, champagne and many more.
But Sony’s offerings have not impressed retail consultants with whom I spoke. Willard Ander, a senior partner at McMillan Doolittle in Chicago, was unsparing in his assessment: “Sony doesn’t get retail. The stores are not energized and not shop-able.” Apple stores extend an “emotional connection” to their customers that Sony’s do not, Mr. Ander said. The absence of such a connection, he said, was a common failing of manufacturers who venture into retail on their own. (Dell, meanwhile, announced last week that it would soon begin selling its computers in stores — but not its own. It will offer its machines in 3,000 Wal-Mart stores.)
Wendy Liebman, the founder of WSL Strategic Retail in New York, was equally critical of the Sony Style store, which she faulted as being merely “a place of stuff.” She said that a successful brand excites a passionate attachment, the way Starbucks or Target do, and that Apple’s stores exemplify “emotional connection.”
“People can just walk in, absorb the fumes and feel like the smartest technophile in the world,” she said. Let’s add that there is only one place to buy computers that features Geniuses at all times.
IT may be that as long as personal computer makers stick with Windows, no amount of merchandiser ingenuity will be able to gin up passion matching a Mac enthusiast’s. But the proposition really has not been put to a fair test in a store. Imagine having the opportunity to test-drive a high-performance Windows machine made by a boutique manufacturer like Voodoo, based in Calgary, Alberta. Voodoo offers a variety of configurations for different kinds of uses and varying performance levels that it labels as medium, high, extreme and insane. What’s “insane”? A Voodoo Omen, configured for serious graphics work — two dual-core processors, liquid cooling, four 15,000-RPM hard drives — costs more than $16,000. No Apple retail store carries anything like it.
Then again, no store selling Windows machines does, either. You have to go online to order it. Hewlett-Packard acquired Voodoo last year but has not expanded distribution channels to allow customers to test-drive these babies out on the road. I don’t think I can point my spousal unit to the Voodoo Web site and persuade her that a $5,563 Voodoo configured for the home office is just what we need: “You see, dear, we’ll actually be saving $3,500 by going ‘extreme’ rather than ‘insane.’ ” Come to think of it, I’m not ready to make the purchase, either. That’s a sale that has no chance without a family visit to a store for a hands-on trial.
Sony already has the stores. What it lacks among its offerings is a machine so extraordinary that people would come just to gawk at it, and then, perhaps, would notice surrounding products that shine in the reflected light.
Mr. Ander says he believes that any company, if clever enough, can use intangibles to attract retail customers. “If Payless ShoeSource can reposition itself as a place that markets ‘cool,’ ” he asked, “then why can’t Sony?”