Apple was dying by the end of the 90s, but then it opened its first ever Apple Store 25 years ago – and the rest is history
Today, there are approximately 550 Apple Stores worldwide, spread across countless major cities and five continents. In other words, this is a serious achievement for Apple.
Today marks the 25th anniversary of the opening of the world’s first two Apple Stores. Found in McLean, Virginia, and Glendale, California, they were opened on this day in 2001.
Far from these humble beginnings, Apple Stores today serve as the gateway to the company’s ecosystem and are a thriving segment of Apple’s business that brings in billions of dollars in annual sales. Here’s the story of how it happened.
Apple goes its own way
By the late 1990s, Apple had spent many years trying to get by on a “store within a store” model. It didn’t work.
Apple would be given a corner in a big box retail store. Sure, it would have its own little display space, but its products would be displayed and sold by employees working for the host store, not Apple.
This frustrated Apple CEO Steve Jobs, who became outraged at the way his company’s products were being pushed to customers by staff who weren’t passionate about them and didn’t even understand them particularly well.
Speaking to biographer Walter Isaacson, Jobs put it this way: “All the salesman cared about was a $50 spiff. » These salespeople were not well trained on what made Apple computers different. Customers might just see Apple’s higher price without learning about its innovative features, Jobs worries. “Unless we found ways to get our message across to the store’s customers, we were screwed,” Jobs said.
Becoming frustrated with this situation, Jobs decided that Apple should go its own way. After all, Jobs was notoriously obsessed with control. Running its own stores would allow Apple to ensure everything was to its liking instead of relying on the half-hearted efforts of one of its business partners.
In 1999, Apple began secretly interviewing outside executives for a role in developing a chain of Apple-branded stores. Ultimately, they settled on Ron Johnson, Target’s vice president of merchandising. It was a good choice: someone who shared Jobs’ passion for design and his interest in crafting the user experience.
When planning the new lineup of Apple Stores, Jobs and Johnson made a number of key decisions. On the one hand, there should only be one entry into the store, allowing Apple to control what the user saw and experienced. Additionally, instead of setting up its stores in remote, out-of-town locations, Apple should have a presence on Main Street, regardless of the cost of rent. High footfall was important because it would allow people to come on a whim – which was particularly useful for converting Windows users.
The stores also had to be the right size. Too big and visitors wouldn’t understand where to find what they needed upon entering. But scale them down too much, and it would signal that Apple had limited, small-scale ambitions.
Even the Genius Bar was a unique stroke of genius.
Perhaps more importantly, Apple’s limited product line was a huge advantage. This would allow Apple Stores to be airy and minimalist, with enough space for people to try out the company’s products. This was vital to attracting loyal fans and newcomers alike. In other words, the goal was to be the complete antithesis of any other computer buying experience. This was a competitive advantage for Apple.
Even the Genius Bar was a unique stroke of genius. Johnson had asked his staff to name the best customer service experience they’d ever had, and almost all of them mentioned a stay at a fancy hotel. So Johnson sent his first store managers through the Ritz-Carlton’s training program, then translated what they learned into what would become the Genius Bar. Apple, Jobs and Johnson decided that Apple Stores would offer a service like no other in the retail industry.
Overall, everything about the Apple Store had to “imput” – or convey – the company’s values. As Johnson said, “the store will become the most powerful physical expression of the brand.” Apple wasn’t just imagining a store, but planning a new way to dominate tech retail.
Predictions of failure…
At the time, there were many predictions circulating that the Apple Store would fall flat. “Maybe it’s time for Steve Jobs to stop thinking so differently,” Bloomberg Businessweek said under the headline “Sorry Steve, Here’s Why Apple Stores Won’t Work.” Retail consultant David Goldstein, for his part, predicts the concept’s imminent failure: “I give them two years before they turn out the light on a very painful and costly mistake,” he predicts.
Even Apple’s former CFO, Joseph Graziano, was skeptical, saying that “Apple’s problem is that it continues to believe that the way to grow is to serve caviar in a world that seems more content with cheese and crackers.”
And there were times when things could have gone wrong. One morning during development, Johnson woke up with a sudden thought: Instead of organizing stores around Apple’s product lines, as the company had planned, they should instead be centered around what people could TO DO with products, such as importing movies or editing photos. That would fit much better with Apple’s emerging idea of a Mac as a digital hub, but it would also mean delaying the opening of the first store by three to four months.
I give them two years before they turn the lights out on a very painful and costly mistake.
David Goldstein
At first, Jobs exploded with rage at this disruptive idea. But after he calmed down, he realized Johnson was right.
As he told Isaacson: “If something goes wrong, you can’t just ignore it and say you’ll fix it later. That’s what other companies do.” Apple continued the change – and stores fared better.
…this never happened
From the start, the first Apple Stores were a success. Computer retailer Gateway had its own stores, and they received an average of 250 visitors per week. In contrast, Apple Stores averaged 5,400 visitors per week in 2004. The Manhattan store, opened in 2006, averaged 50,000 visitors per week in its first year. Jobs’ idea of opening in high-traffic locations paid off.
Apple Stores had $1.2 billion in sales in 2004, setting a retail industry record for the time it took to reach the $1 billion milestone. About a decade after the first Apple Store opened, their total revenue was $9.8 billion, with each store bringing in $34 million annually.
Today, Apple is estimated to earn between $4,000 and $5,000 per square foot in its stores. Compare that to the U.S. average, which is around $400 per square foot, and it’s clear that Apple’s decision to launch its own retail locations has been an unmitigated success.
But more than just gross sales, Apple Stores have helped create buzz around new Apple products. People camp out overnight to be the first into a new store or the first to buy a newly released device. Their minimalist designs and prime city center location have made them a must-have for consumers around the world, whether they are loyal Apple users or have never heard of the brand before.
Even so, the Apple Store was hugely successful for Apple and led other tech companies to follow suit. Samsung has its own line of stores, as do Microsoft and Google. But none of these copycat stores would exist if the first Apple outlets hadn’t opened their doors a quarter of a century ago – and changed the way you shop in the process.
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