Apple Retail Chief Position Vacant for 10 Months, First Physical Store Revenue Decline in Four Years

Since the departure of its former retail chief John Browett, the position of Apple's retail head has been vacant for ten months. The company’s latest quarterly earnings report revealed a decline in retail store revenue for the first time in at least four years. This development necessitates that Apple give special attention to its retail operations moving forward.

In 2001, Apple revolutionized the conventional retail model with the introduction of Apple Stores, which featured bright and modern designs as opposed to the dull, cluttered layouts of products and accessories commonly seen in stores. Apple's retail stores quickly became the go-to places for young people purchasing Apple products. However, as Apple products have become ubiquitous worldwide, the operational model of Apple's retail stores has also become familiar to consumers.

John Browett began serving as Apple's retail chief in April 2012. During his six-month tenure, Browett implemented several aggressive measures that caused significant dissatisfaction among consumers and Apple retail employees, leading to a sharp drop in consumer satisfaction with Apple stores. Since Browett's departure in October of last year, Apple CEO Tim Cook has personally overseen the management of retail operations.

According to insiders, Apple hired the renowned global headhunting firm Egon Zehnder International to help find a suitable candidate for the retail chief position, but progress has been slow. Nevertheless, after interviewing numerous external candidates, Apple has finally compiled a shortlist.

An insider revealed that many rejected candidates included high-ranking executives from the wireless and telecommunications industries. The CEO of a French privately-held retailer declined an interview with Apple, believing it would be difficult for an outsider to change Apple's corporate culture.

No consideration for internal promotion

Another source disclosed that Apple will not consider promoting someone internally to the position of retail chief.

A tech industry headhunting company stated that some potential retail chief candidates have been very sensitive about this role, as they know the company currently lacks clear plans for this department. An Apple spokesperson said: "We are actively searching for retail chief candidates. We have a strong network of executive talent, and these executives with over a decade of management experience will continue to deliver excellent customer service."

Even with the retail chief position remaining unfilled for ten months, Cook has still made retail operations a key component of Apple's strategy to revitalize revenue performance. Cook has expressed his plan to significantly increase the number of Apple stores in China.

In fact, Apple's Apple Store revenue continues to be envied by other retailers. According to statistics published by the retail consultancy Customer Growth Partners, Apple's average revenue per square foot in its retail stores was $5,971 in 2012, up 17% from $5,098 in 2011. In comparison, the world-renowned jeweler Tiffany & Co. had an average revenue per square foot of $3,453 in 2012, while the well-known yoga clothing retailer Lululemon Athletica Inc. had an average revenue per square foot of $2,464 in 2012.

However, Customer Growth Partners pointed out that Apple's lead in this area is beginning to wane. As of the current fiscal year, Apple's average revenue per square foot has dropped to $4,542, a decrease of 4.5% compared to last year's $4,754.

Struggling with homogenization issues

Apple's Apple Stores have become gathering places for consumers to purchase Mac computers, iPads, iPhones, and iPods. New Apple products are launched here before being introduced to consumers. Employees at the "Genius Bar" within Apple stores are always ready to answer consumer questions. However, Apple stores have long been plagued by problems of homogenization.

According to Apple's third fiscal quarter report released last week, Apple's retail store revenue slightly declined year-over-year to $4 billion, reaching the lowest level since the fourth fiscal quarter of 2011 and marking the first year-over-year decline since 2009.

Customer Growth Partners President Greg Johnson noted that the lack of visionary and operationally skilled retail management is clearly detrimental to the improvement of Apple's retail performance. Johnson said: "Apple needs to reinvigorate its refreshing retail store model; the current consumer experience is clearly outdated."

According to Apple employees, during his brief tenure, Browett focused on finding ways to cut costs. Familiar sources close to Apple's retail store operations revealed that shortly after Browett took office, some retail store managers received orders to reduce costs. Over the next few months, employee activities, training, out-of-town meetings, and stationery budgets were successively cut.

After leaving Apple, Browett now serves as the CEO of British fashion and accessories retailer Monsoon Accessorize. A spokesperson for Monsoon Accessorize stated that Browett is unable to comment on this matter.

Restoration of retail store spending

Dane Taylor, 36, who has worked at an Apple store in Virginia for five and a half years, said: "During Ron Johnson's tenure as Apple's retail chief, Apple almost introduced new products and services every quarter. After Ron left, there hasn't been much change in the consumer after-sales service aspect from the perspective of the Apple stores."

Current and former Apple employees stated that in terms of restoring certain expenditures, Apple has begun allowing retail store managers to rent meeting rooms in hotels or shopping centers for large meetings. In some stores, Apple has also started reinvesting funds to hire specialized personnel, such as management and technical support staff for the Genius Bar.

These employees further noted that after basic expenditures in some stores dropped by 30%, stationery and other basic supply budgets have now returned to previous levels. One employee mentioned that the frequency of distributing items like T-shirts with the Apple logo has yet to return to the original level.

Consumer service returns to the core

In the past few months, how to better enable employees to interact with consumers has become the biggest change in Apple's retail operations.

Employees indicated that during Browett's term, Apple's internal communication shifted focus from consumer service to sales. In the following months, consumer satisfaction survey results began to decline in some Apple stores. This confused many store managers, as they had been learning how to effectively influence consumer survey feedback.

Employees also pointed out that after Browett's departure, consumer service once again became the core of Apple's retail stores. Apple organized special training sessions over the weekend in some stores to retrain employees' sales skills. The focus of this training was on helping consumers choose Apple products and recommending personalized applications when they purchase an iPhone or iPad.