Hey guys it’s Greg with Apple Explainedand today we’re going to explore the history of the Apple Store
This topic won secondplace in last week’s voting poll and if you didn’t get to vote, make sure you’resubscribed, that way the voting polls will show up right in your activity feed and youcan let me know what video you’d like to see next
But before we begin I want to tell you guysabout this giveaway iMobie is doing since they were kind enough to sponsor this video
An iPad and Google Home are up for grabs and you can find a link in the description toenter the giveaway for a chance to win
They’re doing this to promote their new AnyTrans forCloud service that can manage all your cloud accounts like Google Drive and iCloud fromone application
It’s also very handy for syncing files across different cloud accountsand sending files to recipients that are too large for email
So if you want to enter thegiveaway, click the link in the description and you’ll find the directions
Now Apple’s retail stores are the most financiallysuccessful in the world, generating more than $5,500 per square foot of retail space
Butthis level of success was not anticipated by anyone back in 2001 when Steve Jobs debutedthe first Apple Store, and you may wonder why that was
Well it’s because Apple hadtried establishing a retail presence before, but it ended badly
So let’s start off byexamining why Apple’s first attempt at retail failed while their second attempt was a wildsuccess
Back in 1997, Steve Jobs returned to Appleand found the company in terrible shape, including their retail presence
For many years Applehad been establishing store-within-a-store concepts
Where a section of a retail storelike Best Buy would be dedicated to Macintosh computers
But there were some fundamentalproblems with this approach
Most retail store staff had no training or experience with Macsso they often directed customers to PCs instead
Also, the reseller’s profit margin on sellingMacs were only around 9% so they weren’t incentivized to recommend them to customers So with all these problems with the store-within-a-storeapproach, you might assume that Apple scrapped the idea and began working on their own retailstores
But that wasn’t the case
Instead, Apple continued to toy around with store-within-a-storeand focused most of their resources on building an online store
Now Apple’s decision tocreate an online store instead of improving their retail stores may sound a bit counterintuitive,but there is some backstory here
You see, the reason why Jobs was able to return toApple is because they purchased NeXT, a computer company Jobs founded shortly after being forcedout of Apple
And some of the technology developed by NeXT was used to build Dell’s successfulonline store
And when Dell’s CEO, Michael Dell, was asked how he would fix Apple, hesaid, “I'd shut it down and give the money back to the shareholders
” And this angeredJobs very much
So he assembled a team of Apple and NeXT employees to build and onlinestore that would be better than Dell’s
On November 10, 1997, Steve Jobs announcedthe online store at a press event, and said: "I guess what we want to tell you, Michael,is that with our new products and our new store and our new build-to-order manufacturing,we're coming after you, buddy
" Apple generated $16 million in revenue fromits online store in the second quarter of 1998, shortly after it launched
By 2006,Apple was generating millions in revenue a day from the online store
In fact, the onlinestore team used to compete against the retail store team to see which achieved more sales,the two were neck and neck for years, and this sent a signal to Apple that the demandfor a retail Apple Store definitely existed, they just had to figure out an approach thatworked best
Tim Cook, who joined Apple in 1998 as SeniorVice President for Worldwide Operations, announced that Apple would "cut some channel partnersthat may not be providing the buying experience Apple expects
We're not happy with everybody
”Cook cut ties with every big box retailer, including Sears, Best Buy, Circuit City, ComputerCity and Office Max to focus its retail efforts with CompUSA
Between 1997 and 2000, the numberof Mac authorized resellers dropped from 20,000 to just 11,000
At that point, Apple could focus their retailefforts on CompUSA, expecting their hands-on approach to help increase Mac sales
And whilesales did increase slightly, the "store within a store" concept still didn’t meet Apple’sexpectations, partly because the Apple section was in the lowest-traffic area of CompUSAstores
Apple added Best Buy as a second authorized reseller, but challenges still remained andMac sales never achieved the kind of numbers Apple wanted
Jobs recognized the limitations of sellingApple products through third-party retailers and began exploring ways to improve the model
Jobs believed the Apple retail program needed to fundamentally change the relationship tothe customer, and provide more control over the presentation of Apple products and theirbrand message
This new approach to retail required new ideasand a few new employees too
In 1999, Jobs personally recruited Millard Drexler, formerCEO of Gap, to serve on Apple's board of directors and the following year Jobs hired Ron Johnsonfrom Target
The retail and development teams headed by Allen Moyer from The Walt DisneyCompany then began a series of mock-ups for the Apple Store inside a warehouse near thecompany's Cupertino headquarters
But not everyone agreed on how to create agreat retail experience
For example, when Ron Johnson shared his idea of including aGenius Bar for technical support, Jobs blasted the idea
Saying, “That's so idiotic! It'llnever work! Ron, you might have the right idea, but here's the big gap: I've never metsomeone who knows technology who knows how to connect with people
They're all geeks!You can call it the Geek Bar
” Johnson replied by pointing out that manyof the Genius Bar workers would be in their 20s, and have grown up with the kind of technologythey'd be supporting
Jobs told Apple's general counsel to trademark "Genius Bar" the followingday
Although this development process didn’t always go smoothly, it led to the creationof a very successful store
On May 15, 2001, Jobs hosted a press eventat Apple's first store, located at the Tysons Corner Center mall in Virginia near Washington,D
C
The store officially opened on May 19, along with a second store in Glendale Galleriain California
More than 7,700 people visited Apple’s first two stores in the openingweekend, spending a total of $599,000
The vast majority of media publications andanalysts thought opening Apple Stores was retail suicide
But Apple quickly proved themwrong, bypassing their competition in sales-per-square-foot, and in three years reached $1 billion in annualsales, the fastest of any retailer in history
But the explosive growth didn’t stop there,by 2006 Apple retail stores were generating $1 billion a quarter
In response to all thissuccess, Jobs said that "People haven't been willing to invest this much time and moneyor engineering in a store before
It’s not important if the customer knows that
Theyjust feel it
They feel something's a little different
” By 2011, Apple Stores in theUS were generating an average of $473,000 per employee
According to research firm RetailSails,Apple Stores ranked first among US retailers in terms of sales-per-square-foot, almostdoubling Tiffany, the second retailer on the list
And on a global level, all Apple Storeshad a combined annual revenue of $16 billion
Under the leadership of Ron Johnson, the formersenior Vice President of Retail Operations, the Apple Stores have been responsible for"turning the boring computer sales floor into a sleek playroom filled with gadgets
” With the success of Apple’s own retail stores,they re-established ties with major big box retailers like Best Buy and Staples
AuthorizedApple resellers have a dedicated store-within-a-store section, offering a distinctive Apple-styleexperience to showcase products
The relationship with Best Buy calls for the company to sendApple Solutions Consultants to train Best Buy employees to become familiar with Apple'sproduct lineup
Now Ron Johnson left Apple in 2011 to accepta CEO position at JC Penney, where he executed an extremely unsuccessful retail plan thatdropped their store sales by 32%
But that’s a story of another time
Back at Apple, TimCook began searching for a new senior Vice President of Retail Operations which tookalmost a year since they were being very careful to choose someone who was a good match forApple
It came as a surprise then, when John Browett, then CEO of Dixons, was picked asRon Johnson’s successor
Cook said, "I talked to many people and John was the best by far
I think you will be as pleased as I am
His role isn't to bring Dixons to Apple, it'sto bring Apple to an even higher level of customer service and satisfaction
” NowDixons is a consumer electronics retailer in the UK and doesn’t have a particularlygood reputation
Many people were confused why Apple chose Browett, asking, “Did heonly interview one person?” Although Cook was initially confident in his decision, thatconfidence began dwindling as Browett’s changes to Apple’s retail stores took effect
Just a couple months after taking the reigns,Browett began implementing cutbacks and layoffs in an effort to meet profit goals and encouragethe, what he considered, ”bloated” store staffs to run "leaner", despite the objectionsof retail veterans within the company
This led to store employees seeing their hourscut or even losing their job, and caused store to be understaffed
Apple spokesperson KristinHuguet eventually admitted, "Making these changes was a mistake and the changes arebeing reversed
Our employees are our most important asset and the ones who provide theworld-class service our customers deserve
” Six months after being hired, John Browettwas forced to step down and Apple began a year-long search for its next Senior VicePresident of Retail Operations
Apple’s patience was rewarded in October 2013 whenthey hired Burberry CEO Angela Ahrendts, but Apple changed the retail operations positionto Retail and Online Stores, since Apple wanted to make the online and retail shopping experiencemore seamless
Cook said, “I am thrilled that Angela will be joining our team
Sheshares our values and our focus on innovation, and she places the same strong emphasis aswe do on the customer experience
She has shown herself to be an extraordinary leaderthroughout her career and has a proven track record
” This time he was right
Ahrendtsimplemented some clever technology at Burberry to help improve the customer experience andshe was an integral part of the changes Apple made to their Apple Stores in recent years
In 2016, Angela Ahrendts and Jonathan Ivecollaborated on a new redesign of Apple Stores that was first implemented at the Union Squarein downtown San Francisco
The idea was to turn Apple Stores into "town squares", a gatheringplace that draws people in naturally and helps foster human experiences that draw peopleout of their digital bubbles
There were open spaces with touch-sensitive tables and shelvesfor product displays, and rebranded rooms for the store
"The Avenue" is the centrallocation for hardware, as well as for receiving advice from sales associates and individualswith specialized knowledge of music, creativity, apps and photography called Creative Pros
The Genius Bar became the "Genius Grove", a tree-lined area for help and support
"TheForum" features a large video screen and offers game nights, sessions with experts in creativearts, and community events
"The Boardroom" lets aspiring developers and entrepreneurslearn how to use their products to their full potential
And "The Plaza", while limitedto select locations, offers a "park-like" space outside the store featuring free Wi-Fiand occasionally hosts live concerts
There’s also "Today at Apple" educational sessions,which offers more than 60 free hands-on sessions for learning different skills using Apple’sproducts and software
The new design will eventually be adopted by every Apple storeacross the globe
So that is the history of the Apple Store,and if you want to vote for the next video topic, don’t forget to subscribe
Thanksfor watching, and I’ll see you next time
This topic won secondplace in last week’s voting poll and if you didn’t get to vote, make sure you’resubscribed, that way the voting polls will show up right in your activity feed and youcan let me know what video you’d like to see next
But before we begin I want to tell you guysabout this giveaway iMobie is doing since they were kind enough to sponsor this video
An iPad and Google Home are up for grabs and you can find a link in the description toenter the giveaway for a chance to win
They’re doing this to promote their new AnyTrans forCloud service that can manage all your cloud accounts like Google Drive and iCloud fromone application
It’s also very handy for syncing files across different cloud accountsand sending files to recipients that are too large for email
So if you want to enter thegiveaway, click the link in the description and you’ll find the directions
Now Apple’s retail stores are the most financiallysuccessful in the world, generating more than $5,500 per square foot of retail space
Butthis level of success was not anticipated by anyone back in 2001 when Steve Jobs debutedthe first Apple Store, and you may wonder why that was
Well it’s because Apple hadtried establishing a retail presence before, but it ended badly
So let’s start off byexamining why Apple’s first attempt at retail failed while their second attempt was a wildsuccess
Back in 1997, Steve Jobs returned to Appleand found the company in terrible shape, including their retail presence
For many years Applehad been establishing store-within-a-store concepts
Where a section of a retail storelike Best Buy would be dedicated to Macintosh computers
But there were some fundamentalproblems with this approach
Most retail store staff had no training or experience with Macsso they often directed customers to PCs instead
Also, the reseller’s profit margin on sellingMacs were only around 9% so they weren’t incentivized to recommend them to customers So with all these problems with the store-within-a-storeapproach, you might assume that Apple scrapped the idea and began working on their own retailstores
But that wasn’t the case
Instead, Apple continued to toy around with store-within-a-storeand focused most of their resources on building an online store
Now Apple’s decision tocreate an online store instead of improving their retail stores may sound a bit counterintuitive,but there is some backstory here
You see, the reason why Jobs was able to return toApple is because they purchased NeXT, a computer company Jobs founded shortly after being forcedout of Apple
And some of the technology developed by NeXT was used to build Dell’s successfulonline store
And when Dell’s CEO, Michael Dell, was asked how he would fix Apple, hesaid, “I'd shut it down and give the money back to the shareholders
” And this angeredJobs very much
So he assembled a team of Apple and NeXT employees to build and onlinestore that would be better than Dell’s
On November 10, 1997, Steve Jobs announcedthe online store at a press event, and said: "I guess what we want to tell you, Michael,is that with our new products and our new store and our new build-to-order manufacturing,we're coming after you, buddy
" Apple generated $16 million in revenue fromits online store in the second quarter of 1998, shortly after it launched
By 2006,Apple was generating millions in revenue a day from the online store
In fact, the onlinestore team used to compete against the retail store team to see which achieved more sales,the two were neck and neck for years, and this sent a signal to Apple that the demandfor a retail Apple Store definitely existed, they just had to figure out an approach thatworked best
Tim Cook, who joined Apple in 1998 as SeniorVice President for Worldwide Operations, announced that Apple would "cut some channel partnersthat may not be providing the buying experience Apple expects
We're not happy with everybody
”Cook cut ties with every big box retailer, including Sears, Best Buy, Circuit City, ComputerCity and Office Max to focus its retail efforts with CompUSA
Between 1997 and 2000, the numberof Mac authorized resellers dropped from 20,000 to just 11,000
At that point, Apple could focus their retailefforts on CompUSA, expecting their hands-on approach to help increase Mac sales
And whilesales did increase slightly, the "store within a store" concept still didn’t meet Apple’sexpectations, partly because the Apple section was in the lowest-traffic area of CompUSAstores
Apple added Best Buy as a second authorized reseller, but challenges still remained andMac sales never achieved the kind of numbers Apple wanted
Jobs recognized the limitations of sellingApple products through third-party retailers and began exploring ways to improve the model
Jobs believed the Apple retail program needed to fundamentally change the relationship tothe customer, and provide more control over the presentation of Apple products and theirbrand message
This new approach to retail required new ideasand a few new employees too
In 1999, Jobs personally recruited Millard Drexler, formerCEO of Gap, to serve on Apple's board of directors and the following year Jobs hired Ron Johnsonfrom Target
The retail and development teams headed by Allen Moyer from The Walt DisneyCompany then began a series of mock-ups for the Apple Store inside a warehouse near thecompany's Cupertino headquarters
But not everyone agreed on how to create agreat retail experience
For example, when Ron Johnson shared his idea of including aGenius Bar for technical support, Jobs blasted the idea
Saying, “That's so idiotic! It'llnever work! Ron, you might have the right idea, but here's the big gap: I've never metsomeone who knows technology who knows how to connect with people
They're all geeks!You can call it the Geek Bar
” Johnson replied by pointing out that manyof the Genius Bar workers would be in their 20s, and have grown up with the kind of technologythey'd be supporting
Jobs told Apple's general counsel to trademark "Genius Bar" the followingday
Although this development process didn’t always go smoothly, it led to the creationof a very successful store
On May 15, 2001, Jobs hosted a press eventat Apple's first store, located at the Tysons Corner Center mall in Virginia near Washington,D
C
The store officially opened on May 19, along with a second store in Glendale Galleriain California
More than 7,700 people visited Apple’s first two stores in the openingweekend, spending a total of $599,000
The vast majority of media publications andanalysts thought opening Apple Stores was retail suicide
But Apple quickly proved themwrong, bypassing their competition in sales-per-square-foot, and in three years reached $1 billion in annualsales, the fastest of any retailer in history
But the explosive growth didn’t stop there,by 2006 Apple retail stores were generating $1 billion a quarter
In response to all thissuccess, Jobs said that "People haven't been willing to invest this much time and moneyor engineering in a store before
It’s not important if the customer knows that
Theyjust feel it
They feel something's a little different
” By 2011, Apple Stores in theUS were generating an average of $473,000 per employee
According to research firm RetailSails,Apple Stores ranked first among US retailers in terms of sales-per-square-foot, almostdoubling Tiffany, the second retailer on the list
And on a global level, all Apple Storeshad a combined annual revenue of $16 billion
Under the leadership of Ron Johnson, the formersenior Vice President of Retail Operations, the Apple Stores have been responsible for"turning the boring computer sales floor into a sleek playroom filled with gadgets
” With the success of Apple’s own retail stores,they re-established ties with major big box retailers like Best Buy and Staples
AuthorizedApple resellers have a dedicated store-within-a-store section, offering a distinctive Apple-styleexperience to showcase products
The relationship with Best Buy calls for the company to sendApple Solutions Consultants to train Best Buy employees to become familiar with Apple'sproduct lineup
Now Ron Johnson left Apple in 2011 to accepta CEO position at JC Penney, where he executed an extremely unsuccessful retail plan thatdropped their store sales by 32%
But that’s a story of another time
Back at Apple, TimCook began searching for a new senior Vice President of Retail Operations which tookalmost a year since they were being very careful to choose someone who was a good match forApple
It came as a surprise then, when John Browett, then CEO of Dixons, was picked asRon Johnson’s successor
Cook said, "I talked to many people and John was the best by far
I think you will be as pleased as I am
His role isn't to bring Dixons to Apple, it'sto bring Apple to an even higher level of customer service and satisfaction
” NowDixons is a consumer electronics retailer in the UK and doesn’t have a particularlygood reputation
Many people were confused why Apple chose Browett, asking, “Did heonly interview one person?” Although Cook was initially confident in his decision, thatconfidence began dwindling as Browett’s changes to Apple’s retail stores took effect
Just a couple months after taking the reigns,Browett began implementing cutbacks and layoffs in an effort to meet profit goals and encouragethe, what he considered, ”bloated” store staffs to run "leaner", despite the objectionsof retail veterans within the company
This led to store employees seeing their hourscut or even losing their job, and caused store to be understaffed
Apple spokesperson KristinHuguet eventually admitted, "Making these changes was a mistake and the changes arebeing reversed
Our employees are our most important asset and the ones who provide theworld-class service our customers deserve
” Six months after being hired, John Browettwas forced to step down and Apple began a year-long search for its next Senior VicePresident of Retail Operations
Apple’s patience was rewarded in October 2013 whenthey hired Burberry CEO Angela Ahrendts, but Apple changed the retail operations positionto Retail and Online Stores, since Apple wanted to make the online and retail shopping experiencemore seamless
Cook said, “I am thrilled that Angela will be joining our team
Sheshares our values and our focus on innovation, and she places the same strong emphasis aswe do on the customer experience
She has shown herself to be an extraordinary leaderthroughout her career and has a proven track record
” This time he was right
Ahrendtsimplemented some clever technology at Burberry to help improve the customer experience andshe was an integral part of the changes Apple made to their Apple Stores in recent years
In 2016, Angela Ahrendts and Jonathan Ivecollaborated on a new redesign of Apple Stores that was first implemented at the Union Squarein downtown San Francisco
The idea was to turn Apple Stores into "town squares", a gatheringplace that draws people in naturally and helps foster human experiences that draw peopleout of their digital bubbles
There were open spaces with touch-sensitive tables and shelvesfor product displays, and rebranded rooms for the store
"The Avenue" is the centrallocation for hardware, as well as for receiving advice from sales associates and individualswith specialized knowledge of music, creativity, apps and photography called Creative Pros
The Genius Bar became the "Genius Grove", a tree-lined area for help and support
"TheForum" features a large video screen and offers game nights, sessions with experts in creativearts, and community events
"The Boardroom" lets aspiring developers and entrepreneurslearn how to use their products to their full potential
And "The Plaza", while limitedto select locations, offers a "park-like" space outside the store featuring free Wi-Fiand occasionally hosts live concerts
There’s also "Today at Apple" educational sessions,which offers more than 60 free hands-on sessions for learning different skills using Apple’sproducts and software
The new design will eventually be adopted by every Apple storeacross the globe
So that is the history of the Apple Store,and if you want to vote for the next video topic, don’t forget to subscribe
Thanksfor watching, and I’ll see you next time
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