Despite the fact that the Apple retail network failed in the first three years of its existence, but due to its ability to subsidize the market entry and some innovative approaches, today it has reached a quite positive result. No matter at which point of the planet someone occurs, entering an Apple Store, he/she will always get the highest quality of the service, which the big manufacturers’ retail stores usually envy. The company provides an opportunity for the users to explore and find the answers concerning the innovative technologies, without any pressure on the prospective buyer. This and some other leading changes, which the Apple Inc. adopted and implemented, allowed it to compete properly with its greatest rivals, such as Microsoft Company. Thus, to understand the reasons for the Apple retail stores’ success one should observe the leading changes in the retail industry, which occurred in recent years, and those innovative approaches the company realized in order to go with the times and be successful.
The Leading Changes in the Retail Industry of the USA in the Recent Years
History of retail dates back to the remote past. Since the birth of material relations, people used to exchange various goods and services. The first form of these relationships was trading in market places. Today, the retail industry is an outstanding component of the US economy and is a part of the wider service sector. There is a variety of retailers’ types. The major groups among them are the large mass network (Wal-Mart, Target, Costco), department stores (Macy’s, Kohl’s), the sellers of clothing and footwear (TJX, Gap), food (Kroger, Safeway), medicines (Walgreen, CVS Caremark ), electronics (Best Buy), goods for home (Home Depot, Lowe’s), online retailers (Amazon), and so on (Levy, Weitz, & Grewal, 2013). Currently, the retail sales industry is undergoing a major transformation, and the growth of the economy promises to change the situation concerning the temporary decline in sales, caused by the crisis. The sales process itself is changing so fast that it can call into a question the concept of “retailer.” Thus, the foremost interesting trends in the industry are the following.
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The Growth of Online Sales
The traditional sale in the stores started giving away to the distribution through the online channels. As a result, the Internet giant Amazon entered the top 10 of the retailers in the United States, starting with the turnover of about $4 billion in 2002, which was an impressive figure but was still nothing more than a drop in the bucket of the total US market (“Amazon.Com, Inc”, 2004). Moreover, the traditional players hurry up to penetrate into this area. Thus, according to the results of 2013, the online sales of Wal-Mart rose up to 30%, exceeding the corresponding figure dynamics of Amazon (+ 20%) (Mac, 2016). In 2012, online retailers accounted for over 10% of the US retail market and more than 13% – in the United Kingdom, which was the world leader according to this indicator at that period. However, online commerce in the United States reached particular success in the winter of 2014 on a background of the extremely cold season, which held the buyers at home. By 2022, according to forecasts of the Economist Intelligence Unit, the online retailers will account for about a third of the trade market of these countries.
The Development of Mobiles Technologies
E-commerce has been developing for more than one year. However, a new trend of the purchase with the usage of smartphones and tablets has recently occurred. Therefore, on the “Cyber Monday” of 2013, mobile shopping accounted for about 17% of the total purchases. The figure was not impressive, though it was 55% higher in comparison with the same period of 2012.
The promising trend is the creation of so-called “electronic wallets”. In 2012, more than a dozen of the major US retailers, including Wal-Mart, Target, 7-Eleven, and Sunoco, announced the development of their mobile payment system (“Retail 2022: How the Economist Intelligence Unit sees the retail landscape changing over the next decade,” 2012). This alliance of the retailers called it the Merchant Customer Exchange (MCX). The mobile payment technology was based on the special applications, which any user can install on his smartphone. If he/she pays for the purchase, the application will provide a special code, which one can read at the cash register. In 2013, Amazon launched a more universal payment system (Mac, 2016). The service, which is a competitor for PayPal by eBay, allows paying bills subscriptions to the magazines and newspapers, providing cash transfers, releasing the payment for mobile communications, and other services and goods on the Internet.
Thus, the emergence of smartphones, trading applications, viral marketing, and promotion of the goods through social networks gave a powerful impetus to the development of e-commerce. Moreover, the most important factor here was the ability for the consumer to compare prices and choose the lowest. For instance, Groupon’s success (more as a phenomenon rather than as a business model) demonstrated that the low price was the best way to lure the consumers to the Internet (“Retail 2022: How the Economist Intelligence Unit sees the retail landscape changing over the next decade,” 2012). And the skepticism of those who believed that for certain groups of goods online sales are not suitable due to the fact that they need to be tested before purchasing (food, clothing), was refuted by the successful recent examples of the individual companies. By 2022, according to the forecasts of the Economist Intelligence Unit, one will have been observed the consolidation of the existing e-commerce concepts: special applications will automatically search for an offer with the best price and enter it to the user’s cart (“Retail 2022: How the Economist Intelligence Unit sees the retail landscape changing over the next decade,” 2012). The technologies, which promote the commission of the impulse purchases on the Internet, will experience considerable development.
The Personalization of Sales
The concept of the “perfect product” for the person, who makes the decision to buy something, is too extensible. The ideal good for each specific person cannot be considered ideal for all people and to all the firms, which intended to provide market segment processing. Hence, the active collection of information about the preferences of a particular user becomes one of the innovations. It is necessary for the development of individual product offerings and discounts (Bedgood, 2015). For that purpose, the companies use various technologies for obtaining and processing the data, including the analysis of the Internet content. The traditional retailers try to attract customers’ attention to the stores via various social activities, interesting for the specific audience as well.
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The Buyers’ Interest in the Small Shops
One of the latest trends in the United States became the buyers’ interest in the small shops. This tendency stays in contradiction with online expansion. However, such trends exist, causing some negative impact on the performance of the largest mall operators, such as Wal-Mart. This situation can be associated with the desire of the consumers to purchase fresh food within the walking distance (“Retail 2022: How the Economist Intelligence Unit sees the retail landscape changing over the next decade,” 2012).
Gradually, the retail stores in the United States are moving toward becoming the centers of the social life, not only providing the products but also tendering the number of services (for instance, reference service, free parking, cafes, restaurants, repair services, refueling, accommodation, loans, banking services, recreation room, childcare and counseling services). In the future, it will support the traditional retail model and attract the customers to the stores (“Retail 2022: How the Economist Intelligence Unit sees the retail landscape changing over the next decade,” 2012).
“Internet of Things” and its Influence on the Purchases
One of the trends of the future may become the “Internet of things” – the new world order, in which every house and every system of personal usage will be connected to each other and controlled by a smart phone (O’Reilly, 2014). Today there is no doubt that the “Internet of Things” together with mobile communications, cloud computing, big data and social networking developments have enormous potential to change the economics, social institutions and lives of the users. There are two main directions in the development of the “Internet of things”, which are traditionally referred as industrial and human. For example, Industrial Internet of Things (IIoT) requires a deep understanding of the system and the ability to make systems’ fragments, created in various periods, to work together. Contrary to that, Human Internet of Things (HIoT) prefers to rely on the rapid development of the prototypes, which future success is not granted, but is based on the positive user experience and attractive product design focusing on the patterns of the industry leaders, Apple and Microsoft (O’Reilly, 2014). From the buyer’s point of view, it means that a single buying decision influences the other purchase one. At some moment, the users will find out that they do not just buy the specific set of objects, but invest money into the system of the interconnected devices, coherently working with the purpose to organize, simplify and improve their lives.
Thus, one of the retail stores, which achieved great results, using some of the modern trends in the retailing, is the Apple Store.
Preconditions for the Creation of the Network of the Apple Stores
In the late 1990s, Apple Inc. was selling its products under the mediation of Sears and CompUSA networks (Swanson, 2015). In fact, the sales were low because the position of the Apple products failed as the devices from the other manufacturers generally overshadowed them. It could not provide brand promotion. Thus, the company leaders decided to open the stores, which provided only the sales of Apple brand (Swanson, 2015).
At that time, Apple strategy directed on the opening of the large stores for the demonstration of a small number of gadgets seemed too ambitious for a still-growing brand. The detractors’ confidence in the collapse of such a project was fueled by the decline of the other producers in the field of consumer electronics. However, the laptop manufacturer Gateway shut the whole network of 188 retail stores in 2004 (Swanson, 2015). The CompUSA network, where Apple sold its products before opening the Apple Stores, planned to curtail its business in 2007. After opening the first Apple Store in Tysons Corner (VA) critics categorically asserted that the focus of the manufacturer on a small number of products and perfectionism regarding their aesthetic component would not allow turning around the sales in the traditional format (Swanson, 2015). Moreover, the company executives always perceived the retail stores as something more than the actual retail outlets. It led this trade network to the glaring success.
Thus, before opening its first store, Apple tested 34 different ideas with the outlets in one of the huge electronics stores in Japan (Swanson, 2015). The purpose of that was to find the most optimal solution for the company from Cupertino. Then Apple Store prototype was built in one of the storage areas in the campus simply for testing the retail ideas under the conditions close to real (Swanson, 2015). By the way, in scarcely designed Apple Stores the designers provided enough space for the buyers to play with the gadgets.
The Reasons for the Popularity of the Apple Stores
The main advantages of Apple Store in comparison with the other retail networks became the attractive interior, quality product, friendly staff, and the availability of racks with “geniuses”. The only negative factor is the high prices. The huge popularity of the Apple Stores one can explain not with the usage of the unknown magic of the company.
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The Advantageous Locations and Attractive Design as one of the Reasons for the Apple Stores Popularity
First, the Apple Stores have the undoubtedly advantageous location of the buildings, which are either beautifully restored significant architectural monuments, or constructed masterpieces of modern architecture. For instance, one can observe the Apple Store, opened in spring of 2016 in San Francisco (Apple Press Info, 2016). The building is unique: it links the most famous square of San Francisco with the renovated shopping center on the north side, forming a beautiful place for meeting and communication. On the territory of the decorated shopping center, there are the benches, outdoor Wi-Fi, the “green wall”, which use to be the background for the regular live music events. The store is 100% powered by renewable energy sources, including solar panels installed on the roof of the building (Apple Press Info, 2016). Observing the Apple Stores all over the world one can certainly say that the designers and the company’s leaders understand the significant role of the architecture in society.
Organization of Space in the Apple Store
Second, there are strictly spelled out instructions, which provide the organization of space and people’s activity in the shop. Thus, the modern stores are divided into several zones, which have the own name and some purposes. For instance, the designers created the “Avenue” zone according to the image of the glass showcases along the boulevards, the formulation of which varies depending on the season (Apple Press Info, 2016). The walls of the “Avenue” are interactive showcases, on which the Apple products and services, from music and art to the applications and photos revived. The stores of the company have a new team of specialists, so-called Creative Pro, who will give professional advice concerning the products and services for creativity. On the “Avenue” displays, the customers are able to see a selection of the accessories produced by the other manufacturers and labeled “Available in Apple’s” (Apple Press Info, 2016).
In all traditional Apple Stores, there is a Genius Bar, which after decorating the area with the flowerbeds with the trees and patenting this innovation, changed its name to the Genius Grove. In these cozy spaces lined with stylish beds with the live trees, the specialists – Geniuses – will support the customers, who will experience the problems with the company’s products (Apple Press Info, 2016).
The zone “Forum” is a notable meeting place near the video wall of the 6K format. It hosts the events of the series “Apple Today”, which acquaint the local population with the most gifted and famous artists, musicians, photographers, developers, gamers, and entrepreneurs to inspire the customers with the new developments in their favorite business (Apple Press Info, 2016). The program “Apple Today” includes the year-round programs for children, monthly events for teachers, the courses for beginners and experienced developers, creative meetings with local experts on art, “Night of Games” with the editors of App Store, and so on. “Forum” including the video wall is a place where one can learn something new, for example, how to make movies presented in iTunes or to watch exclusive premieres of the new music and videos from the Apple Music.
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Centralization of the Apple Stores
The company obtains the special software that helps to carry out the organization of the space in one or another Apple Store (Campbell, 2013). It includes a map, in which one, using the standard building blocks, one can create a specific scheme of the certain Apple Store. All information of the program is stored on the central server. Thus, the company can remotely control the organization of the space in all of its stores (Campbell, 2013).
All devices in the stores have a connection to the same server to ensure the continuous providence of the actual information in the stores. For example, if the company’s marketing department launches a new promotional video of the iPad 4, it will appear almost simultaneously in all the stores of the incorporation. Another example is the emergence of critical information about a price change of the particular product in all the company’s stores at the same time. The purpose of all of this centralization is the following (Campbell, 2013). First, the visitor will be able to feel constantly the stability of the Apple Company. Second, the buyer will have an opportunity to receive the equally high level of service anywhere in the world.
Certainly, in addition to the central server existence, the devices themselves, located in the store, play a tremendous role. The buyer, who came to the store, can use iPad to get acquainted with Apple appliances. The store employee can use the same iPad to view the currently available products or to complete a purchase. He can do that through the special gestures, which transfer the device into a new operating mode, or due to the additional devices, such as a device for reading of the credit cards built-in the iPhone Case.
The Specialized Personnel Training and the Rules for its Operation
In its executives, Apple described the subtleties of the store employee’s behavior up to the words, which he or she should and should not say during the conversation with the client. It is curious that for the Apple Store employee his psychological qualities are paramount and technical education of the HR managers is a secondary issue (Biddle, 2012). Apple made a bet on the customer’s emotions and the communication process of the staff with the clients. After all, a happy buyer is a person, who bought the thing, which he/she wanted to buy. Here one can observe the personalization of the sales and the personal approach to each client.
Each Apple Store employee has to pass the 14-days course of education and training, during which he learns to use the diagnostic services, component isolation and sincerely express sympathy for people (Biddle, 2012). The main part of the course – “Working Genius” and “Nature of Genius” – teaches the employee to respond to the buyer questions in accordance with the predefined plan. During his work he/she uses to spell the phrases like “I understand you”, “respect”, “suggest”, “sympathize”, and have to communicate with the client in the way that after moving away from the Apple Store, the customer will be pleased with the visit of the store, or take away the shiny new MacBook or iPhone. The term “empathy” one can find on every manual page for the Apple Store employees (Biddle, 2012). Its drafters implied that the customer and seller should pass all the way starting from the entrance and ending at the cash register.
One of the sections of the manual for the Apple Store Genius Bar staff is dedicated to the specifics of non-verbal communication with the customer (Biddle, 2012). Here one can read about the good and improper gestures by which one can make a conclusion about the identity of the client. For example, if a man is scratching his nose, so he is hiding something, and from the other hand, if the customer is smiling, it signals about his openness in communication.
Denying something is a big taboo for the Genius Bar employee (Biddle, 2012). The customer is always right, even if he/she is wrong. Thus, the counselors have not to fix the customers mistakes, but simply to give their point of view. For example, telling the customer about his/her mistakes the Apple Store employee has to start with the words “it turns out.” It gives the customer a false sense of his/her remaining faithful to his principles, but in fact, he/she has been recently corrected in an extremely subtle way.
The Comparison of the Apple Store and the Microsoft Store as the Greatest Competitors in the Sphere of the Custom Electronics
If one compares Apple Inc. not with the direct competitors, but with the world’s largest retailers, the company from Cupertino certainly will concede the giants like Wal-Mart, Carrefour S.A., Tesco, and so on. However, the first Wal-Mart stores were opened in 1962, Carrefour S.A. – in 1957, Tesco – in 1929. Apple opened its first company store in 2001 and since then it achieved incredible results (Swanson, 2015). If one observes the spread geography of Apple Stores, he would mention the key markets won by the company. First, the Apple trade network covered two coasts of the Northern America, and then it started the expansion into Asia and Europe. Australia was “conquered” relatively recently – in 2008. Thus, at the moment the network of the branded Apple Stores already includes more than 400 sale points, which brought about 7 billion dollars in the last fiscal quarter of 2014 (Swanson, 2015). According to the analysts, in the last three months of 2014, about 100 million visitors attended the shops, which makes about 18 thousand people a week (Swanson, 2015). Of course, direct competitors cannot even dream about so brilliant success. Considering the sales number in mono-brand stores of Microsoft, which is approximately the same level company, is far from Apple indicators.
One should admit the similarities and differences between the Apple and Microsoft stores in order to understand what allows the Apple Company to reach greater success in retail sales than its competitor’s ones. To do this, one can observe the Microsoft Store on 5th Avenue in New York, opened in 2015 (Lashinsky, 2015). Its design is vociferously rich with a great abundance of glass and video panels. However, from the architectural point of view, it looks like just a store that advertises its products on every piece of the free surface. It automatically kills all the intrigue that the buyer or a conventional passer can see inside of it. At the same time, the Apple Stores contain only the company logo on the façade, and the buildings themselves have a mysterious shape similar to a museum or something surreal and attract even ordinary onlookers to go inside and look around.
The interior of Microsoft Store is very spacious and bright. On the trading floor, there are several wooden tables with the products of the company (Lashinsky, 2015). For the technical support, so-called Answer Desk, there is a separate corner aside, its decoration, and the appointment is similar to the Genius Bar in the Apple Store. On the second floor of the Microsoft Store, there is a large play section, hall for presentations, and plenty of different software for the sale (Lashinsky, 2015).
It is curious that Microsoft representatives did not curry favor and confirmed some “certain similarity” in the design (Lashinsky, 2015). However, none of the Apple Stores is still equipped with the interactive panels on the walls. Each visitor of the corporate Microsoft store has the ability to freely enjoy the opportunities of the new Xbox One, hundreds of game titles, and even experience the charm of the VR-technology (Lashinsky, 2015). However, even these innovations did not help Microsoft to increase the attendance of its retail stores.
The main difference between the retail stores of Apple and Microsoft is the following. The Apple Store is not mostly the shopping center, but the company’s heart of the communication with the customers. Regular events, which take place in the Apple Stores, aim not only to advertise their brand but to provide the training for various population groups or some other specific social events as well. It attracts a large number of people into the store buildings, and only then, the quality of the products offered within the retail store with the charm of the employees does the job.
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Today, the retail industry is the foremost component of the US economy and is a part of the wider service sector. Currently, the retail sales industry is undergoing a major transformation, and the growth of the economy promises to change the situation concerning the temporary decline in sales, caused by the crisis. Thus, the leading changes, which occurred in the US retail industry in the recent years, were the growth of online sales, development of mobile technologies for the retaining sales, personalization of the sales, and increase of the buyers’ interest in the small shops and the emergence of the “Internet of Things”, which influenced the formation of the purchases in general.
Due to the poor brand promotion, Apple started the strategy directed on the opening of the large stores for the demonstration of a small number of gadgets, which seemed to be too ambitious for a still-growing brand. The detractors expected the collapse of that project because the other producers in the field of consumer electronics had to decline the same ones. However, innovative approaches of Apple concerning this issue, like arranging of the Genius Bars, which was the consulting center for the Apple users, usage of the advanced Internet, and smartphone technologies allowed the company to reach the great success in the retail sales.
However, providing the same services was not enough for the Microsoft Company to reach the same number of retail sales as Apple did. I think that the main difference between the retail stores of Apple and Microsoft, which ensures the success of the first company, is the fact that the Apple Store is not mostly the shopping center, but it puts the communication with the customers in the first place. Regular events, which take place in the Apple Stores, are directed not only to advertise their brand but to organize the training for various population groups or some other specific social events as well. At first, it attracts a large number of people into the store buildings, and only then, the quality of the products, comfortable communication offered within the retail store with the charm of the employees, does the magic of selling the products. Thus, only the full complex of the leading trends in the retail network can provide the entire success in this industry.