---

To subscribe, click here. To return to list of past issues, click here.

January 2008

The Business of Retailing!

Like many consumers, I find unique retail stores intriguing. It is equally intriguing to me in this age of me-too stores when a retail company comes along that provides a laboratory from which all of us in the business can learn. Apple's approach to creating and building a successful retail store business is as innovative as the products it sells. While there are opportunities to learn from lots of different retailers, few have been so successful in such a short period of time.

Apple's first two stores opened in May of 2001--one in Tysons Corner Mall, Virginia, and the other in Glendale Galleria in California. Soon after, the experts weighed in with their thoughts on Apple's venture into retailing. A Business Week headline at the time read "Sorry, Steve, Here's Why Apple Stores Won't Work." The Street.com, an online financial investment website, had this to say about Apple Stores, "It's desperation time in Cupertino California" (Apple headquarters). In spite of the skeptics there are now more than 200 stores in the United States and in countries around the world. By every measure these 200-plus stores are wildly successful. According to CFO Peter Oppenheimer, Apple Stores generated $1.7 billion of Apple's $9.6 billion total 2007 fourth-quarter revenue.

While $1.7 billion in sales certainly is a significant number, what I find even more impressive is the individual performance of these stores generating an average of $8.5 million during the quarter. According to Oppenheimer, the average store is seeing 14,700 visitors a week generating dollars per square foot numbers that make everyone else in the consumer electronics business look pathetic. For example, the average Best Buy store, the nation's largest electronics chain, generates sales of $370 per square foot while the average Apple Store generates an astonishing $4,032 per square foot.

Apple isn't perfect and like every other retailer, it has its critics. But it is difficult to deny Apple's success.

LESSONS TO BE LEARNED

Apple Stores provide proven ideas, strategies, and insights that can help any retail business, small or large, grow and better serve customers. The two most-asked questions by other retailers are: 1. How is it possible for Apple Stores to have grown so fast, and 2. How do the stores generate so much sales volume in locations that are mostly in the 3,000 to 4,000 square foot range.

Anyone who has ever shopped in an Apple Store knows they aren't successful because of low prices. In fact, nearly everything sold there is more expensive than comparable electronics brands sold in other electronics stores. It would be easy to attribute the amount of traffic and sales to the company's well-designed and positioned products. After all, even if you don't aspire to own an Apple computer, other Apple products such as iPods and iPhones are highly desirable to a huge portion of the population. True, the success of these stores certainly depends on Apple putting out compelling products that consumers want to buy. But great product is not the only reason the stores attract so many customers and sell so much merchandise.

The first reason I believe these stores are so successful is the environment that's been created within the store. Customers feel comfortable and are encouraged to touch everything and play with the electronic products, which are displayed for easy access. There's a story circulating about a customer who regularly visited one of the stores in New York City and was able to write a book during her many visits. Another reason for success is that a sufficient number of store associates hang around throughout the store ready and able to answer questions, demonstrate how the products work, and explain their use. While they are there to help you buy, there is never any overt or even subtle pressure to do so. The idea is to let the customer seek their own level of help. Otherwise the associates stay out of the way and let you play.

GENIUS BAR

Among my favorite and most important features in Apple Stores is the Genius Bar. The people working in this part of the store handle a wide variety of problems and situations including repairs and merchandise exchanges. And they do it with great care and consideration of the customers and their needs. Whenever possible they make repairs while the customer waits.

Since these stores are always busy, Apple makes it easy to schedule a Genius Bar appointment. Customers can go online either in the store or in their own home or office and sign up for an appointment at their local Apple store. I've done it and it works quite well.

Apple Stores place a high priority on teaching customers how to use their products. Many stores have a theatre area in which classes are held on software and other products. Newer stores have The Studio where customers can get creative help in using products to do everything from film editing to music composition to graphic design. Customers can also get individual instruction on both hardware and software, which also can be set-up by appointment.

One of the most recent changes at many Apple Stores is the elimination of point-of-sale terminals. They have been replaced by hand-held scanners that allow associates throughout the store to scan items and run customer credit cards. Customer are asked if they prefer a receipt right now or to have it sent to them by email. What this does is eliminate long waits in line while making it easier for customers to buy.

All of these things add up to a great experience, but the strategy that holds it together is a staff of friendly, knowledgeable people who give every customer as much personal attention as is wanted or needed. I've been in Apple stores from coast to coast, and there are always enough people working in the stores to serve the needs of the customers. I have yet to meet an Apple associate who didn't seem to love what he or she was doing.

Collectively these things add up to Apple's ability to sell large numbers of $300 phones, $1,800 laptops, and $25 cases for the smallest music players.

It's important to remember Apple Stores only sell Apple products and third party software, games, and accessories at full list price and full margin. They occasionally offer small discounts on discontinued or refurbished products but that's the exception, not the rule. How many retailers can make that claim? Few other retailers are willing to do what Apple does to create the kind of atmosphere where customers can hang out for as long as they want. Few other retailers provide the kind of service and services that keep customers coming back again and again. And few other retailers generate the kind of volume in their stores that Apple does month after month, year after year.

---

How about your own ZIP code?

Last August when New York City department store Saks Fifth Avenue rolled out its new shoe department, it did something that's never been done before. Like shoe departments in other upscale stores, Saks has a lot of shoes. And like other shoe departments in other upscale stores, those shoes are very expensive. But, unlike other upscale stores, this 8,500-square- foot, eighth-floor shoe department has its very own zip code: 10022-SHOE. They tell us the last four letters aren't really needed to get mail delivered to the shoe department.

The United States Postal Service says they worked with the store in what some are calling a "ground-breaking collaboration" to provide this unique designation. I think this is a really creative idea and wonderful marketing tool. But I wonder how many dollars had to change hands for this "ground-breaking collaboration" to take place!

---

The Changing Retail Climate!

With the housing crisis, higher gas prices, talk of recession, the focus on presidential politics, and general upheaval in the world, retailers are taking a hard look at the number of stores and various formats they operate and determining whether or not they want to open more stores in 2008. Macy's announced the closing of nine under-performing stores across the country. Talbots announced the closing of all 66 Talbots Kids Stores and the 12 Talbots Men's Stores they began opening a couple of years ago. Jewelry retailer Zale Corporation announced the closing of 60 unprofitable stores. Liz Claiborne announced the closing of its 54-store Sigrid Olsen chain. Pacific Sunwear will close its 154-store demo chain. And home furnishings retailer Ethan Allen will close 12 of its stores. As this is written, Dell Computer just announced the closing of all 140 of its stores and kiosks.

---

America's Best Retailers to Work For!

Every year FORTUNE magazine recognizes The 100 Best Companies to Work For in the issue that comes out in late January. Once again, this year a group of retailers have been recognized for creating great work places. At #3 on the list is Wegman's Food Markets, the wonderful New England-based food chain. Starbucks is #7. The small Northern California grocery chain Nugget Markets is #12. Whole Foods Markets is #16. Container Store is #20. Stew Leonard's is #26. QuikTrip convenience stores rank #28. REI is #34. Nordstrom is #36. And Publix Super Markets is #91. Congratulations to every one of these great retailers for understanding the importance and high priority of creating a great place to work for their associates.

According to the National Retail Federation (NRF) consumers spent an average of $164.81 on gift cards this past holiday season for a total of $27.8 billion. The NRF also says that 50.9% of those consumers who redeemed their gift cards by the second week of January spent more than the amount of the card.

As of January 1, 2008, the U.S. Census Bureau is estimating the population of the United States reached 303,146,284 people. We're going to need every one of them to visit stores and spend some money this year if 2008 is going to be better that 2007!

After another dismal quarter, Sears/Kmart is undergoing further restructuring with the announcement by Chairman Eddie Lampert that CEO Aylwin Lewis would be leaving and that he, Mr. Lampert, no longer would be involved in the day-to-day operations of the business. It was also announced that the company would be split up into separately managed divisions.

Until next month...

---

Seminars and Training Programs for Managers and Associates

Delivering performance-enhancing speeches and seminars for retailers since 1987, George jam-packs his presentations with practical, real-world information. His seminars for managers and associates teach store management skills, customer service improvement, and sales techniques. If you want to improve store productivity and profitability, we encourage you to call George Whalin. Don't wait, his calendar fills up quickly.

Topics for managers' meetings and corporate conferences:
(Click on a topic for details)

Great Store Managers Make Great Stores!

How to Find an Eagle in a Flock of Turkeys! Finding, Hiring, and Keeping the BEST Retail Employees

Customer Focused Selling

Every Customer Every Day!

For more information go to our web site or call 800-766-1908.

---

Speeches and Seminars for Retailers

As one of the nation's best-known and most popular retail speakers, George's speaking schedule includes events for retailers and consumer products manufacturers all across the country. He's added some exciting new convention and trade show topics. If you are a meeting planner or are involved with speaker selection and would like to book George for your next convention, we encourage you to call as early as possible. George's calendar fills up quickly.

Topics for conventions and trade shows:
(Click on a topic for details)

Retail Success! Increase Sales, Maximize Profits, and Wow Your Customers in the Most Competitive Marketplace in History

Into the Future! Powerful Trends Shaping the Future of Retailing

Stop, Look, Touch, and Buy: The Dynamics of Merchandising

12 Powerful Advertising Secrets Every Retailer Should Know

Power, Punch & Pizzazz! Create Advertising that Grabs Customer Attention and Sells More Merchandise

Customer-Direct Marketing: Increase Retail Sales with High-Impact Direct Mail & E-Mail

Double Your Sales and Triple Your Profits with High-Impact Marketing and Promotions!

Competition? What Competition! Standing Out in Today's Competitive Retail Marketplace

How to Find an Eagle in a Flock of Turkeys! Finding, Hiring, and Keeping the BEST Retail Employees

Every Customer Every Day!

For more information go to our web site or call 800-766-1908.

---

Resources for Retailers

George Whalin's book RETAIL SUCCESS! is now in its ninth printing. A number of consumer products manufacturers have purchased the book for their retailer customers. Retailers have provided copies for their managers who regularly refer to portions of the book in their managers' meetings. And managers are referring to the book in their daily store meetings. If you haven't purchased a copy yet, what are you waiting for? For multiple copies, call us for volume pricing. For individual copies, there are also some very good deals to be had at amazon.

Go to our web site today where you'll find several other books in addition to RETAIL SUCCESS that George recommends. Check it out often, he keeps adding to the list.

---

If you have an opinion or thoughts about any of the topics posted, I invite you to comment at retailerblog.com It's easy to do. And if you have a topic you would like to see addressed on the blog, send me an e-mail at george@whalinonretail.com.

---

In addition to speeches and seminars, George also consults with retailers helping them improve the operation of their businesses. His consulting services include helping retailers with strategic planning issues, marketplace positioning, merchandising and store layouts, developing results-driven marketing and advertising programs, personnel management, and improving store performance. If you need solid, practical, proven insights and ideas to grow and improve your business, call us toll-free at (800) 766-1908.

---

We encourage you to pass this publication along to your associates and colleagues. If all or any portion of this newsletter is reproduced in another publication, attribution should read as follows: Copyright 2008. Reprinted with permission from George Whalin's Retail Management E-Letter. To occasionally reprint portions of this newsletter one time, no express permission is required. To reprint in more than one venue or multiple articles, please contact us at 800-766-1908 or info@whalinonretail.com.

---

To subscribe, click here. To return to list of past issues, click here.

---