In Depth

Apple Takes A Bite Out Of Luxury Retail

Is Apple looking to recreate its in-store retail experience? Recent moves by the electronics giant would suggest yes — and the makeover has a decidedly lux feel.

In light of the company’s addition of new high ticket price products in the physical retail environment and the increasingly significant contributions of ex-Burberry exec Angela Ahrendts as vice president of retail for the company, many eyes are on Apple to see what comes next.

As a recent article in The New York Times reminds us, before joining Apple in 2013 to much fanfare, Ahrendts was pivotal in taking Burberry online, long before many of its competitors had made moves in eCommerce. Since her arrival at Apple, she has been relatively quiet, staying out of the public eye and avoiding interacting with the press. Behind the scenes, however, Ahrendts has emerged as a fundamental player in creating a more luxury retail experience for the tech giant, spearheading a recent deal with French audio company Devialet to sell its sleek white and chrome speaker, known as the Phantom, in Apple Stores at a base price point of $1,990.

Up until now, Apple has primarily sold its higher-priced items exclusively online, saving its physical retail space for lower-priced electronic products, ranging in the hundreds of dollars.

Bringing the Phantom speaker — which will initially be sold in 14 Apple Stores — reinforces some of Ahrendts’ other recent moves to create a luxury Apple retail experience. Some of her other initiatives include private try-on appointments for the most expensive Apple Watches, reducing the numbers and variety of accessories sold in store and working with manufacturers to create special packaging for gadgets carried in Apple’s stores.

Apple is obviously hoping that Ahrendts’ strategies will have a positive impact on its growth. The company’s 463 physical retail locations account for about 12 percent of Apple’s annual $234 billion in sales, according to Jan Dawson, an analyst at Jackdaw Research. In-store revenue rose about 39 percent in the last 12 months, with Apple stores generating $5,775 per square foot — that’s more than any other retailer in the world, beating out Tiffany & Company, Coach and Movado.

Since coming aboard Apple, Ahrendts has focused on not only improving the retailer for customers but for employees as well. As the NYT story points out, she rectified an earlier decision to slash hours and benefits for employees and gave Apple’s 60,000 retail employees the ability to air their grievances and send suggestions via email. Additionally, Ahrendts creates a weekly three-minute video with updates on the retail strategy to improve communication and morale. Ahrendts has also overseen the opening of new stores in the international market, including 14 in China and Hong Kong.

The launch of the Apple Watch was another victory for Ahrendts and the team leading retail innovation at Apple. The company, which is known for creating excitement around its releases, used the launch of its first wearable technology to plant a flag definitively in the luxury accessories market.

According to GadgetFlow, Apple Watches will account for 62 percent of the wearables market this year. Starting at $10,000 and going all the way up to $17,000, the top-of-the-line Apple Watch Edition series — which includes solid gold versions — is not so much a collection of gadgets as one of tokens offering “the chance to own an Apple product that the plebes can’t afford,” wrote Will Oremus for Slate. He goes on to say that “they [consumers] aren’t paying for a device, really. They’re paying for prestige."

Apple created an exclusive in-store, try-on experience for those seeking to purchase watches from the Apple Watch Edition series. According to 9to5Mac, when a customer interested in the Apple Watch Edition enters the store, he or she embarks on a fully guided “journey,” managed by an Apple Store Expert, who has received specialized training for working with high-end clientele. These customers are given no-wait access, and their expert will spend as much as an hour with them, being careful not to rush them the way a typical customer might be hurried through the buying process in order to accommodate other appointments. These high-end customers are even given an option for at-home video conferencing rather than in-store personal setup once they’ve purchased their Apple Watch Edition.

As Oremus points out, Apple products have never come cheap. The first personal computer offered by the company, the Apple II, debuted at a base price of $1,298 in 1977, that’s roughly $5,000 in today’s dollars. The first iPod cost $399 in 2001, the equivalent of more than $500 today. Even now, iPhones and iPads cost significantly more than rival phones and tablets. But is Apple losing its way in now catering to the arguably uber-rich?

As Apple continues to add more luxury items to its in-store offerings and attempts to create a luxury retail “journey” for clientele with deep pockets and refined tastes, it will be interesting to see what the response is from its “regular” customers. This focus could pay off, especially as the retailer expands into real estate in emerging luxury markets, like China and the Middle East, but it could also create a backlash among its tech-savvy and casual technology consumers who are still willing to pay a premium (if not an astronomical sum) to own a piece of the Apple brand.

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