A week before Apple released the iPhone X, its most important new product launch in years, CEO Tim Cook flew hundred of miles away to the middle of the country.
He made the trip to attend the opening of a new “flagship” Apple store in Chicago.
The Chicago store showcased the new design Apple is rolling out across its network of retail outlets, a massive revamp that includes bigger spaces with sweeping balconies and leather seating balls, an upgraded title (retail stores are now “Apple’s biggest product”) and opening day fanfare reminiscent of an iPhone launch.
The store makeovers are great fodder for press releases that tout “town squares” and space for community building.
But the store redesigns also serve a more critical function, by providing a much-needed overhaul of Apple’s customer support system, the Genius Bar — a signature feature of Apple’s retail business that has struggled to keep up with the times. According to numerous blue-shirted “geniuses” that Business Insider spoke to, a rising tide of store visitors and on-the-job performance expectations have pushed the system to the breaking point.
“The customer service model is about ready to pop,” says one Apple “genius” who has worked at the company for seven years and requested anonymity because employees are not permitted to talk to the press. “That is the issue and the employees are feeling it,” the person says.
Apple’s effort to ease the strain on its stores and its tech support system is especially important as ecommerce is changing the face of retail in the United States. Because it’s more convenient to order an iPhone from retailers online, Apple needs to lean on the other advantages physical stores offer more than at any time since it opened its retail stores, say analysts.
“The thing you’re really want to go after is the experience, that’s the thing that’s going to set you apart, because you can just buy a product online,” says Above Avalon analyst Neil Cybart. “The changes reflect where retail is headed, it’s not just selling a product, it’s about going beyond the product.”
AppleWhen Apple first opened its retail stores in 2001, the company was still a niche player with a less than 4% share of the US PC market. Today, Apple is the world’s most valuable company, with a staggering $900 billion market cap, thanks in large part to the success of the iPhone.
Apple makes over $5000 per square foot, according to an Emarketer estimate. That’s higher than any other retailer, even luxury stores like Tiffany’s, says Nicholas Pitsis, research analyst at Emarketer. That kind of efficiency — and the foot traffic that Apple draws — means that malls want to attract Apple as an “anchor,” Pitsis said.
With all that success comes crowds.
Apple now has over 85 million iPhone users in the United States, according to a recent estimate. That means more Apple users per store than ever before, and more people walking through the doors with everything from cracked phone screens to problems logging into iTunes.
Retail employees notice that the stores are packed. One says that his store can’t keep up. “We haven’t been able to keep up with traffic since I started 8 years ago,” a senior Genius at a small store in the Midwest that has yet to be redesigned told Business Insider. “I wouldn’t even walk in the store because of how crowded it gets. During Christmas [season] you can hardly move.”
Even consumers who purchased their phones through their wireless carriers now increasingly turn to the Apple store as their de-facto service center. In some cases, the arrangement is deliberate: T-Mobile earlier this year started bundling AppleCare, Apple’s warranty and service program, into its own device insurance program, funneling its own customers to Apple for service.
“The carriers have always kind of seen the support side as a cost they’d rather not carry at retail and done their best in last few years to shift support to online and phone channels, and get it out of stores,” analyst Jan Dawson said. “I think Apple is very welcoming, they encourage you to come into their stores and ask for help, it’s quite different in that sense from anything else that’s out there.”
“Get them in and out as fast as possible”
Cramer’s ShirtOne Genius who worked on the West Coast said that he felt the pressure to service an increasing number of customers, and received pressure from his supervisors to get people out of the store quickly, especially if he took more than the 10 minutes allotted for an iPhone appointment.
“It’s turning into a reality that the system Apple has in place is not able to keep up with the volume of people and demand,” he said.
Apple retail employees use a system called Net Promoter for People, or “NPP,” and the number of customers an Apple employee helps per day is tracked.”We’re challenged on those metrics to get them in and out of fast as possible,” he continued. The elimination of perks, like flying newly-hired Geniuses to Apple’s Cupertino headquarters for training, has also lessened the job’s allure.
“For the past five years they’ve been trying to keep up with the ‘victim of their own success’ problem, switching now to larger stores to accommodate more techs. More Geniuses. That’s been a trend that’s very clear,” Loup Ventures founder Gene Munster said.
In 2016, Apple introduced a new repair role, named Technical Expert, which can do iPhone repairs and replacements for customers, but can’t repair Macs. The new Technical Expert roles seem to be doing a better job accommodating people who walk in with broken iPhones without appointments.
Not just about selling products
AppleWith the new store design, Apple is rethinking the concept of the Genius Bar itself. Although new stores still have the traditional scheduled appointments for customers, the system has shifted to what Apple calls the “Genius Grove,” in which roving techs can service customers in a large tree-lined part of the store.
“You see a lot of design changes, moving away from a Genius Bar, it really is basically the whole store, you just kind of walk in and you don’t wait in one specific spot, you just talk to anybody,” Cybart said. “The goal is kind of to answer your question, take your product from you, and have you move on and not have lines.”
If it works as intended, the process will be a win for both customers and Apple staffers.
The redesigns are so important that Apple appears to have slowed its retail expansion in the US to focus on them. Apple’s total number of retail stores in the US was flat at 270 stores in Apple’s fiscal 2017 year, the first year without new stores in at least three years according to research firm eMarketer. (The new Chicago store opened in Apple’s fiscal 2018).
And Apple is trying to make the most of its existing space, adding square footage to alleviate the overcrowding.
“They actually expand the literal footprint of their stores. And so they’ve been remodeling some of the smaller stores to make it almost twice as large. It’s not necessary just to fit more product in, it’s just to really have people move around,” Cybart said.
The idea is to let customers do things in-store that aren’t possible to do online, whether that’s getting a technical problem solved or taking the free photography and programming classes Apple offers in its stores.
Apple’s Cook said at the Chicago store opening that selling products is only a “small part” of what its spaces are for. Now it’s up to the new retail spaces to prove it.