Reports persist of Apple Retail Store budget cuts, emphasis on revenue over customer satisfaction

“Despite a public acknowledgement by Apple that recent retail store staffing changes were ‘a mistake’ and have been reversed, store employees still haven’t received an official explanation of the changes, and signs persist of a continuing focus on revenues and profit instead of customer satisfaction,” Gary Allen reports for ifoAppleStore. “Sources say employee performance standards have changed to emphasize the employee sales functions, more small products will be stocked at the stores, and that several budget categories have been slashed, including for store maintenance. All the while, morale continues to drift lower among many retail store employees.”

Apple Senior VP Retail: John Browett“Last month Sr. VP Retail John Browett made several staffing changes that included laying off probationary employees, reducing hours and limiting overtime. However, after the changes became public and generated sharp criticism from employees and Apple aficionados, The Wall Street Journal reported that Browett reversed the changes and instructed leadership teams to tell employees, ‘We messed up,'” Allen reports. “He also told his team to stress that no one had been laid off, and that new hires were being made. But despite Browett’s denial, all the sources to IFO were unanimous that employees had indeed been laid off, fired, assigned no hours or otherwise made unemployed by Apple. The sources also say they’ve not heard one word from Browett about the incident, not even an acknowledgement of Apple’s public statement.”

Allen reports, “In 2009, Jobs took six months of medical leave and put Tim Cook in charge of the company, including the retail stores. Cook is primarily an ‘operations guy,’ sources explain, and his natural focus is revenues and profits, not customers. While Jobs was away, Cook and chief financial officer Peter Oppenheimer began to confront Johnson on his customer-centric retail philosophy—both felt the stores didn’t generate enough revenues to justify operating expenses. According to accounts, Cook pushed Johnson ‘quite hard’ about how other channels were selling more Mac’s per-capita than the retail stores. Without Jobs’ support, Johnson found it was nearly impossible to keep Cook and Oppenheimer from switching the chain’s primary purpose from a superior experience to revenues. Last year when Cook became the permanent CEO, he hired Browett from UK-based Dixons to head the retail chain. ”

Read more in the full article here.

MacDailyNews Take: Sounds like Johnson had a good idea of what was coming, which likely contributed to his leaving Apple four months prior to Jobs’ death. Why watch your greatest achievement, the engine that drives much of Apple’s success, be filled with cheap gas and run without maintenance until it seizes?

Make no mistake, if these reports are true, this sort of misguided “thinking,” from Tim Cook on down, will kill the golden goose. (See this related article, also from today: NPD: Nearly 60% of Apple product owners more likely to purchase another Apple device after positive Genius Bar experience.)

Apple shareholders should be very concerned. We suggest that concerned shareholders email CEO Tim Cook directly and ask him what exactly is going on with Apple Retail: tcook@apple.com

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Related articles:
NPD: Nearly 60% of Apple product owners more likely to purchase another Apple device after positive Genius Bar experience – August 28, 2012
After being Browettized, Apple Retail touts numbers – August 20, 2012
Apple newbie John Browett brings Dixons to Apple Retail Stores – August 17, 2012
Dear Tim Cook: Apple’s retail focus should be on delighting customers, not generating cash – August 16, 2012
Apple Retail Store chief Browett: ‘We messed up’ with Dixons-eque staffing gamble; refutes layoffs – August 16, 2012
Apple retail chief Browett to get $56 million golden hello – May 27, 2012
Apple grants 100,000 shares to new retail head John Browett – April 25, 2012
Tim Cook emails UK customer: John Browett’s role isn’t to bring Dixons to Apple Retail – February 1, 2012
Eyebrows raised over Apple’s hiring of Dixons CEO to run Apple Retail Stores – January 31, 2012
Apple hires Dixons CEO John Browett as new retail chief – January 31, 2012

Apple Inc.: The most profitable retailer in America – August 15, 2012
Apple’s retail juggernaut is magical and revolutionary in its own right – May 25, 2011
Apple Retail Stores hit 10th anniversary (with video of Steve Jobs’ tour of 1st store) – May 18, 2011
Apple Store: ‘The best damn retail experience in America!’ – December 2, 2010
Apple’s retail stores generate huge sales – December 27, 2007
Piper Jaffray finds ‘gravitational pull’ at Apple Retail Stores – November 26, 2007
Apple thinks different with cash register-less retail stores that bring in billions – November 23, 2007
Apple makes retail seem ridiculously easy – May 29, 2007
How Apple’s Steve Jobs is revolutionizing Manhattan retail – May 08, 2007
Fortune: Apple Inc. is America’s best retailer – March 08, 2007
How Apple Retail Stores beat Best Buy, Neiman Marcus, and Tiffany – December 19, 2006

62 Comments

  1. Just sent this:

    Mr. Cook,

    I am very concerned with the current direction of Apple retail store operations. What drew me to Apple was the customer focus over profits, customer first, profits follow.
      I have frankly become an Apple evangelist and a big part of that is telling friends about the great shopping experience at Apple stores.
      I hated the pushy, inept, warranty waving salespeople at Best Buy, et al. I understand you are in business to make money, (I am a small shareholder), but please don’t let the bean counters and sales bozos destroy the Apple Core, customer delight.

    Thank you,

    …………..,
    Sent from my iPhone

    1. Dear Jax,

      I read your mail with glee and delight, not because I enjoy reading critical material from our customers, but joy at the sight that we’re saving $1,000 a month per store by instituting these procedures introduced by our head of retail, the magnificent John Browett, none other than the new Jesus Christ of Apple.

      Not very sincerely yours,

      Cook the Mook

    2. Dear Mr. Jax44. I understand your concern, please rest assured that Apple is focused on those concerns and have taken every necessary step to remain the best customer experience in retail. The vicious rumors are just that, rumors; quite similar to those proffered by the Obama crowd about the Republicans wanting to throw grandma off a cliff. Apple will continue to grow, unless we become a socialist nation under the current administration.

      1. Jean: What evidence do you have that R(money)’s Medicare voucher system would NOT let those die that do not have the financial wherewithal to get insurance and pay for their own care? That is PRECISELY the effect of what R(money)’s plan proposes! Survival of the richest.

        1. @WhitIV,
          Anyone with a “whit” of intelligence would understand that the Romney plan would NOT require future Medicare beneficiaries to pay ONE DIME more toward their medical care if they don’t wish to. The amount provided to future retirees would be equal to the cost of the SECOND least expensive private option in an given region that meets all of the Medicare benefit standards. So, seniors would have at least TWO private options that require them to spend $0 extra out of their pocket. In addition, they would also maintain the option to stick with the current Medicare fee-for-service “public option”. This SAME market-based approach has had great results for the current Medicare prescription drug program, with costs 40% below those initially projected by the non-partisan CBO as well as high satisfaction among retirees. It is FAR preferable to the Medicare ration board approach included in President Obama’s health care reform legislation (“Obamacare”), which would affect CURRENT seniors as well as future ones.

        1. Kaplanmike – you are exactly correct, Jean never should have posted her political comment, and I never should have taken the bait and responded to it. Not here. I apologize.

      2. It’s no more rumor about tossing Grandma (who, in my case, would be my mother, an 85 year old dynamo that does more for her community in a week than the current crop of Republicans that get any air time could accomplish in 4 years — that would be the last 4 years, and probably an apt prophesy for the next 4, whether they gain the White House or not. The only thing I’ve seen from the conservatives in this country in the past several years has been obstructionism, defamatory and divisive rhetoric and pushing a conservative Christian agenda wherever they don’t like what’s happening. A slightly less hateful, but more damaging form of Rev. Fred Phelps and the Westboro Baptist Church.

  2. Apple Stores do not exist in isolation – they are part of the whole that is Apple and the Apple experience. To think of the retail stores as being like Target or Walmart is wrongheaded and ill-advised.

    I’ve always trusted Apple Store employees to help potential customers find the exact solution to the problems they need to solve, i.e., I felt totally comfortable telling friends / acquaintances to visit the Apple Store and find employees who’ll do what they can to find out what sort of hardware / software they’ll need to do what they want to do and not have some “sales guy” upselling and bullshitting them into buying stuff they don’t need.

    As a long-time Apple customer (since ’89) and AAPL stockholder for about five years, these stories are indeed worrisome.

    1. They are simply the worst kinds of stories to hear about Apple post Steve Jobs. Apple turning into a nickel and diming number crunching accountant lead profit seeker, instead of a customer focused, delight employees, customers and then stock holders all at the same time.

  3. When I visited the store in Munich, it was a crowded place I wanted to leave as soon als possible. I had to make my way through the crowds, got my iPad cover and headed onto the street again, happy about having got away from that place. I prefer almost any certfied Apple resaler to that Apple store.

  4. They’ve got it all wrong. It isn’t a retail store, it’s The Apple Experience Store. Sales are a side benefit of the superior and remarkable service experience customers have there. Anyone can sell a computer, but it takes dedication to make a life long customer. Please don’t forget that, Apple.

      1. Nah I don’t think Cook, unlike Jobs, is the kind of guy to fire someone without a second chance. Browett got a slap on the wrist and was forced to undo all he did and say to his staff “We messed up” which means “I messed up”.

      2. Absolutely. If it wasn’t approved by Cook it wouldn’t be happening. He is the CEO. In a company run as tightly as Apple, the CEO controls something as important as how the retail stores are operated. This is a big deal. Some people may try to act like it isn’t but it is. I agree with the post from someone stating that Ron Johnson saw this coming and got out ahead of it. It’s the first crack and they had better repair it now.

        1. The problem is not Bowett, it’s Cook. I agree, he is the one that hired this man from Dixons. Cook wanting to turn Apple stores from customer experience centers to sales driven profit margin focused stores… terrifying.

          1. Yes, it will kill that intangible product that Apple sells, quality experience. Just like the Roman Empire, the bigger it gets the more difficult it is to manage so I have no doubt at some point Apple will fail to some extent. It happens to everyone. Like it or not it just does. But it shouldn’t happen this quickly. Apple has only been successful for a few short years. You could put nearly any competent business executive in charge of Apple now and they could keep it running smoothly far at least 5 years. If this is any indicator of management skills Apple will be considerably less than it is today five years down the road. Much less. Apple is not bulletproof. There are always critics looking to tear you down when you are successful. Imagine how many are out there trying to tear down Apple every day? And I don’t mean their competitors, I mean just people who are happy when others fail. If Apple loses their magic that they have with their customers they will fail. Their great hardware won’t be enough.

  5. From now on, MDN should always show Browett’s picture and Dell’s picture together, they’re the same sort of bozo, one goofy-looking, the other doing a slow burn. Bad news either way.

    And it’s starting to look like there should be a third bozo’s picture alongside those two.

  6. Apple does indeed need to adjust their staffing at the stores, at least the one in my area. Numerous times I go there and there are waaaaay too many employees vs. number of customers in the store. The genius bar is much busier than sales so I imagine much of the costs are a result of customers needing repairs.

    1. I visited the Apple store in Pasadena, CA this past Saturday, and the situation was quite the opposite. I needed to buy a cable for a 10:30 presentation and was at the store at exactly 10:05. There weren’t that many customers, but all the blue shirts were already busy. It took about ten minutes of waiting and (eventually) waving my arms before someone was able to take my credit card. Did NOT have a good feeling about staffing levels…

    2. Don’t always assume people are at the Genius bar for hardware repairs.
      Sometimes customers just don’t know how to do things. They can ask a Genius just about anything to do with their stuff: a software installation isn’t working, or they think they accidentally trashed all their iPhotos, or how to put iTunes on an external drive, or their eMail is screwed up, it’s whatever.

  7. Took my MBP in to the Apple Store, it was packed on a Sunday afternoon. I noticed two issues with the Genius Bar:

    1) that there were so many people at the bar in the first place. Just in my end (3-4 spots), at least four other MBs and MBPs and two iMacs were processed while I was there, 3 of these (plus my own) had work orders done up and taken into the back room.

    2) given #1, they really should’ve had 50% more techs manning the Bar to try keeping it from looking that busy. I know there’s routine non-warranty stuff like RAM and hard drive installs going on, but the perception is that Apple stuff is not as “it just works” as the claim goes (certainly my own MBP is evidence of that, it’s getting a new logic board after having issues since the day I got it).

  8. I haven’t set foot in an Apple store in a very long time as there is nothing there that cannot be bought elsewhere. They used to be stocked with hardware and software- now it’s a bunch of tables covered with iPhones and iPads. The Genius Bar is overrun with the clueless, lazy and confused and staffed by the overworked and underpaid

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