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. Apple’s success is now starting to rot the core with respect to providing hardware service and support directly in their stores. With so many new customers who need hardware repair, staffing that support is eating into their profitability. Not to mention it’s overwhelming the space in the store. It’s ALWAYS packed in the back of the store with newb users who don’t understand tech and need help. Perhaps there’s a new opportunity for support providers out there.

  2. Here is the email I sent to Tim Cook.

    ===
    Mr Cook:

    As an Apple Shareholder for over 10 years, I have become increasingly concerned about the reports of Apple’s stores undergoing a “rethink” in terms of how it treats its employees, what items are stocked, and the emphasis of profits over the customer experience.

    What makes these stores so unique is their attention to the total customer experience. Prior to their launch, no other large retailer offered its customers an experience at that level. A free Genius Bar that answered all of your questions and did not always hold you to a fixed warranty; knowledgeable and happy employees who were eager to discuss their products and proud to work there; and one of THE most beautiful buildings that defied the imagination.

    Now it seems that Apple has decided to cut down this money tree because they want more wood for the fire. Eventually, these little changes to staffing, content, more strict alliance to the warranties, and store maintenance, will tarnish the overall experience and turn the elite Apple Stores into a Best Buy knock-off with lousy customer service.

    I urge you to reconsider these changes and to continue to support the previous operations model. I, and many other Mac enthusiasts and shareholders, will be watching these changes closely and will hold all of those accountable.

    1. What you’re ignoring is the fact that change IS NEEDED at their stores. They can no longer “support the previous operations model.” Their growth and user base extend much further than just Macs. The number of customers needing help is growing right along with their sales. They need to address this now because the stores are being swamped with more customers in need vs. those who are there to buy.

      It’s figuring out how best to address this issue is the problem. Perhaps this Browett is not the right guy, but change is needed and it won’t always be pleasant at first.

  3. My recent store experiences were not great! The stores are clearly under staffed. A lot of people waiting, looking frustrated and bored. Even with an apt. I had to wait 20 minutes for a simple transaction.

  4. I’ve talked to several friends who work at Apple stores and the news is all bad. The typical corporate bullshit is in full effect. Staff has been cut. Emphasis for employees has shifted to “making the numbers.” Angry & frustrated customers are wandering the crowded and understaffed store yelling “Will someone please help me?” This deteriorating situation would appear to be directly tied to the loss of Mr Jobs. He would never have stood for the creeping mediocrity now in full effect at the stores he created.

  5. MDN : your take on the situation is perfect. You need to spearhead a campaign to get rid of Browett and make the community of aware of this dangerous development. This truly will be killing the goose that lays the golden eggs. Nothing lasts forever including powerful companies. There is no more AT&T it is now in reality Southwestern Bell. US steel is nothing. General Motors went bankrupt. Those were the big three that were supposed to go on forever. Perhaps a different generation from Apple but still they were the biggest and had been for decades and decades not just a couple of years. If Apple isn’t careful there reign won’t last more than a couple of years. Greed, greed is good. Perhaps that should be the new motto for Apple? It pisses me off!

  6. If all this is true (of the reported staffing cutbacks with the focus only on bottom line financial numbers) then it’s a shame that this is happening. With all the many billions Apple has saved up, it makes no sense that they’re focusing more on the bottom line than customer service, especially with their Apple Stores. What separated Apple from its competitors, beyond Apple making superior products, was its face-to-face excellent customer experiences in their stores. If this facet of their business declines, then their superiority as a company will start to erode. I know I’m stating common sense stuff but it seems Apple is losing sight of this.

  7. Q: When should you boot a Marketing-Moron from your company?

    A: Yesterday. They’re dead easy to identify. Shame on you for letting the nasty bastard into your company in the first place! Very bad move Mr. Cook! Every day he remains in power is another day of demolition that can take YEARS to undo. Have no mercy. Take no prisoners. Out he goes ASAP. So long Mr. Browett and good riddance. Already forgot you.

  8. Apple, get rid of this guy now before he single handedly destroys the house that Steve built. DO IT NOW. Just admit you made a hiring mistake, do a Steve-o and throw this guy out before further damage is done to retail. Apple’s retail is such a unique positive feature, that everyone raves about you will be sorry if this guy guts it, and in doing so guts the positive, helpful, customer first personal of Apple. This nut job thinks he’s running a Walmart.

  9. And…
    Those now in charge at Apple need to refocus on the customer experience. This is what made Steve’s Apple what it is today. The experience with the hardware: aesthetically and functionally, the experience with the software: Ease of use, common sense execution of tasks, and the experience of retail always someone ready to help THE CUSTOMER, going beyond the average store in making the buyer happy, be it with a newly purchased product, or going beyond normal with a product with a problem to customer satisfaction and brand loyalty (like surprising the customer with a new replacement for a used product with a vague problematic issue). This is Apple’s unique core.

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