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. There have been so many articles in the past about how Apple Stores are among the most profitable retail stores in the nation… Either these rumors are just that (to try to undermine Apple by competitors?), or there are some seriously stupid bean counters trying to cut open the golden goose.

  2. Browett’s actions suggest a catastrophic failure to comprehend the Apple customer and a cascade of bad decisions probably rooted in a disdain for the customer he ported over from Dixons (whatever that this).
    Apple customers BUY; they don’t need to be sold. Apple customers are discerning and from what I’ve seen in the stores they are their to be informed not sold.
    If Browett is left to his strategy the next thing will be the conversion of the few staff from computer-savvy to dumb ‘get-a-sale’ pods like all the other ‘electronics’ stores.
    Browett appears too arrogant to listen to his staff in the pursuit of empire-building and self-aggrandizement. Do Cook and Browett really miss that there is a singular Apple experience of which retail is a contributing part but only a part and not an enterprise in itself. This profit-center approach is anathema to the Apple Experience.

    1. “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”

      Doesn’t sound like conjecture to me.

    2. What has Cook done to fix this major problem? Browett is still there, the changes that Browett put into place when he came to Apple appear to still be in place, this is a major problem, far worse than the lame Antenna-gate non-issue.

  3. At the store in the Bridgewater(NJ) Mall last Wednesday there were at least 18 Apple employees. It is not a big store. It certainly seemed more than adequately staffed.

  4. 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.

  5. 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.

  6. 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.

Leave a Reply to Steve Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.