Why Apple and Amazon win at retail and Best Buy, J.C. Penney, and K-Mart lose

“Retail is an industry in decline — but only for traditional retailers,” Rick Newman reports for U.S.News & World Report. “For companies that have become successful doing something else, opening a chain of stores can bring millions of new customers and the profits that go with them.”

“This paradox of the retail marketplace is evident in some of the biggest names at the mall. Traditional retailers such as Best Buy, J.C. Penney, Sears, and Kmart are struggling to reverse losses, turn themselves around and give shoppers new reasons to think they’re relevant,” Newman reports. “Yet Apple, a technology company and newcomer to the retail scene, operates a network of more than 200 U.S. stores that have created a new paradigm for brick-and-mortar success.”

Newman reports, “Data on corporate reputations shows how trust relates to success in the modern marketplace. In the latest survey of corporate reputations by Harris Interactive, Amazon, clearly the most successful online retailer, came in first. Apple — which runs the most profitable stores, in terms of sales per square foot — came in second. Struggling retailers, meanwhile, have been falling in the Harris ratings. Best Buy fell from 27th in 2011 to 41st this year. J.C. Penney dropped three spots to 37th. Sears, which lacked the visibility to make the list in 2011, did make the rankings in 2013 — but came in 46th with a score indicating its reputation is ‘poor.'”

Read more in the full article here.

Related articles:
Apple to expand, move 20 retail stores to accommodate growing crowds – February 12, 2013
Apple’s million dollar per day retail store – December 28, 2012
Apple Stores dominate retail with double the sales per sq. ft. of nearest rival, Tiffany & Co. – November 13, 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

19 Comments

  1. Mostly nonsense. JC Penney didn’t take time to cultivate a new market when their traditional market matured. Sears and Kmart are in trouble retail wise because opt the management at the company. remember, Kmart bought Sears, not the other way around. The Sears plan of profitability has nothing to do with retail and everything to do with real estate.

    Walmart dominates with price driven philosophy, Amazon does the same.

    Sears and Kmart relevant? They never were.

    1. Sears was very relevant up until about the 80’s, they were the world’s largest retailer and had really superior products, especially their appliances and tools, and excellent service. These days it’s all junk, and the product that’s advertised as being on sale is always out of stock.

  2. Traditional retailers such as Best Buy, J.C. Penney, Sears, and Kmart are struggling to reverse losses, turn themselves around and give shoppers new reasons to think they’re relevant,” Newman reports.

    FYI- Sears and K-Mart are owned by the same company and have been for years since K-Mart merged with Sears. If the guy does not know that, what else does he not know.”

    There are plenty of brick and mortar retailers that are doing well- it is just not the no brainer that it once was. Customers must be offered some advantage by brick & mortar vs online or they will fade to insignificance.

    People seem to forget that Apple created retail because of the sorry way brick & mortar retailers handled their products. That is still largely the case. Best Buy could not sell ice water to a person dying of thirst based upon their sales methods and staff behavior. People buy stuff at Wal-Mart, Best Buy, Target and such DESPITE the sales experience.

  3. Sears, to me, is like Nintendo: the parts are worth more than the whole. They have great brands such as Kenmore, Craftsman, Diehard, Joe Boxer, and Land’s End. Nintendo is the same. Mario, Zelda, Donkey Kong, etc. I think that’s why Nintendo will be gobbled up within the next 5 years (hopefully by someone who will make great iOS games). Sears, however, is just in need of some serious need leadership, a stronger web presence and modernization…. O and Apple products 😉

    1. The other thing Sears has is brand confidence. I went to Sears Parts Direct online for a part on my snowblower because it was the only part provider that I could recognize and therefore trust. (Warning: If you call them by phone, they try to upsell a ridiculous amount of items which includes magazines.)

  4. Interesting article.

    From my point of view it goes back to what Apple does well. They focus on a few really great products and make the experience great. Apple is not trying to be the store to buy everything tech. Apple’s focus is only on the good stuff.

    I recall a story about SJ having a conversation with Nike. It went something like SJ saying to the Nike folks, “you have some great stuff but you also have a lot of junk. Focus on the good stuff and get rid of the junk”.
    Now, Nike taken a page out the the Apple playbook. They focus on what they think is their really good stuff. Nike now has that mentality of creatiing a few really good products, focus on those products and promote those products and make the experience good for the consumers.

    I believe having a few really great products instead of a mass of products for every consumer and budget allows you to focus and create a better experience for the consumer.

    Granted, you are not going to get everyone to buy your products (never happens anyway) but if they are really good, like in Apple’s case, people will save and find a way to buy the good stuff. Best buy, JC Penny, Sears and expecially Kmart wallow too much in the shit with a ton of mediocre products and doesn’t focus on the consumer experience.

    My mother use to say, “if you buy or settle for shitty products and service, you will develope a taste for shit”. Hmmm…. pretty smart lady if you ask me.

    1. It’s a vertical vs. horizontal approach. SJ was a pioneer in operating a company in a vertical paradigm. Apple remains the best of only a few examples of companies who operate in this manner. It is a far superior approach yielding better quality products with better user experiences, but it’s also harder to sell to a group of people with such a high “more is better” mentality.

      Just look at RJ’s repeated failures at JCP. His ideas are sound and superior, but the American consumer remains a hard sell in the vertical realm. We tend to want a billion options, even if most are crap, and we want them all to claim to be “on sale”. It doesn’t even matter if the original price is phony, which it usually is, or if every item in the store is “on sale”. As long as we have too many option that are all marked down, discounted, etc., it’s more appealing. Of course it’s insane, but then so is the human mind.

      Incidentally I think the vertical approach is going to win out eventually, but we’re probably not even close to the tipping point. Just look at how Wall Street is responding to the most successful company on the planet. The vertical approach does not make for good capitalism, even when it is supremely successful. Better to have lots of profitable companies, with mediocre products, that care more about returning their existing capital to Wall Street than using it to build new and better products.

      I feel bad for TC. If he just came out and told them all to go fuck themselves, like SJ would have done, everyone would probably leave Apple alone to keep doing what they do. TC is too nice.

    1. But K-Mart’s main competitor is Walmart; ergo, K-Mart is toast because they don’t wield even remotely near the “bully power” that Walmart brings to bear on suppliers.

  5. people line up in front of dinky carrier shops to get the iPhone at launch.

    ron Johnson who ran apple retail is struggling now with J.C Penny. You have apple store clones like Msft which do dismal sales.

    why? Products. You can copy apple stores but if you don’t have the products you aren’t going to do well.

    Apple stores do supremely well because besides the products they have better customer service than Best Buy etc.

  6. My two cents on Sears…
    Over 20 years I had bought all types of products from Sears. Not everything I bought (fridge, dishwasher, snowblower, Etc.) was “top of the line” but was good quality and reliable, lasted for years.
    The reason I will not buy anything else from them is the lousy service they gave me. Sears is famous for pushing extended warranties and maybe I was a sucker but I liked the piece of mind knowing if something broke that they would fix or replace it.
    When they let us swing in the wind over our washing machine (not a year old when a cheap piece of plastic caused it to fail) and kept canceling our service appts for over two weeks, I called to complain. The response left me bewildered. I was told that the service tech couldn’t make my appt that day due to previous appts running long. Instead of rescheduling for the next day or so the policy was to CANCEL our appt, not informing us and meaning we had to call and reschedule, putting us at the back of the line of appts.
    I eventually spoke with a manager who confirmed this. When I told him that this meant Sears was losing a loyal customer if they weren’t going to honor their responsibility.
    He basically told me that he didn’t care.
    I haven’t set foot in a sears for the past 6 years.
    Instead I support my local retailer and rely on my local service company (who always gives us great advice on the products that are reliable and easy to repair).

    1. I bought a socket set from SEARS made by craftsman. I grew up on craftsman made in the USA. The first turn on the socket cracked it in half. Made in china! Are you kidding people. Are you that greedy?

  7. Zappos is killing it right now number 1 thing is customer service, which is lacking everywhere you go now. So I just buy online, save money, and if I need to return I don’t have to put up with a bunch of BS.

    Zappos is great and I try to keep my shopping there. They have amazing service! And 365 day return policy!

  8. Ok, I’ll call bullshit on Amazon. My last four of five items ordered did not match the photographs in the ads. After four BBB complaints, Amazon tells me I have a credit that will show up n checkout. So I order another item… No credit and after another BBB complaint, Amazon tells me the credit is only for amazon items fulfilled by amazon! Fucking bullshit! They can’t issue me a credit? Yes they can. So I get refunds for the false advertised items and have to file more BBB complaints to get my shipping charges back for false advertising. And guess what…. 6 months later and the photos are STILL wrong! So the CEO has his priorities right at least. None of his photos are up to date but he has time to come out for gay marriage instead! No more amazon for me. I don’t care what his opinion is but FIX YOUR FUCKING COMPANY YOU PIECE OF SHIT ASSHOLE!

Reader Feedback

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