Apple Banks on Physical Stores as Economies Reopen, Retail Chief Says

Apple is expanding retail operations as the United States emerges from the pandemic, betting that a combination of strategies developed before and during COVID-19 will make its stores more popular than ever, its retail chief told Reuters.

Apple is doing this as the retail industry works out what the post-pandemic future will look like, including consumers who have become used to ordering almost everything online.

For Apple, the answer is keeping what helped it through the pandemic, and doubling down on its pre-pandemic strategy of in-store events and experiences beyond shopping.

The express counters that popped up to help customers more efficiently pick up online orders, for example, will become regular features of Apple's 500-plus stores around the world, all of which have reopened as of June 14.

The iPhone maker is also adding a new "Creative Studios" programme, starting in Los Angeles and Beijing, that aims to teach young people from underrepresented communities to use Apple products to create music, films, and photography. That adds to a broader array of classes based out of the stores designed to bring in customers in contact with Apple more frequently.

"We're looking at this moment right now as a way to really begin again, and begin again in every way," Deirdre O'Brien, Apple's senior vice president of retail and people, told Reuters as the company prepared on Thursday to open a new store at the renovated Tower Theatre in downtown Los Angeles, Apple's second new US retail outlet since the beginning of the pandemic.

Apple boomed during the pandemic, hitting $2 trillion (roughly Rs. 1,48,36,500 crores) in market capitalisation in August 2020 and setting records for sales of iPhone handsets and several other categories.

One of the retail-related weak spots in its financial results, analysts said, was a slowdown in sales of AppleCare, a device insurance plan that is often an upsell during a store visit but easier for consumers to skip online. Apple also experienced supply chain missteps over the past year, delivering its iPhone 12 later than usual last year and saying in April that the global semiconductor shortage would cost it several billion dollars in sales.

Personal experience

Part of Apple's retail success amid closures was streamlining its buy-online, pick-up-in-person process. Apple's long-held retail strategy has been to encourage customers to wander its airy stores to touch and feel its devices.

During the pandemic, Apple re-worked many stores to have small express counters designed to facilitate pickups quickly but still give a personal touch, sometimes by following up online or by phone later to set up devices.

"The goal was really for speed, which is very different than what we usually experience in a retail store," O'Brien said. "We want to make sure that in that experience that they can come in, quickly get the product they want. But we do want to make sure that we can also have a quick conversation with them to make sure that they have everything they need."

As local rules allow, Apple is returning to in-person events and classes at its stores. The "Creative Studios" effort will eventually roll out to other major cities, O'Brien said.

Carolina Milanesi, principal analyst at Creative Strategies, said programs like those, in addition to courses designed to teach computer coding and other tech skills, are ways for Apple to bolster its brand with consumers between purchases.

“The more they can get you to use the device, the more engaged you are, the more loyal you're going to be," Milanesi said.

© Thomson Reuters 2021