Apple Can’t Afford Buyer’s Remorse With Next Retail Hire
John Browett, the Dixons exec tapped to oversee Apple’s retail operations last January, was Tim Cook’s first big hire after taking up the CEO reins at the company. Nine months later, he would be among Cook’s first big fires, ousted from Apple after a series of missteps that drew some rare negative publicity to the company’s wildly successful retail empire.
Now Apple is once again on the hunt for an executive to oversee its retail stores, a keystone of the company’s success. And it can ill afford to make another such hiring mistake.
In the fourth quarter, Apple’s 401 stores worldwide generated an average revenue per store of $11.2 million, and a recent study found that Apple’s retail stores earn $6,050 per square foot, compared to Tiffany & Co., which earned $3,017 a square foot.
So who might Apple look to to fill the shoes of Ron Johnson, the chief architect of its retail strategy, who left the company last year to take the CEO job at retailer J.C. Penney? That’s a conundrum difficult enough to perplex the most skilled of recruiters; recall that it took Apple about seven months to sign Browett, and that was with the help of executive search firm Egon Zehnder International.
An easier task is to determine where Apple might look for candidates with the sort of experience needed to drive its retail ops.
“Apple’s next frontier is to really grow the brand internationally,” Neil Stern, a senior partner at retail consultancy McMillan Doolittle LLP, told AllThingsD. “So brands like Nike, Coach, Burberry and Starbucks spring to mind as being ‘models,’ perhaps, of where an individual might have that experience.”
We’ve been asking around for weeks about possible external candidates for Apple’s senior VP of retail job, and have heard largely the same thing, and a few names to boot*. They are, in no particular order:
- Burberry CEO Angela Ahrendts
- Victor Luis, president, International Group, Coach
- Jeanne Jackson, president, Direct to Consumer, Nike
- John Culver, president, Starbucks Coffee China and Asia Pacific
- Paul Gainer, executive vice president, Global Disney Store
All five are well qualified. They’re working for global brands with a strong consumer focus and broad international presence. Ahrendts has spent years stewarding one of the world’s most iconic global brands. Luis has spent years steering Coach’s international operations and, crucially, served as CEO of Coach China. At Nike, Jackson is working for a company with a culture similar to Apple’s, one on whose board CEO Tim Cook serves; she also used to run Banana Republic and Walmart.com. Culver has played a key role in growing Starbucks’ global footprint in markets that are of keen interest to Apple, and has done a good job of translating the company’s culture internationally, which isn’t an easy job. Gainer has been overseeing the Disney Store since 2008, when the company reacquired it, and now directs a global retail chain that’s in many ways reminiscent of Apple’s. His boss, Disney CEO Bob Iger, sits on Apple’s board.
Good candidates, all. But would any be interested in making the jump to Apple?
Industry sources are divided on that issue. Some say the job is so high-profile that it will inevitably generate strong interest and appeal to the caliber of candidates like those above.
Others feel that the transition that a move to Apple would require of these candidates would be off-putting. “Any one of these people would be terrific for that job,” one source with close ties to Apple said. “But none of them would ever take it. They’re retail people, and Apple is not a true retailer. It’s a consumer-products company.”
Most retail CEOs come out of a merchandising background, setting a vision for the brand and selecting the product lines it will sell; creating the consumer experience and building out the merchandising, marketing, financial and operational columns that support those things is their passion. But running Apple’s retail operations these days doesn’t involve much of that. Instead, it’s about continuing to execute well on someone else’s good idea. It’s about selling the devices you’re told to sell, and selling them effectively in more markets. The real exciting stuff, the big innovation, has already happened. Apple doesn’t need a hotshot, retail problem-solver. And that may temper the job’s appeal.
As one source familiar with Apple’s retail operations said, “I’m not sure people of the caliber Apple is probably looking for would see an opportunity to add much value to the company’s retail operations — certainly not as much as they might find elsewhere.”
So, then, where does Apple turn? Does it look for retail leadership internally?
That’s certainly a possibility. And there are at least three candidates: Steve Cano, Apple’s manager of retail stores; Bob Bridger, Apple VP for retail real estate and development; and Jerry McDougal, VP of retail.
Of the three, McDougal seems the most likely, simply because he holds the VP of retail title already. But sources say that Cano would be a good pick, as well. His name has been bandied about before in relation to this job, and, according to insiders and outsiders both, he’s well-suited for it. As once source said, “Frankly, I was surprised he wasn’t tapped last time around.”
“I think Steve’s probably the best internal candidate,” Needham analyst Charlie Wolf said. “He’s the most well-rounded of those three.”
And that would seem to be the case. Cano started out as the manager of Apple’s first Soho store. Then he transferred to the company’s Ginza store in Japan to manage its opening and early days. Subsequently, he transferred to London to run international retail operations. And now he’s head of all Apple Stores.
In other words, he’s got broad in-the-field experience and, crucially, he gets Apple Store culture. Browett didn’t, and that’s among the reasons behind his ouster.
“[With Browett], clearly, there was not a cultural fit,” Stern said. “Any new head needs to fit into the Apple (and Apple Store) culture.”
And to have a strong vision for how to expand the Apple Store experience internationally, while maintaining one of its hallmarks: Good service. Sure, Apple sells a lot of hardware through its stores, but it also caters to multitudes of customers who visit seeking help at its Genius Bars. And that’s a keystone of its retail success. As one retailer said, “People underestimate just how powerful the Genius Bar is. You walk into an Apple Store with a broken iPhone, expecting a fight with some customer service rep that doesn’t know what they’re doing. But, instead, you get a Genius who diagnoses your problem on the spot. Maybe he even replaces your iPhone. Now how do you feel about Apple as you walk out of that store?”
The point: Whoever Apple taps for this job must do a good job of keeping customers happy as the business grows and work hard to ensure that, more often than not, folks who walk into an Apple Store for help walk out customers for life.
Put all those requirements together and the task of finding a candidate with the skill set to meet them becomes a tall order, indeed. Taller still, given the embarrassment of being forced to sack Browett after less than a year on the job. Apple’s next hire for this job has to be a good one. The repercussions are far too great if it’s not.
And, as Ron Johnson notes, the stakes are too high to rush a decision.
“I think Tim will take his time with this,” Johnson told AllThingsD. “The internal team is very strong and capable of running well until he finds the right person.”
Apple declined comment on its search for a new SVP of retail, noting — as it did in the press release announcing Browett’s departure — that its retail team continues to report directly to Tim Cook.
*The reply most often offered in response to this question: Ron Johnson.
With reporting by Tricia Duryee.