Jobs is Retail!

· Steve Jobs' lasting legacy for retail

October 5, 2011

Reflecting on his life and Apple's humble beginnings while delivering a commencement address in front of Stanford University 2005 graduates, Steve Jobs commented, "You can't connect the dots looking forward...[but]...Believing that the dots will connect down the road will give you the confidence to follow your heart even when it leads you off the well-worn path and that will make all the difference."

Steve believed in a future he envisioned for others (not selfishly for himself) and worked tirelessly toward it. His own steadfast focus on realizing that vision energized tens of thousands of people, transforming work into passion for many.

As Steve Jobs passes from living legend to historical figure, he will be remembered as a successful businessman for co-founding Apple, NeXT and Pixar. Oh, and for rekindling Apple at its lowest point, then leading it to unprecedented success. As more time passes, he will be seen as an inventor next to Bell, Ford and Edison. Eventually, in my opinion, he will be most remembered as a connector of people and as a transformer of industries (tech, entertainment, communications and retail). His ideas introduced new ways of interacting with each other that now work anywhere on the planet.

Jobs' vision and Apple's execution have had a transformative effect on the retail industry, both in-store and online, in an industry the company entered fewer than 10 years ago.

When Apple introduced The Apple Store, pundits predicted the demise of the effort and even the company. Now, 300+ locations and more than a dozen countries later, this consumer experience company boasts the highest sales volume of any retailer, approaching $6,000/SF or €420/m2.

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The success of the Apple Store venture proves Steve's management philosophy that all the details are important, even if they are not under direct control. Apple's ability to successfully coordinate products, people, technology and services through purposeful and singular experience design is unprecedented—and worth emulating.

I believe success is largely rooted in Steve's design philosophy. His vision was a blend of business and the arts. By emphasizing emotion and aesthetics, Jobs placed value on customers' enjoyment of using Apple's products and services. He made sure the engineers, designers and sales associates in the stores did too. He wanted, I believe, a good experience designed into every product, every place, and into everyone.

One of his values was simplicity evidenced by his continued focus on making design lines cleaner, weights lighter, instruction manuals shorter, products more capable and easier at the same time, and by holding price points on products through their maturation. Steve made retail easier for customers as part of his grand design. His examples are an unexpected gift to our industry.

Apple never retailed Apple products, they Apple-ized retail.

Jobs' appreciation for the arts and Apple's design-based way of thinking helped us all see how a better experience creates a better bottom line. For example:

Better experience: By giving customers the opportunity to schedule shopping, repair, Genius Bar, or training times, Apple's customers get the uninterrupted time and attention they crave. Better bottom-line: Apple can accurately predict staffing needs so the company spends less on labor per sales dollar generated.
Better experience: By using roving (handheld) registers, customers waste less time in lines, don't have to fumble with receipts, and get to deal with one t-shirted Apple rep from start to finish. Better bottom-line: Apple increases its capacity in number of shoppers/hour and sales/hour while getting to know its customers and their needs better.
Better experience: By placing electronic catalogs with a 'help me' button next to every product in the store customers are able to know more, learn more, and become better shoppers and users. Better bottom-line: Apple can direct knowledgeable resources to the customer when and where they need it.
Better experience: By giving customers free services (storage, email, syncing, remote phone/tablet erasing, learning and support) customers became more confident and used their products even more. Better bottom-line: Apple's super users are less expensive to support and double as brand ambassadors.

These are just some of the patterns Jobs' thinking gave to retail. He knew, intuitively, that design gives everyone more of what they want.

In Steve's honor, consider, as retailers, what you can do for your customers. Think about how you can push the boundaries of what's possible—even when they are not in your domain. And remember, as Steve often said in his speeches, that [paraphrase] making more great products isn't as important as making more great experiences.

Steve Jobs has stopped living but his impact on retail will live on.

Author Mike Wittenstein is retail experience designer at Storyminers. Photo of Jobs at Stanford in 2005 by Keng Susumpow.

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O gênio do varejo da Apple agora inova na J.C. Penney

J.C. Penney gets rid of hundreds of sales

By ANNE D'INNOCENZIO, AP Retail Writer – 1 day ago

NEW YORK (AP) — J.C. Penney is permanently marking down all of its merchandise by at least 40 percent so shoppers no longer have to wait for sales to get bargains.

Penney said Wednesday that it is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing. Starting on Feb. 1, the retailer is rolling out an "Every Day" pricing strategy with much fewer sales throughout the year.

The plan, the first major move by Apple executive Ron Johnson since he became Penney's CEO in November, is different from Wal-Mart's iconic everyday low pricing. Unlike Wal-Mart, Penney's goal isn't to undercut competitors, but rather to offer customers more predictable pricing.

"Pricing is actually a pretty simple and straightforward thing," Johnson told the Associated Press during an interview ahead of the announcement at the company's Plano, Tex. headquarters. "Customers will not pay literally a penny more than the true value of the product."

Penney's plan comes as stores are struggling to wean Americans off of the profit-busting bargains that they have come to expect in the weak economy. The move is risky, though, because shoppers who love to bargain-hunt may be turned off by the absence of sales.

"The big question on investors' minds will be: 'How customers will react to a single price point versus a perceived discount under the old strategy?'" says Citi Investment Research analyst Deborah L. Weinswig.

Here's how Penney's pricing strategy will work:

— Sale prices become everyday prices. The company will use sales data from last year to slash prices on all merchandise at least 40 percent or lower than the previous year's prices. So, a woman's St. John's Bay blouse regularly priced at $14.99 could have the "Every Day" price of $7.

— Fewer sales. The retailer will pick items to go on sale each month for a "Month-Long Value." For instance, jewelry and Valentine's Day gifts would go on sale in February, while Christmas decorations would be discounted in November. Items that don't sell well would go on clearance during the first and third Friday of every month when many Americans get paid. Those items will be tagged "Best Prices," signaling to customers that's the cheapest price.

— New tags. The retailer used to pile stickers on price tags to indicate each time an item was marked down. But now each time an item gets a new price, it gets a new tag too. A red tag indicates an "Every Day" price, a white tag a "Month-Long Value" and a blue tag a "Best Price."

— Simpler pricing. Penney will use whole figures when pricing items. In other words, you won't see jeans with a price tag of $19.99, but rather $19 or $20.

— New advertising. Ads began airing Wednesday with a shopper screaming "No" to discounts as they look in their mailboxes, a pile of coupons and big sales signs. The company also has a new spokeswoman (talk show host Ellen DeGeneres) and logo (a red outline of a box that features JCP in the corner.) And a 96-page catalog will be mailed each month to 14 million customers, along with other promotional efforts.

The strategy, unveiled at Penney's investor meeting on Wednesday, comes as the retailer tries to turn around its business. Heavy discounting has hurt department stores like Penney. The group generates an average of about $200 per square foot, less than half the $550 or $600 stores like Victoria's Secret and Lululemon make per square foot, according to John Bemis, head of Jones Lang LaSalle Inc.'s retail leasing team.

But Penney has been a laggard even among department stores as its core middle-class customers have been among the hardest hit by the weak economy. It's also failed to attract younger customers even though its added hip brands like Mary-Kate and Ashley Olsen's teen clothing collection called Olsenboye. The stores also have been by Johnson himself describes as "tired."

For the 11 months through December, Penney's revenue at stores opened at least a year — an indicator of a retailer's health — rose 0.7 percent, while competitors like Macy's Inc. rose 5.4 percent, and Kohl's was up 1.1 percent. Penney posted a loss in the third quarter and cut its fourth-quarter earnings outlook after a disappointing holiday season when it had to heavily discount to attract consumers.

The new pricing caps months of speculation about what Penney's future might look like under the leadership of Johnson, a former Target Corp executive and the mastermind behind the success at Apple Inc.'s stores.

Johnson, who joined the company's board in August, already has put his stamp on the retailer. He has tapped former colleagues at Apple and Target to join him at Penney. That includes Target's top marketing executive Michael Francis to be Penney's president.

Johnson also is borrowing from the playbook of Apple, which shuns discounting and focuses on selling products and offering services.

In December, Penney said it will have homemaker doyenne Martha Stewart develop mini-shops starting next year. And during Wednesday's meeting, Penney executives outlined plans to in the next two years add Main Street, a series of 80 to 100 brand shops in stores similar to the Martha Stewart ones. It also plans to open areas in all stores called Town Square, a place that will offer services and expert advice, similar to Apple's Genius bars.

Perhaps the biggest challenge for Penney is to sell shoppers on its new pricing. For years, Penney, like many other stores, has propped up price. The intent: to make it look like shoppers are getting great discounts when items go on sale.

Penney has been an especially big promoter. Last year, the company, which offered 590 sales events last year, nearly three-quarters of its revenue come from merchandise that was discounted by 50 percent or more.

That's more than double the retail industry average. According to an estimate by management consultant firm A.T. Kearney, a typical retailer sells between 40 and 45 percent of its inventory at a promotional price, up from 15 to 20 percent a decade ago.

The increased discounting has been a vicious cycle that only feeds into shoppers' insatiable appetite for bigger and better discounts. In fact, whereas it took 38 percent off to get shoppers to buy 10 years ago, it now takes discounts of 60 percent, Johnson says.

At Penney, the regular price on an item that costs $10 to make rose 43 percent, from $28 in 2002 to $40 in 2011. But because of all of its sales and other promotions, what it actually ended up selling for rose only 15 cents, from $15.80 to $15.95 during that same period.

"I have been struck by the extraordinary amount of promotional activity, which to me, didn't feel like it was appropriate for a department store," Johnson says. "Once you start to promote, the only way to beat a promotion was to make it bigger."

Walter Loeb, a New York-based retail consultant, says Penney's new pricing is "visionary" and revolutionary."

But Charles Grom, a retail analyst at Deutsche Bank, says it will be difficult for Johnson to change shoppers' buying habits. Macy's, for example, cut back on coupons a few years ago, only to reverse courses after sales fell.