giovedì 19 gennaio 2012

Retail lessons from Apple

The case of Apple Store
Recently I read an interview with Ron Johnson, senior VP of Apple Retail Division published on the Harvard Business Review. The statistics on sales effectiveness of Apple Store are impressive: about $ 5,000 in sales per square foot (compared to $ 880 at Best Buy), $ 481,000 in sales per employee (compared to $ 124,000 JC Penney, the famous chain of American department stores). Ron Johnson explains the main reasons for this success:
  • ·      The Genius Bar is yet another brand of Apple that stands out from other producers that eventually can only imitate it
  • ·      The staff is young, motivated, with a deep knowledge of Apple products and philosophy
  • ·      The staff follows the APPLE metohd: "Personalized Approach to customers with warm welcome, Probe to Understand the problem, found a solution, Listen for issues, and End with an invitation to return"
  • ·      Apple provides both the hardware and software then has the opportunity to provide integrated support
  • ·      Improves customer relations through the personal relationship.

Media tablets and computer retailers
Here we consider the case of media tablets and their distribution through chain stores specialized in consumer electronics (eg. Mediaworld, Euroncis ,..). In these stores, the Apple section stands out from the one of other PC and smartphone producers, preserving its look and feel of strong product integration. The customer is reassured that he is buying an iPad that will work seamlessly with all other Apple products. In the U.S., Apple has recently signed an agreement with Target department store to open mini Apple Store in 25 of its locations in the next year in the attempt to make Apple available for consumers who aren’t necessarily looking for electronics.

For non-Apple media tablets, the situation is significantly different and less reassuring for the customer. In fact, these are usually grouped into marginal positions and exposed in a way that ends up reinforcing the conventional wisdom of "confusion", fragmentation and lack of product integration. Clearly even the consumer initially "iPad skeptical" or with a limited budget will eventually prefer Apple products.
Technology manufacturers should learn Apple’s lesson: “Apple is in the relationship business as mush as the computer business”.

Reccomendations for Samsung
I chose Samsung because the company is present in Italy (Amazon and Barnes & Noble are on-line retailers) and has a wide array of products (smartphones, media tablets, PCs, TV ,...). Hence, in terms of turnover Samsung represents a material part for these stores and its bargaining power should be significant. Samsung could exploit this situation to convince store managers to create dedicated areas in which are displaied and sold Samsung’s top products such as tablets (Galaxy Tab), smartphones (S2 Galaxy Notes) and TV (Smart TV). This offer must transmit a message of:
  • ·      homogeneity (same products, same colors,...)
  • ·      integration (communicate the possible interactions between the products, eg tablet can share video with TV)
  • ·      excellence (show the product’s quality and distinctive characteristics HW)

For example, building on Samsung Smart View feature it would be possible to create a very effective campaign showing that your smartphone and/or Galaxy Tab could become a second TV broadcasting what you're watching on TV. This feature also allows to watch a content different from that displayed by the TV (if coming from an external source such as a Blu-ray or a Sky box). You can also use your smartphone or tablet as a TV remote or the tablet keyboard to interact with the internet TV. These are exactly the characteristics of integration and excellence that create a perception of differentiation.

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