Will Apple's Retail Strategy Change Under Angela Ahrendts?

Former Burberry CEO moves from London to Cupertino to head Apple retail operations.

May 19, 2014 at 11:59PM

Former Burberry Limited (NASDAQOTH:BBRYF) CEO, Angela Ahrendts, has finally made the move from London to Silicon Valley.

Angela Ahrendts To Join A

Source: Google images

Apple (NASDAQ:AAPL) CEO, Tim Cook, announced last fall that Ahrendts, whom he called one of the smartest people he's ever met, would assume control of all things retail at One Infinite Loop "sometime in the spring of 2014." That moment arrived around May 1.

Will she move the needle for retail at Apple and provide more value to investors? She has big shoes to fill. The first de facto head of retail there was legendary former CEO Steve Jobs, who developed the Apple Store concept way back in the pre-iPod days. 

Retail is not the star
At Apple, retail provides a relatively small portion of overall revenue, about 12%, and it is growing slowly at only a 5% annual rate.

How can Ahrendts improve things there?

She might try some of the same techniques she employed at Burberry, where revenue averaged 11% annual gains and EPS increased threefold over the last half decade. The stock followed suit, rising over 150%.


BBRYF data by YCharts

Target the young everywhere
One way might be to look internationally. If the market for iPhones and iPads wanes in the Americas and in Europe, as projected by many analysts, Apple might need more presence in emerging economies. Right now, a majority of stores are located in the U.S., Canada, and Europe. Only a small fraction are in countries such as China, Brazil, and Turkey.

Of course, to expand in emerging markets, the company must introduce competitively priced products or work hard to take advantage of China Mobile's huge subscriber base. Ahrendts will have to work closely with Tim Cook and other executives to focus on Asia and other growing areas. If she can do that, retail could become more important to the company. 

As Burberry did under Ahrendts, Apple might want to pay attention to demographics and the technological savvy of its customers.

Over half of the world's population is under the age of 30, so Apple must offer products that this cohort wants and can afford. To communicate with them, the company needs to ensure its top-of-the-line marketing, advertising, and social media strategy doesn't change. Anrendts has to be a key part of that effort if retail is to grow.

The customer is always right
Another focus area could be ensuring that customer satisfaction, which is critical in retail, remains a top priority. In a recent survey conducted by ACSI, although Apple ranked No. 1 in the cell phone category, its score declined slightly from the previous year's total.

Napkin Idea Flow

Ahrendts could bring some of the methods she used at Burberry to make users happier. In the past, she made good use of benchmarking with others outside her industry, such as salesforce.com CEO, Marc Benioff, who once provided recommendations to her on the back of a napkin. Maybe he can write a few things down on the iPad, too. 

Apple might learn a few things from Amazon.com, which consistently rates high in customer satisfaction surveys, as CEO Jeff Bezos makes it his No. 1 priority in Seattle. 

Foolish conclusion
Former Burberry CEO, Angela Ahrendts, has made her way across the Atlantic and settled in Silicon Valley to run Apple's retail operations. Applying the lessons she learned in London could make her just as successful in Cupertino. If that happens, Apple investors would surely benefit.

So, might there be a fashion statement in future Apple products? Perhaps a plaid smart watch or iMac?

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