Friday, October 5, 2001

We took the opportunity Thursday to attend the preview given the Press of the Apple Store in Palo Alto. It was a very interesting experience. The grand opening is 2 days away at 10:00 AM on Saturday the 6th. Like most of the reports that you have read about the other Apple Stores, this one is clean, well lighted, comfortable and high-toned. Think Williams of Sonoma, without the clutter. It comes across more like a museum than a retail outfit, with only the numerous shelves of software as the giveaway that transactions are supposed to take place here. It's a class act and Apple should be proud ... lets just hope that it doesn't scare off the hungry masses. You know those that shop at Sears instead of Macys

So why is this particular Store more of a risk for Apple than all the previous stores that have opened? First it is the only store Apple has opened, so far. that is not in a Mall setting. It is street front property and, as Ron Johnson , Apple's Retail Senior VP, put it, this particular store is an "experiment." An experiment with a long term horizon.

Apple had considered putting this store in a Mall ... the Stanford Shopping Center. No risk there. The Stanford Shopping Center must be one of toniest Malls in the country. This is not your average cheesy Mall. An Apple Store would have fit right in. In addition it is also one of the most highly visited Malls in the Silicon Valley area. The place is always packed, not with people that are looking for bargains, but with people that want to, and can, lay down large sums of cash for whichever luxury item takes their fancy. Again this is the type of traffic that would be the exact fit for the kind of consumer Apple is, at least in part, aiming to attact.

Instead of this location, Apple chose the tip-end of the commercial part of University Ave in downtown Palo Alto. This for the Store that is at the heart of its retail chain. Don't get me wrong University Ave in no slouch in the tony traffic and tony shops department, and it is undoubtedly less expensive than the Mall location, but it doesn't have the ready made, built-in qualities that the Mall location would provide. So it will be an interesting experiment ... the kind of adventurous experimentation that is a hallmark of a quality company.

When questioned, Ron Johnson explained that they are satisfied with this location and feel that is has a lot of future potential. They think this part of University Ave will develop in coming years. And indeed University Ave is changing. Lately some of the more honky-tonk merchants have been kicked out or had their rents increase to an unsustainable level. The only fast food restaurant on the Avenue has shuttered its doors, after being there donkeys years, and they are even putting these fancy french lavatories on street corners scattered around town.

The chosen location also has some things going for it. It is right across from a popular Borders bookstore that is housed in what was an old historic movie theater. Lots of customers stream in and out of the bookstore at all hours of the day and night.

Ah yes, and then there is the Copolla factor. Two doors down, film director, and epicurean Francis Ford Copolla has just opened a restaurant. Given the fact that Copolla was one of the featured artists in Apple's Think Different campaign, I asked Mark McClellan, head of PR for the Apple Stores, if there was some sort of collusion going on here. He laughed and said it was just a case of synergistic coincidence ..... I wonder.

Pass the Canolli .....

Facts gleaned from the press briefing at the Apple Store

• The focus of the Apple Stores is to increase market share and to create direct sales from the stores ... not as a three dimensional billboard. Success will be measured by those factors. Indeed the underdog moto of the stores is 5% down 95% to go - referring to market share.
  
  
• Direct education sales cannot be made through the store. For example a Stanford University student cannot drive the two miles down to the store, purchase a computer in the store at an education discount, and walk out with it. However they can go online at the retail store and purchase a computer at the education discount from Apple's online store. It will be delivered to their residence. Personnel at the retail store will be there to walk you through the process of an online education purchase and answer any questions you might have.
  
  
• Third party products for sale at the Apple Store (which all seemed of very high-quality, to this reporter), go through an extensive vetting process. An impertinent reporter asked if Apple receives any kind of kick-back from third-party manufacturers for carrying their products in the Apple Store. He was told, politely, but firmly that this was not the policy, that products were only evaluated on their quality and on their usefulness to the digital hub strategy.(Ok, Ok that impertinent reporter was me).
  
  
• When I first entered the store is seemed small to me, compared to pictures I had seen of other stores. However our tour guide Ron, said that the footage was pretty much the same as every other store. The only difference was that this particular store was 5 feet shorter. Apparently the home owner who lives right behind the store did not want his house torn down to accommodate the generic Apple Store blueprint. Copolla said he could make some of his 'persuasive friends' available to Apple. Apple opted to make the store 5 feet shorter.
  
  
• Customers that already own Macs and are having problems with them can bring them to the Geniuses at the Genius Bar and either have them fixed on the spot, or, if the problem is more serious, Apple will arrange to have the problem worked on elsewhere. We thought of a lot of clever questions on this topic after we had left the press event, such as will there be a charge for these repairs, what is the turnaround time if a product is sent out for repair etc. Apple is working on getting back to us with answers, but they indicated that the Geniuses would attempt to do as many repairs as possible at no charge. I know that is not a very satisfying answer, but we expect more details shortly and will update this report.
  
  
• The red hotline telephone, the one that connects the geniuses of the Genius Bar to Apple Central - in the unlikely event that your particular genius is having a slow day - is not, in fact, connected directly to a server farm of dual processor G4 Power Macs, but actually goes through to Uber Geniuses, who never have an off day.

  One last observation , and then I'll let you get on to the pictures below. It is clear that Apple wants to use these stores to further build the Apple product user community. They want you to come into these stores, play with new products, get answers to your questions and solve your problems for you ... kind of a technology cafe. They will be running regular rotating software demos/tutorials, and there will be no high-pressure selling in these stores. Lots of smiles and let me know if I can help you's. The whole retail store shebang, in my opinion, is a great, bold, interesting move. Now it will be curious to see if it works.

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For our previous reports on the Palo Alto Apple Store click here