Apple (NASDAQ:AAPL) is being forced to take a different approach to selling its products as it works to prop up sliding iPhone sales. That includes discounted iPhone prices based on trade-ins splashed prominently across its website and in stores. The shakeup appears to be running much deeper, after the company announced Angela Ahrendts, SVP of Retail, will be departing after five years in the role. The new head of Apple retail operations is expected to focus on making the Apple Store experience better for consumers while also amping up the sales aspect of AAPL’s 506 retail locations.
Apple Names Deirdre O’Brien SVP of Retail + People
On Tuesday, AAPL announced that Angela Ahrendts is leaving the company after five years as the head of Apple retail operations. Replacing her is Deirdre O’Brien, an Apple veteran with 30+ years of service. O’Brien’s past roles include heading up Apple’s Human Resources department and a tenure as a VP in charge of sales and operations.
Apple’s announcement says O’Brien’s new position will be SVP of Retail + People. This combined role puts her in charge of the 506 Apple Stores with 70,000 employees, plus 35 online stores and the overall HR management for AAPL: recruiting, training and staff support.
Apple didn’t give an official explanation for the departure of its former SVP of Retail. In its announcement, the company said Ahrendts will be leaving in April, but the company’s leadership team website already has Obrien’s updated title listed. This has led to speculation that Ahrendts may actually be stepping down immediately (though Ahrendts is also still listed as the SVP of Retail).
Apple stock saw a 1.71% surge yesterday, but that was prior to news of the Apple retail shakeup.
Why the Change in Apple Retail Leadership?
The change in leadership of AAPL’s retail operations seems likely to be in response to the challenges Apple faces as iPhone sales slow.
When Ahrendts joined the company, iPhone sales were still on fire. She had been running luxury clothing company Burberry and brought a high-end approach to Apple retail operations. Her focus was on remodelling stores to make them look more stylish, rather than opening additional locations. This included a move away from the Genius Bar to more casual service centers, which reached a pinnacle with the greenery-filled Genius Grove at the company’s flagship San Francisco store. As Reuters reports, this strategy has led to some customer service complaints.
Bloomberg notes that Ahrendts was also opposed to discounting products — something that luxury goods makers simply don’t do.
That approach worked well when the iPhone was minting what seemed to be a never-ending stream of cash for Apple. But that all changed last year when the reality of APPL’s situation began to hit home. Promotional posters for iPhone trade-in deals went up in stores, and Bloomberg reports Apple retail staff and technicians were instructed to aggressively push customers toward iPhone upgrades. The iPhone battery replacement program not only contributed to reduced iPhone sales in 2019, it also led to customers frustrated by the repair experience and a sometimes lengthy wait for a new battery.
Bloomberg quoted Ahrendts from a recent Vogue interview in which she said “the tragedy in retail is that it has become about numbers.”
At this point in time, Apple retail is all about numbers — in particular, moving more new iPhones, and selling more accessories like the Apple Watch to go along with them. That shift in emphasis means luxurious digs are less important right now that selling product and keeping customers happy.
Apple says:
“Deirdre will bring her three decades of Apple experience to lead the company’s global retail reach, focused on the connection between the customer and the people and processes that serve them.”
So far there has been mixed reaction to the shakeup in Apple retail management.
On one hand, the appointment of a long-time AAPL insider is seen as a positive. Especially someone like O’Brien who has a background in sales and operations. However, there are questions about how effective she can be in implementing change while also in charge of HR for a company that employs over 132,000 full-time staff.
We’ll have to wait and see if Apple made the right move, but one thing seems certain: expect to see fewer potted plants, more emphasis on customer service, and more sale signs in Apple retail stores going forward.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
