When Apple announced yesterday that Deirdre O’Brien will become its Senior Vice President of Retail and People, it focused on the positive side of a fairly shocking revelation — the company’s much-admired retail chief Angela Ahrendts is leaving after only five years.
Having covered Apple for a long time, I found the news of Ahrendts’ departure unsettling. Even putting aside her visibility as one of the tech industry’s leading female executives, her long-term strategic ways of looking at retail, and her apparently strong rapport with retail employees across the globe, there are three bigger reasons her departure could hurt Apple in the long term.
First, Ahrendts joined Apple from British fashion house Burberry, which she led out of a sales slump as CEO — a position she might one day have taken at Apple. Ever since her hiring, and more so as she gained Apple experience, she was believed to be one of very few people who could one day run the design- and marketing-focused technology company.
On a related second note, Ahrendts was a complete contrast with her predecessor John Browett, an electronics retail CEO whom Apple fired after only months on the job. Unlike Browett, who reportedly pushed Apple retail employees to aggressively upsell products like traditional electronics stores, Ahrendts took the opposite approach, making the stores feel even more like upscale, pressure-free boutiques. Apple’s retail locations became measurably nicer under her watch.
Third, and perhaps most importantly, Ahrendts helped guide Apple through its rocky but ultimately successful transition into selling wearables, as well as the smooth evolution of its physical and online stores during a time of historic retail upheaval. As brick and mortar chains collapsed, Apple thrived, and its online retail stores were more smoothly integrated into its international websites.
It’s unfair to either credit Ahrendts with all of Apple’s retail successes or downplay Deirdre O’Brien’s potential to do even better in that role. But my gut feeling is that this development signals some major behind-the-scenes change in Apple’s retail direction.
Yesterday’s announcement has the feel of a temporary move — a way to avoid what happened with Browett, whose dismissal was followed by an extended retail leadership vacuum until Ahrendts was hired. O’Brien already has a large HR-related portfolio at Apple, and there’s no way the company could reasonably expect her to oversee “Retail and People” for several years.
In that light, I wonder how Ahrendts’ departure will positively or negatively impact Apple’s retail stores, a question I suspect won’t be answered conclusively for a year or more. Here are a few possibilities:
- More aggressive iPhone sales. Apple was reportedly concerned years ago that its stores are not making as many iPhone sales as they should be, and recent evidence — including a Vogue Business interview last week with Ahrendts — suggests the stores still lag in iPhone sales, while leading the world at selling Macs. As we’ve recently seen on its website, Apple could be preparing to change tactics to make its retail stores the top destination for trading in and buying phones.
- A heavier focus on tech, including video and AR. Apple may be preparing to move beyond selling wearables on fashion, and into more experiential selling experiences, based on its known work on a streaming video service and augmented reality hardware. Boutique-style displays focused on watches and bands may give way to greater spotlights on video screens and AR glasses.
- Slashing stores and employees. Apple might be planning to more aggressively cut either ill-performing stores or excessive retail employee counts. The company has already closed a few older stores, and like its suppliers, may see less of a need for huge head counts due to fewer anticipated customers.
On the last point, Ahrendts spoke just last week about the “tragedy in retail … that it has become about numbers,” where cutting costs rather than investing in people has become a key to profitability. In light of slowing sales, Apple CEO Tim Cook might be moving aggressively to change up or cut costs in retail stores, and Ahrendts may have felt that the time was right to leave on a high note. I suspect the decision wasn’t hers alone.
Regardless, everything will work out fine for her — she made roughly $24 million each year she worked at Apple, and that was actually a pay cut from the reported $27 million she made in one year at Burberry. For Apple’s retail initiatives in a post-Ahrendts era, however, the outlook isn’t quite as clear, as the company’s latest iPhone sales promotions have felt clumsy and uninspiring. Here’s hoping Cook and O’Brien have some smart plans to keep moving both Apple’s stores and sales forward.
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