Due to reconfiguration of store displays and staff, Fortt says Apple can actually better supervise the door and make sure people walking out with items legitimately should be. Plus, it keeps staff free for the more important tasks of doing product demos and helping shoppers who haven’t already made up their minds about what to purchase.

Fortt’s source, someone “familiar with Apple’s retail operation,” says the benefits of the new EasyPay system outweigh the downsides, something which will lead Apple to make it a feature “prominently touted” at Apple’s new Grand Central Terminal store in New York City, which is set to open Dec. 9. If self-checkout really is doing as well as Fortt’s source seems to think it is, I wouldn’t be surprised if Apple made encouraging its use at new location a standard practice, both through staff advocacy and physical layout.

Self-checkout is undoubtedly going to require a lot of initial investment in terms of making sure customers know about it and know how to use it. But if it’s already performing well by Apple’s standards, that’s a very good sign for the future, since as adoption increases it should cut down on Apple’s retail staffing costs and allow for even bigger profit margins for the brick-and-mortar stores.

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Woo hoo! Now we know when we get to buy the iPad. However, we haven’t been told where we get to buy it. Of course the Apple Stores (both online and off) will carry it, but the end of the press release has a cryptic statement that the iPad will be sold at select (emphasis added) Apple Authorized Resellers.

That probably means not every place that can sell Apple products will be allowed to sell iPads. This is a curious position for Apple and its distribution strategy. Which model does it choose?

Let’s take the iPhone. It’s very limited in distribution. Apple and AT&T controlled sales at the beginning and then eventually allowed places such as Wal-Mart and BestBuy to carry it. Apple COO Tim Cook confirmed BestBuy would sell the iPad but didn’t say who else would have that capability. Logically, anywhere you can buy an iPhone you should be able to buy an iPad, right?

What about any place you can buy an iMac? Only time will tell, but here is what I think will happen. Cue the special effects.

First to get the iPad will be campus bookstores. Education is a key market and I’m sure many parents want to give iPads to their kids before they go off to college. Traditionally in the fall Apple has promotions for education consumers that give away a free iPod when you buy a Mac. That might fall by the wayside to be replaced with a discount deal on an iPad. Most likely the iPad 3G won’t be sold there because campuses already have wireless and campus bookstores won’t have the staff to deal with the nuances of selling AT&T wireless service.

AT&T stores will obviously carry the iPad 3G, but probably not the iPad Wi-Fi. Space is at a premium at AT&T stores and the margins on the iPad are going to be relatively low. I’m going to conjecture it will allow you to buy the iPad without buying a data plan, but will do a hard sell for it. I don’t think AT&T will discount the iPad if you buy a data plan however.

Apple Specialists, who according to Apple “are independent Apple Dealers and Service Providers with a strong commitment to the Mac platform” have also been unofficially slated to sell the iPad Wi-Fi. The Specialist I spoke with could neither confirm nor deny the rumor, but simply smiled at me, which is a good sign. I doubt they’ll get the iPad 3G. Many Specialists often have retail locations that could compete with sales at AT&T locations. Apple will want to protect the AT&T stores as much as possible.

Traditional catalog retailers will also get the iPad Wi-Fi. These places already sell the entire Apple product line except for the iPhone. Unlike the other channels, I think Apple will experiment with allowing these resellers to sell the 3G versions. Catalog companies often sell mobile phones so they have the support to deal with this type of sale. Apple will want to directly compete with the other netbook offerings from these resellers and will want the iPad 3G sales from these vendors.

Left up in the air are the places you can buy an iPod and iPod touch, but not a Mac, such as department stores and even vending machines. These retailers probably won’t be invited to the iPad party. To keep Apple’s brand image going strong, Apple will want some degree of exclusivity as to who gets to sell the iPad. Too many returns and salespeople who aren’t properly trained could sour people on the Apple brand. iPads won’t be sold in vending machines like iPod nanos.

Not mentioned in the press release is the role of the highly profitable AppleCare for these devices. Anyone who sells AppleCare will be able to sell AppleCare for the iPad, but pricing will likely be more expensive than for an iPod or iPhone.

Where do you think you’ll be able to buy an iPad?

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Well, it has been almost nine years since Apple got into the retail store game and with Microsoft blatantly copying Apple with their recent move into retail, it’s time for a change. As last week drew to a close, clues emerged suggesting Apple is looking to reinvent its retail store design, and once again it’s developing a prototype. This time, however, it’s not tucked away in an aircraft hangar at Area 51, but can be found at 340 University Ave, Palo Alto.

On Friday SiliconValley.com reported:

[Apple] will build an Apple Store that project developers referred to in planning documents as “a new prototype for the company.” The facade will be entirely transparent at ground level, vast skylights will flood the store with natural light, and trees will grow inside, fed by the sunlight from above.

It sounds so beautiful. Quite unlike the building that currently stands at 340 University Avenue;

Not much to look at now, but, give it time... Image from Google Maps

According to the report the architectural review board voted unanimously to approve the plans which, although referred to as a “renovation,” include completely demolishing the facade and roof of the building. It seems the structure has been altered so many times in recent years it doesn’t qualify for historic protection.

The plans credit architectural firm Bohlin Cywinski Jackson — the same firm behind Apple’s iconic Fifth Avenue store in New York, whose entrance resembles a giant transparent-cube. SiliconValley.com’s Will Oremus says several sources have told him Apple is behind the project, while Alexander Lew, chair of the arhitectural review board, said:

Apple is pretty secretive… But at the same time, when you look at it, the design is pretty unique. …I think a lot of people have kind of guessed.

The whole design is inside-outside, with everything completely exposed. With the huge skylight, there’s going to be lots of daylight and it will feel more like an atrium inside. … We’re excited about the project.

Naturally, Apple declined to comment on the plans. Shocker, eh? Thankfully, the proposal includes some tantalising descriptive prose detailing the vision for the new store, the beginning of which should sound familiar to anyone who has ever visited an Apple store.

The proposed store is a new prototype for the applicant. Fully half the function of the store serves to provide education and service to business as well as customer patrons in addition to product sales. The store is a commons for the applicant’s community to gather.

[The all-glass store front] dissolves the boundary that traditional store facades create. By not breaking the horizontal ground plane of the sidewalk with opaque wall or landscape element, for example, the street is made part of the store’s interior; the pedestrian is in the store before entering it.

Of course, we don’t know absolutely for sure if Apple is responsible; I suppose this could be Microsoft’s doing. And while we’re at it, Apple’s much-rumoured-tablet might run Windows 7 and feature a hardware keyboard and built-in fax machine.

I’m trying to imagine what makes this “prototype” so special and new. Aside from the interesting aesthetics (Apple does like its glass-walled cathedrals) what will make this store different?

The NYC Upper West Side store has been likened to a Cathedral. Image by Apple, Inc

Are we talking the tried-and-trusted Scandinavian furniture we see today in all other Apple stores, or will we be treated to a complete overhaul? Touch-enabled surfaces everywhere? More room dedicated to iPods and iPhones? A new Tablet Bar?

I’m holding out for a luxurious coffee bar in every Apple Store 2.0. If it did that, I could practically live in my local Apple Store. What would you change in yours? Share your ideas, and coffee-cravings, in the comments below.

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The New York Times reported yesterday that entertainment super giant Disney is planning to reboot its entire chain of global retail stores as part of a major new strategy and vision inspired and guided by Apple CEO Steve Jobs.

In the current economic climate, most retailers are looking for ways to cut down on spending and holding-back on investment and growth initiatives. But according to the New York Times’ Brooks Barnes, Disney is taking a leaf out of Apple’s book and using the economy’s downtime to reinvent its own retail stores.

Disney is… getting more aggressive and putting into motion an expensive and ambitious floor-to-ceiling reboot of its 340 stores in the United States and Europe — as well as opening new ones.

This mirrors Apple’s own aggressive efforts in the last 18 months to refurbish existing stores and open whole new outlets. It’s a strategy that’s paying off. In August, Bloomberg reported that Apple’s retail stores were performing consistently well, despite the economic downturn.

Apple… increased revenue at its stores by 2.5 percent in the first six months of the year to $3 billion as the rest of the retail industry suffered. During the same period, sales at all U.S. retailers fell 9.2 percent compared with the first half of 2008, according to the U.S. Commerce Department.

So the investment and growth strategy is working well for Apple, and clearly Disney is hoping that some of Steve’s retail magic might rub off on it.

Fingerprints

Steve Jobs joined Disney’s board of directors as the majority shareholder in 2006, and, according to Barnes, “…[his] fingerprints can be seen on Disney strategy, in the same way that he influenced the look and feel of Apple’s own immensely popular retail chain.” And while Jobs didn’t personally develop Disney’s new retail strategy, he pushed the company to go for much more than a standard refurbishment. Andy Mooney, Chairman of Disney Consumer Products, is quoted saying, “Dream bigger — that was Steve’s message,” Certainly sounds like Steve, doesn’t it?

And the dream is big. Emphasis has moved away from regarding the Disney stores as merely merchandise outlets to something far more grand. “The world does not need another place to sell Disney merchandise — this only works if it’s an experience,” said Jim Fielding, President of Disney Stores Worldwide. “When consumers are ready to spend again, we will be ready.”

The new stores will include theaters for children to watch their favourite Disney features, karaoke contests and even live satellite chat with Disney stars around the world. Smart displays with embedded sensors and audio/video components will create personalised experiences for shoppers. “Walk by a ‘magic mirror’ while holding a Princess tiara,” writes Barnes, “and Cinderella might appear and say something to you.”

In addition to the theater (in itself reminiscent of Apple Store’s own in-store lecture and learning space), the new Disney stores will allow customers to interact with the high-tech fixtures and fittings via their iPhones. Employees will brandish hand-held payment devices, just as they do in Apple Stores.

Steve Jobs shared detailed documents on Apple’s expertise in retail store development and management, while Disney Executives paid visits to Apple stores. According to Barnes, there was even a ‘pilot’ store to iron-out the wrinkles. Steve Jobs insisted Disney create a prototype store, which it dubbed “Imagination Park.”

The company followed his advice, working for the last year on a full-scale, fully stocked store inside an unmarked warehouse in Glendale, California. The prototype was crucial to shaping an overall philosophy, Mr. Fielding said, noting that he discovered the shops needed more “Pixar-esque winks and nods.” To that end, one sales area is now labeled “WWTD: What Would Tinker Bell Do?”

The new stores will be unveiled in May 2010 in Southern California, Long Island and Madrid. Disney is also planning to create a new flagship store in Times Square, New York.

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The locations of the first Microsoft Retail Stores have been announced. Microsoft’s foray into brick-and-mortar retail will begin in Scottsdale, Ariz., and Viejo, Calif., CNET News‘ Ina Fried reported in an article yesterday.

Microsoft confirmed it has signed leases for both locations, where it expects to open its retail stores in the fall. Microsoft spokeswoman Kim Stocks said:

“Over a billion people use our products every day yet we don’t have a way to directly connect with them. We see the physical stores, as well as a consistent online experience, helping that.

“Our customers have told us three things — they want a more simplified buying option for PCs and devices, great technology, and competitive prices and knowledgeable staff.”

Umm, isn’t that four things, Kim?

I’m not surprised she seems confused. If she read the 124-page Retail Store Proposal I reported on this week, she’s probably still a little dazed. I know I was.

I have only two questions: Will the first store be introduced to us by Steve Ballmer, will Microsoft forge ahead with its blatantly Apple-inspired “Guru Bar,” and will you be standing in line hours before the grand opening?

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I’m glad I don’t work in Marketing. It’s a troubled, stressful world where there’s no such thing as a “lie” and the customer is considered little more than an uninformed, paranoid bag of walking money. Marketing execs rabbit incessantly about “managing expectations” or “steering brand awareness” and other essentially meaningless buzz-phrases. Either it’s subtle genius, or howling bum-gravy.

Here are a few of the “highlights:”

• Customer experience seems to be high on the agenda, though geared toward Emily, a hypothetical customer broadly categorized as one of three types: Basic Communicator, Productive Connector and Escapist.
• “Reconsideration of the Microsoft brand by consumers” — speaks for itself.
• NikeTown, AT&T, Sony, Nokia and Apple are acknowledged as providing retail/customer service benchmarks that Microsoft could learn from or aspire to.
• A Digital Media Wall is planned that will span the length of the store wall. There are lots of design mockups of what might appear on it. Check out the proposal for details.
• Windows 7, PCTV and Windows Mobile will also get their own dedicated stages.
• The stages will get their own dedicated Microsoft Surface Tables.

There’s a lot more in there besides these few points. Here are a few of the visualizations. No prizes for spotting similarities with the Apple Store. (But, to be fair, how many ways are there to design a retail store that sells computers and software?)

Proposed Windows 7 Stage

Here it's called the Guru Bar. In the proposal it's called the Answer Bar.

If you squint, this looks like an Apple store. What are the odds?!

I found this one odd. Buried in the proposal is a chart that explains which sort of customers use Microsoft’s various services. Bing is said to be for “Search Explorers” and “Search Productives.” MSN is for “Information Seekers” and “Functional Organizers.” Frankly, I’m failing to see how these are truly distinct, different things?

Microsoft was quick to post a comment on the Gizmondo website, saying:

“As a part of our process in briefing creative agencies, we shared some early prototypes and concepts of our retail store plans. No final decisions have been made. As we previously announced, we are on track to open retail stores this Fall.”

I wish Microsoft every success in their Retail stores. I’ll happily visit them to see what techy goodness is on offer. But for what is supposed to be a proposal that should make me want to run out and start building the first Microsoft Store with my own two hands, the language in this document leaves me cold.

“The brand vision: realizing potential. The value proposition for the retail offering and experience is: inclusive exuberance.”

Inclusive Exuberance? Seriously?

OK, I know I’ll be flamed for my criticism. But look — if you think this sort of language is not a screaming insult to human intelligence and dignity… well, then, you’re probably already in Marketing.

For the rest of us looking forward to seeing what these new stores have to offer, we can only hope they’re not as cynical, “corporate” and soulless as this document manages to be!

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Microsoft is counting on a turncoat to help jump-start its recently-announced efforts to compete with Apple on the retail store front. Former VP of Apple’s Real Estate department, George Blankenship, has been confirmed as a consultant attached to Microsoft’s retail efforts, which should bear fruit beginning this fall.

Blankenship is responsible for shaping the way Apple chose to place its inaugural retail locations, along high traffic routes in places with extremely high property values. The gamble was that being in upscale shopping centers would offset the high lease price of the store locations because it would attract bigger fish, or shoppers with more money to spend and more inclination to spend it.

That’s apparently the approach Microsoft wants to copy when setting up its own brick-and-mortar chain, which will obviously carry hardware from a variety of manufacturers, since it doesn’t make any computers. Those third-party partners might be interested to know that Microsoft’s apparent goal with its shiny, new, expensively placed stores won’t actually be to move product, but to showcase it.

AppleInsider cites an earlier leak as suggesting that Microsoft will be using the storefronts more as an environment for hands-on demos and product showcasing than as a place to aggressively sell product. I think it realizes that it will have a hard time staying competitive with the wide range of online and traditional retailers who sell its products, many of whom have much more leeway with regard to pricing than Apple generally allows its authorized resellers.

In a world in which ignoring advertising is becoming easier to do (TiVo, ad blockers, consumer resistance through overexposure), Microsoft might be on to something with a brick-and-mortar retail approach to raising brand awareness. The Apple Store, after all, is an iconic monolith in the mind of the American consumer, owing to the unity and uniqueness of its design. Let’s see if Redmond can come up with something equally evocative.

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Ron Johnson, Apple’s senior vice president of retail, explained that new tables would provide room for twice the amount of products to be displayed while the average Genius Bar will see a 50 percent space increase.

It’s a tough time for businesses to be trying to grow, but despite Apple’s most recent sales downturn (a 3 percent dip in the last quarter) the company sees it as the right time to expand its on-the-street retail presence. Johnson added, “We know that a lot of people are cutting back, but we’re doing the opposite. We’re investing in the downturn.”

No kidding; As well as the remodeling efforts, Apple is also building 25 brand-new stores in locations including New York City, Paris, Italy and Germany.

Johnson admits, however, that the current economic climate has had an impact. While customer foot-fall in Apple stores is still healthy, it’s not as strong as last year, though that was due in no small part to the launch of the iPhone 3G. Perhaps the introduction of a next-generation iPhone can help improve that situation this summer.

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Taking charge of your own retail distribution is a questionable move even in the best of times, but it looks like Microsoft is bent on opening up another battleground between themselves and Apple, and that’s where they want to do it.

It’s a gutsy move on Microsoft’s part, and it’s hard not to offer up some begrudging respect for a company willing to lay it all on the line like this, considering the economic conditions. There’s no timeline for the actual opening of these stores, so they may just be preparing well in advance, and waiting to weather the storm.

The news of the plan to open retail stores comes via an announcement of Microsoft’s decision to hire 7-year retail vet David Porter as Corporate Vice President of Retail Stores, a move which pretty bluntly suggests that they’re planning on having some for him to oversee. And, in case there was still any question about it, they actually mention said plans in their official press release on the subject.

The big question from Apple’s perspective is: Does Microsoft retail pose a threat? I believe the answer is no, for a number of reasons. First, I think that any market share grab that occurs as a result of the new stores won’t come from Apple’s customer base, but rather from their own existing customers who would otherwise buy at Best Buy or some other large, multibrand electronic retailer.

Second, Microsoft still depends on third-party hardware manufacturers, at least in regards to their primary PC products. Apple sells third-party gear, but its own computers and software are the focus of the store. That means that Microsoft stores won’t carry as strong or cohesive a brand image as their rival, which has been a big part of Apple’s success over the years. Microsoft does have the advantage of having the Xbox to sell, and Microsoft-branded peripherals, but with a hodgepodge of PCs, style and reliability come into question.

Finally, Apple has the advantage of experience on their side. They’ve been in the retail game for eight years, and they seem to be fairly good at what they do. They won’t take Microsoft nosing in on their territory lightly, and you can bet they’re already formulating a response strategy as we speak. Yes, Redmond is bringing on experienced staff, but that doesn’t beat the experience of an entire company.

All of this isn’t to say that Microsoft can’t be successful in their own right. They have the advantage of being able to stock and sell netbooks, for example, which is huge, growing market that Apple doesn’t have a presence in. But if they think they’re going to deliver a knock-out blow to their competitors, they’re sorely mistaken.

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As much as it saddens me to admit this, I must say it. I’m not the fanboy I thought I was. Gary Allen has completely shown me up. His devotion for Apple compels him to attend Apple store openings globally. What is this fascination and how does it translate to Apple marketing?

Going through my RSS feeds, I came across Allen’s photos of the recently opened West 14th St. Apple Store in Manhattan. And it immediately hits me. This is why Allen goes to every opening: a beautiful descending glass spiral staircase, illuminated by a circle of lights below; glass walkways and a complete three story warehouse retrofitted with Apple simplicity in gray paneling, and beach wood accents. This is how I imagine my house to look, and it makes me want to fly to New York simply to enjoy the aesthetic presence of the store. It’s an architectural marvel, and maybe that’s just enough incentive to garner foot traffic for Apple.

Why it works

Nothing beats word of mouth marketing, and by creating a completely open environment for customers to enter and be free to play, talk or hang out is a beautiful thing. It’s like the Starbucks of the IT industry. You compare the Apple store to the Dell stands you see in malls and you realize the immediate polarization in business models as well as brand. Apple fosters community-building relationships, not only between customers and machines, but between customers and other customers. Walking into an Apple store, I feel completely open to talk to the stranger standing next to me playing with the same device. After all, we tend to share one huge interest: our devotion for Apple. It’s always interesting to see a new customer’s interaction as well, the immediate joy they gain from playing with an iPhone or Apple TV. It’s great to see the consumer-on-consumer action, where a knowledgeable customer is more than willing to share their interest and facts with others. Their enthusiasm and passion is conveyed, and the word of mouth has succeeded. Apple now has a new customer.

In that regard, Apple Stores are not about the sale. They are geared toward the special interest groups, giving rise to the Genius Bar and the kids section. These focus topics for discussion with professionals and other users. I remember when the iPhone was released. I picked up an iPhone and realized to my surprise the phone was completely activated. As other people caught on, you could see them calling friends and family right from the store. The staff was friendly, inviting and continued to cheer customers on their purchases. It struck me then that if ever I was in need of free access to the Internet, I could swing by a local Apple Store and get work done.

The Next Social

Apple continues to have a strong community presence, but imagine that spreading to local Apple Retail Stores. Apple has already taken this into consideration, what with their many workshops and one-on-one help services. Larger stores have gone so far as to have dedicated presentation rooms. Imagine being able to reserve it for meetings and more. You wouldn’t need to bring anything, the store’s already chock full of supplies. Throw in wifi, and you’re set.

So the next time you have a few hours to kill, be sure to grab a tea from the Coffee Bean and Tea Leaf, and hang out at an Apple Store for awhile. Who knows, you might make a new friend.

P.S. I would love to see Frank Gehry get his hands on an Apple Store. That is something I would definitely make a trip for.

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