Browett led Apple’s retail empire for all of two minutes (actually more like six months, but it was an absurdly short tenure) and it was apparent that the former Dixon’s CEO probably wasn’t going to work out to many Apple watchers — including my former colleague Bobbie Johnson, who noted the cultural differences of Dixon’s and Apple when Browett was hired. Just a few months after his start, Browett started experimenting with a new “staffing formula” that included reduced hours for store employees and cutting back on new hires.

But despite his brief tenure, the Browett episode serves as CEO Tim Cook’s first big hiring error, so it’s useful to examine what went wrong, especially as Apple is still in the hunt for someone to replace Browett since he was fired in October.

Now CEO of Monsoon Accessorize, Browett made his first comments about his time at Apple at the Retail Week Live conference this week. MacRumors has the video. Here’s part of what Browett says in the clip:

“Apple is a truly fantastic business. The people are great, they’ve got great products … I loved working there. The issue is I just didn’t fit with the way they ran the business. It was one of those shocking things where you’re rejected from an organization for fit rather than competency. The learnings there, is it’s probably, actually the best thing that’s ever happened to me from a business perspective. Because you learn humility and it makes you rather a much kinder person … it also got me very clear on how I am and what I actually am like to work with.”

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Well, to begin with, they’re not really hurting as a result. At least that’s what CEO Tim Cook explained during a Q&A session at Goldman Sachs’ analyst conference this week. Cook was effusive in his description of the stores, calling the in-store experience “Prozac” for him when he’s having a bad day.

And it’s not hard to see why they make him so happy. The average stores pulls in $50 million in yearly revenue, he said Tuesday. And the stores make about $6,000 per square foot of retail space — twice what next-closest retailer, Tiffany & Co. does.

And, as this chart from Horace Dediu at Asymco shows below, Apple Stores are more popular than ever:

Cook said there were 370 million people that walked through the doors of Apple stores during 2012 — the most ever. Besides just being a place where shoppers can pick up an iPhone or MacBook, the stores function as showrooms for the Apple experience, customer service centers, and places to educate new iPhone or Mac users.

It’s been almost four months since Browett’s exit, and there’s still no SVP of Retail. Cook has been overseeing the group, while Apple is said to be still actively looking for Browett’s replacement. It needs someone who knows retail, understands the value of Apple’s brand, and has international experience, since that’s where most of Apple’s sales growth is coming from. Apple’s at the top of its game in retail in these respects, but apparently the SVP slot remains an extraordinarily hard position to fill. Apple doesn’t appear to be looking inward: longtime VP of Retail Jerry McDougal recently left the company after presumably being passed over for the position. It appears instead to be looking outside the company again, despite the bad experience last time.

In all, the toughest thing about Apple retail is, as we learned from the Browett episode, that it’s extremely high profile with almost no leeway to make significant change. Whoever Cook brings in will likely have to accept simply managing the model that’s already in place; which for the ambitious type Apple usually hires, is probably a tough sell.

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On Monday CEO Tim Cook let two of his top executives go. While the departure of iOS software honcho Scott Forstall is getting most of the attention, the retail operations department lost its leader too: John Browett, who just joined Apple in January, was also shown the door Monday. It’s also nearly a year to the day that Apple’s valuable retail empire lost Ron Johnson, who had built Apple’s formidable retail operation from scratch, to JCPenney. But this time, Apple has to start a sudden search for a replacement from scratch and the timing is far from ideal.

Hoping for happier holiday sales

Between October and December 2011 the the company saw its best quarter ever; Apple sold 37 million iPhones, 15 million iPads, more than 5 million Macs and 15 million iPods. The retail operation alone made $6.1 billion in sales during that quarter, and Apple stores sold more iPhones, iPads and Macs than ever before. And it’s no coincidence it happened when it did: the last three months of the calendar year have long been the most lucrative for PC and consumer electronics companies.

Of course, the holiday shopping time is big for any retailer. But for Apple it’s becoming critical to its success — last holiday quarter brought in more than half of the company’s net income for the entire year. But as big as last year was, Cook is actually putting more pressure than ever on holiday sales now, and likely for the foreseeable future: he’s lined up all of Apple’s most important products for a holiday season debut. Every department is looking to beat last holiday’s record sales, but the iPhone and iPad teams are done pushing out products; it’s up to Apple’s retail and operations department to get those devices and services into customers’ hands now.

Who will lead them?

Browett’s exit was not surprising to people paying attention. He made a series of bad moves once he arrived from U.K.-based Dixon’s, most notably trying to cut back on staff in Apple stores in hopes of boosting profit. He also failed to open new stores in China at the rate Apple had forecast.

Still, his departure is not the same as Johnson’s planned exit — Johnson gave more than four months notice before he left to assume the chief executive spot at JC Penney. This was a quick firing and now Cook has to start an executive search. To figure out who he could be looking for, it’s useful to look back at what he did last time.

Finding the right resume

The 10-month long search took him to a company outsider with international experience from an electronics retailer. On paper, that reads well. In practice? It didn’t work out because Cook chose someone with a discounting and cost-cutting mentality.

This time around, Cook could look inside. Apple retail operations veterans were passed over before, such as VP of Retail Jerry McDougal. Would Cook give insiders who know Apple’s culture and corporate expectations a better look this time?

Sanlitun Apple Store, Beijing, China

It also seems like going with an electronics industry veteran wasn’t a great move. Apple doesn’t do electronics retail the way that Dixon’s, Best Buy or Fry’s does it. Perhaps Apple would be better suited to branch out to someone with experience in lifestyle retail, from Nike or Coach, someone who understands Apple’s extremely valuable brand. After all, Apple Stores are more lifestyle boutiques that happen to sell a limited amount of gadgets than a traditional electronics store anyway.

Global brand experience is a must, as is someone who knows how to operate a network of international stores. Apple’s growth is coming from outside the U.S.: Last holiday quarter in particular international accounted for 58 percent of Apple’s sales. Apple continues to grow in China — it will open its seventh store there next week. Apple had planned to hit 25 stores by the end of 2012, a goal it didn’t come close to hitting, so that’s likely to be an important priority for whoever fills this position. But it’s not just the Greater China region. Cook has said in the past the Apple would like to grow more in Brazil somewhere down the road too.

Whatever decision Cook makes is going to be watched carefully and have implications for the future of Apple’s growth and its very valuable retail brand. Doing this search while ramping up for the holiday isn’t ideal, although it’s possible Cook has been planning this move for a while: Browett was known to be on thin ice. But this does represent is a bigger and more symbolic opportunity for the company: to mix up the makeup of the leadership team so it’s not uniformly male and white.

As long as Cook is remaking the company into his own, it’s as good a time as any.

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The man responsible for the decision to experiment with a new “staffing formula” that cut employee hours and fired new hires is British retail veteran John Browett. He was hired earlier this year, after an exhaustive search, to take over the reins from Ron Johnson. And Browett’s approach to “bloated” staffing caused such consternation that Apple was forced to make a rare apology and admit that the changes were a mistake.

”Making these changes was a mistake and the changes are being reversed. … Our employees are our most important asset and the ones who provide the world-class service our customers deserve.”

Remember when Cook unveiled Browett as his first senior hire after taking the CEO job? Back in January, I wrote about the appointment and noted Browett’s experience at pile-em-high, sell-em-cheap retailers — a philosophy very much at odds with Apple’s.

As well as running electronics retail conglomerate DSG, which runs 1,200 large but not exactly liked stores in Britain, I pointed out his other connections and experience:

Browett cut his teeth with Tesco, the world’s third-largest retailer and a dominant force in British supermarket retailing. He was the man responsible for building Tesco’s online presence, creating a leading web-based grocery outlet and delivery service, and he also expanded the company’s ranges way beyond food. He’s also been on the board of EasyJet, the low-cost airline that became famous for its cheap and cheerful approach to flying, for the past five years.

Sure, Ron Johnson had made his name at Target, but it was hard to see how Browett’s cost-cutting approach meshed with Apple’s approach. And at the time, defending the appointment, Cook himself stepped up and said that “our retail stores are all about customer service” and that Browett “shares that commitment like no one else we’ve met.”

At the time, to anybody who had customer-level experience of the empires that Browett commanded, that rang false. Today, it looks like a bit of a joke.

The pressure’s surely going to be on him now. But he’s only doing what many of us expected — and it will be interesting to see how Cook responds.

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According to a Dow Jones report:

In a communication with store leadership teams, senior vice president of retail, John Browett, who took the reins of Apple’s retailstores in April, said that the company had been trying a new staffing formula for its retail stores, leading some employees to see their hourly shifts cut and retail locations to be understaffed. This happened for a few weeks before the company decided to revert to its older system, hoping to rectify the problem.

An Apple PR representative added: ”Making these changes was a mistake and the changes are being reversed. … Our employees are our most important asset and the ones who provide the world-class service our customers deserve.”

Apple doesn’t often apologize, but in this case it’s easy to see why it did. Apple’s chain of hundreds of worldwide retail stores overflowing with chipper, non-pushy employees is one of its most valuable assets in attracting new customers — and its secret weapon for keeping current ones satisfied. The in-person customer service shoppers or browsers in the stores receive is key to the relationship. Attempting to save some money by having fewer employees messes with that formula. It’s a good thing Apple saw this right away for the mistake that it was.

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On Tuesday, the company announced it had hired John Browett as its new retail SVP, poaching him from his current role as CEO of the UK-based consumer electronics retailer Dixons.

Its former head of retail, Ron Johnson, left the company last year to become the CEO of mid-market department store JC Penney; retail responsibilities have been overseen in the interim by CFO Peter Oppenheimer. Browett, who officially leaves Dixons in April, will report directly to Apple’s CEO, Tim Cook.

Browett background

The move has come of something of a surprise to those who already know Dixons. Currently trying to figure out how to operate 13 different retail brands across bricks-and-mortar and web, Dixons couldn’t be more different from the singular, global tight-ship vision that is the Apple machine.

And, although it may be unfair to compare any company to Apple at the moment, we’ll just state the following for the record: Dixons has not exactly weathered the European economic climate particularly well recently.

In its last trading update, from earlier this month, Dixons noted that its sales across the group for the previous 12 weeks, taking in the traditionally key holiday sales period, were down by three percent compared to the year before; gross margins were flat.

On the other hand, Apple is, at the end of the day, just another major brand and consumer electronics giant looking for the best way of leveraging physical retail with online sales, working with its own properties and in reselling partnerships with others.

In that sense, it’s not exactly above any of the others.

Mass-market push?

Putting Browett’s recent Dixons past together with prior experience as CEO of Tesco.com, the very successful online operation of the big supermarket chain, you could also argue that Apple itself is making some careful moves into figuring out how best to tackle the next stage of its growth as a massive company, from being perceived as high-end and expensive as a luxury that everyone can afford.

That’s something the company has also been exploring through the products themselves — from less expensive, older models of the iPhone, to competitive tablet pricing, iPod nanos and smaller MacBook Air laptops.

Dixons’ replacement

Dixons, meanwhile, announced that Browett will step down from his position on the board on February 20, and will be leaving the role of CEO on April 20 after a transition period. He is being replaced by Sebastian James, who has been with Dixons since 2008 running operations.

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To say that Browett inherits a big job is an understatement. Apple’s retail strategy has been phenomenally successful over the past decade — responsible for $14 billion in sales in 2011, according to the company’s most recent results — and the company scoured the globe and waited several months to find somebody.

Immediate reaction to the news was intriguing, because it was split down the middle. On one side were those who read Browett’s credentials and the PR puffs. To them, it looks as if Apple has just hired a man who has succeeded at most things he’s tried, and spent the last five years steering a large retail business with more than 1,200 stores through a difficult period for the economy.

On the other hand, for those who know Dixons as it exists in the real world, the reaction was somewhat different: the most common refrain I saw was “Has Tim Cook ever been in a Dixons store?”.

I’m sure John Browett is a smart guy, and that Apple knows what it’s doing. But the idea of Apple Stores going Dixoney… *shudder*

— Christopher Phin (@chrisphin) January 31, 2012

Dixons operates two major store brands — Currys and PC World — and a number of online outlets, and their approach probably puts them somewhere in the region of Radio Shack and Best Buy. They are not widely loved by the public. And while it’s fair to say that Browett inherited a troubled company and improved its offerings to ordinary shoppers, he has also presided over a calamitous 90 percent fall in its share price over the last five years.

But Apple is standing by its choice, with Cook suggesting that “our retail stores are all about customer service” and Browett “shares that commitment like no one else we’ve met.”

So perhaps it’s worth asking who Browett actually is.

Let’s take a look at the evidence to try and understand what he might do at Apple.

First, he comes with serious academic chops, with degrees from Cambridge University (albeit in zoology) and an MBA from Wharton. In this Retail Week profile from 2009, he is called “affable and intellectual”, and a fierce advocate of good customer service who prides himself in knowing the ins and outs of every product on sale:

A tour of a PC World or Currys store with him reveals a schoolboy enthusiasm for talking at length about the technology behind flatscreen TVs.
On another occasion, he revealed his hands-on nature when a disgruntled customer barged into a back room after realising who Browett was. He leapt to his feet and attended to the customer.

It’s not quite on a par with the late night email habits of Steve Jobs, but this is the sort of detail that Apple will love. They will also like his reputation for driving very, very hard deals with suppliers: Browett is known for trying to extract every last ounce of value from a deal.

Meanwhile, in a Guardian profile published in 2007, just as he was about to take over at Dixons, a friend is quoted as saying that Browett is not the sort to rant and rave.

“He’s more measured, and more democratic – but not too much of a democrat.” The new DSG boss was “full of enthusiasm in a low-key, measured way” when they spoke last night, according to Mr Hyman. But the group could be in for a shake-up, Mr Hyman believes, saying: “You don’t hire John Browett if you’re not looking for some quite important strategic changes.”

This suggests his personal style is likely to fit with Cook’s own approach — but it is the last part that interested me the most: he is the sort of man who wants to have a strategic impact, wherever he goes.

Why is this particularly interesting? Because of the other businesses he’s linked to.

Browett cut his teeth with Tesco, the world’s third-largest retailer and a dominant force in British supermarket retailing. He was the man responsible for building Tesco’s online presence, creating a leading web-based grocery outlet and delivery service, and he also expanded the company’s ranges way beyond food.

He’s also been on the board of EasyJet, the low-cost airline that became famous for its cheap and cheerful approach to flying, for the past five years. Things have been pretty good at the company recently, but it is locked in a battle with the founder, Stelios Haji-Ioannou, who has publicly attacked the company’s directors for what he sees as greed. The board is trying to push through a pay deal that would grant directors substantially more cash than they currently receive.

Both Tesco and EasyJet are companies that seem to come from a very different place than Apple. They both built their reputations through being cheap, aggressive and expansionist. Of course, they pay attention to customer service — but they also achieve highly variable results.

Customer service review site Trustpilot ranks both companies as “acceptable” — Tesco with 6.6 out of 10 and EasyJet with 6.4. Dixons, meanwhile, gets just 4 out of 10: by comparison, Apple scores an 8.

At this stage it’s hard to know what this all means for Apple’s retail strategy. But take a look inside a PC World store and you see that it’s much closer to a pile-em-high approach of Tesco than the pared back approach that Apple prides itself on. The question is whether Browett’s smarts will simply be subsumed into Apple’s existing approach, or whether his instincts for squeezing value out of the lower end of the market will start to dribble into the company.

Photograph used under Creative Commons license courtesy of Flickr user cpchannel

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