Blog Post

Without a leader, what’s next for Apple retail?

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Going into the most critical sales period of the year, Apple’s (s aapl) retail ship has no captain. Again.

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 (s jcp). 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.

13 Responses to “Without a leader, what’s next for Apple retail?”

    • BongBong

      Outside the culture of Apple where all employees share the same goal of excellence, it’s difficult for former Apple execs to continue to perform miracles. Ron Johnson owns JC Penny’s culture now.

  1. Michael Camilleri

    How ridiculous to bring equality and race into everything! Job appointments should always be made on one simple proviso: skill. If you’ve got it, you get it. Sex, creed, colour, etc are irrelevant. Please stick to tech business blogging.

  2. Unfortunately for Apple this a crisis of leadership. Something Apple hasn’t seen since Steve Jobs returned to Apple in the 1990s’. The sheer will of Jobs ego kept everyone else in line and focused on the Jobs direction and vision. As important they believed in Jobs vision. Tim Cook doesn’t have that. He is probably an excellent manager…..but that’s not the same. As near as I can tell…Apple should have name Scott Forstall as CEO. Don’t tell me how hard he is to get along….do you really believe Steve Jobs wasn’t. Forstall knows the Apple mystique. And that mystique is not up for change…with Apple loyalist. Like Cary Grant and John Wayne, Apple has been typecast by its faithful. And like Grant and Wayne, they can’t break that typecast. Jobs understood that. It’s MAGICAL.

    • Shameer Mulji

      Forstall is smart, yes, but was a mere Jobs-wannabe, but he’s no Steve Jobs. When Jobs was running the show, the other execs actually had respect for Jobs, not Forstall. If all the speculation we’ve heard is true, there’s a good chance of Forstall became CEO, the other execs would’ve fled.

    • BongBong

      Fortunately, a company of Apple’s size has bred people who understand “the Apple way” (to borrow and retool a phrase from a major car company) and that will allow Apple to ride out these rough spots. Apple’s customers and shareholders will also provide incentives to the company by letting them know if they stray too far from the path.

  3. Browett was a complete, unmitigated disaster, probably the worst hire Apple has ever made in its top ranks. From the beginning it was crystal clear that this doofus had absolutely no idea what the mission of Apple Retail is. Having no one in charge would be an improvement over Browett. I think Cook has generally done a very good job with Apple, but that hire was idiotic.

    • Shameer Mulji

      “I think Cook has generally done a very good job with Apple, but that hire was idiotic.”

      No more or less idiotic than Jobs hiring Mark Papermaster to lead the iPhone engineering team. That lasted no more than a year.

      • BongBong

        “No more or less idiotic than Jobs hiring Mark Papermaster to lead the iPhone engineering team. That lasted no more than a year.”

        True. Jobs was not perfect and made his share of hiring and product gaffes. The difference that rocketed Apple to their current lofty heights was establishing a beachhead with iTunes, then the iPhone, then the iPad to build on successes. No other company has moved as quickly and intelligently executing iterative design and leveraging existing consumer goodwill.