Retailing as brand management - an example from Apple

Ira Stoll at Reason reports on a visit to an Apple store:

I was looking for a computer to replace the nine-year-old MacBook Pro on which I am writing this column. I was also considering getting a new phone and passing my three-year-old iPhone SE along to a family member.

I left without a new computer or a new phone, but with a valuable lesson—one that you wouldn't necessarily learn if you spent your time listening to the presidential candidates bashing technology companies. One of the best ways to succeed long-term in capitalism is by treating customers well rather than ripping them off.

I was eyeing one of the desktop computers with an integrated Apple screen, Apple keyboard, and Apple mouse that would have cost more than $1,000 altogether. But the employee at the Apple store advised me I'd be better off just getting a cheaper "Mac mini" and buying the mouse, monitor, and keyboard somewhere else. On the phone question, he said I should go to a Verizon store—it had better deals.

Stoll positions this response as a customer service policy for retail and maybe he's right. I suspect, however, this is part of a larger trend for big consumer brands - using the retail environment as a brand management tool. Apple's high street presence seems to serve two purposes - a place where current Apple customers can get support and a place where people (who may or may not be Apple customers) can browse the company's products with trained people to explain what all the complicated stuff does. Selling you a phone, computer or accessory is pretty much secondary to the positive impact on brand image.

I recall a similar visit to a Bose store in Liverpool. We were looking for a good wireless speaker system (it's sitting next to me as I write this) and had a long chat with the young woman serving us. They didn't have the model we wanted in store but they could get it and have it delivered, "or you might get it on Amazon or a good electronics store". This led to a conversation about how she was paid - "aren't you guys on commission?". The answer was "no", they're salaried - the company had stores primarily to promote the brand rather than as a sales outlet.

In elite retail environments - large city centres, up-market malls and some smaller high streets - this sort of retailing is becoming more evident. From Aaron Renn reporting on the mustard shop in New York's Upper East Side through to the spectacular Johnny Walker House in Shanghai we're seeing the rise of retail as brand management. This development reflects the declining effectiveness of advertising in a world of subscription TV, ad blockers and online news - large advertising budgets are being redirected into paying shop rents rather than for minutes on TV or pages in magazines. Sales don't matter next to footfall and the same principles (how many and what profile) apply to shop rental decisions as applied to TV or newspaper ad choices Whether this is a good or bad thing for the high street is moot - it maybe sustains high rents where otherwise demand would push those rents down (Renn points out that Starbucks couldn't afford the rent round the corner from that mustard shop) but perhaps acts also to push out traditional retailers from up-market environments.

....