Ron Johnson: The Brain Behind the Apple Store, Genius Bar

Since Arriving at Apple From Target, Johnson Has Built Major Retail Network

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Apple didn't have a single store in 2000, when Ron Johnson came aboard from Target as Apple's Senior Vice President of Retail Operations. Today the company operates 137 and continues to open more. "Our average store generates more profit than a Gap store does revenue," boasts Mr. Johnson, and "our cost to deliver sales is less than Wal-Mart."

Indeed, Apple is one of the hottest retailers today, and in a keynote speech at the Retail Advertising & Marketing Association's annual Retail Advertising Conference in Chicago last week, Mr. Johnson, dressed casually in black slacks and a gray T-shirt and cardigan, highlighted a mind-boggling set of statistics. In 2005, Apple stores logged $140 million in profits on sales of $2.3 billion, with the chain averaging an unheard-of $4,000 per square foot in sales. That's double sales of $1.1 billion in 2004 and up from just $283 million in 2002. Over the holiday season, 25 million customers visited Apple stores.

Although often characterized as flagship stores or expensive commercials for the Apple brand, Mr. Johnson dismissed the notion: "These aren't just beautiful showrooms."

The legendary think-different Apple attitude is leading the former Target executive to drive more change in the stores, including the recent twist on the Genius Bar. In the last year, Apple has been rolling out the "Studio" in Apple stores, a station staffed by "creatives," such as designers and artists, who offer advice beyond the technical.

Following his talk, Mr. Johnson sat down with Advertising Age contributing editor Mya Frazier to discuss further his plans for Apple retail.

AA: How did Steve Jobs lure you from Target, where you were VP-merchandising and no doubt enjoying great success leading the team that started the discount retailer on its design path?

Mr. Johnson: It's personal and not something Apple wants us to talk about.

AA: How can revenue of $4,000-per-square foot hold steady, or even continue to grow? And how much of that growth is dependent on the iPod?

Mr. Johnson: It's both iPods and Macs, and our sales per square foot right now are growing beyond that.

AA: What are the growth projections? With about 40 new stores a year, is there a saturation point?

Mr. Johnson: Wal-Mart today announced its plans to open 1,500 stores. We operated 137 with volumes not far below Wal-Mart. We clearly can have a lot more stores and over time we'll figure out what that is. Now, we're just opening them one at a time.

AA: Can you take the Apple store beyond urban America?

Mr. Johnson: We have and we're already in Des Moines, Oklahoma City; We're in Japan. We are in lifestyle centers. ... We have to be with the right co-tenants, and you want to be near a restaurant or theater and places where people gather.

AA: Without iPod, could you have an Apple store?

Mr. Johnson: They go together. We do much more business in Mac and accessories than we do in iPods.

AA: You dismissed channel conflict in your talk today at the RAMA conference. But as you get bigger, will you be able to?

Mr. Johnson: It's actually easier as time goes on. Obviously, if you are Best Buy, you want to be the place where the coolest in technology can be found. ... Clearly, it is in their interest to have a robust Apple brand. ... If a retailer is worried about it, they aren't a very good retailer.

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