Tim Cook’s ‘successsor’ quits, but it won’t upset the Apple cart
Angela Ahrendts's resignation as Apple's retail head is a surprise, but perhaps it's a blessing
Angela Ahrendts’s five year-stint as Apple’s head of retail was certainly longer than her predecessor’s. John Browett, the former Dixons boss who arrived at the iPhone maker in 2012, lasted just six months after a disastrous decision to cut back on staff in an attempt to make the company’s store empire more profitable.
But Ahrendts, the former Burberry chief executive whose resignation was announced on Tuesday night, still had a relatively short stint by the California giant’s standards.
Many of Apple’s top executives have been at the company for decades. In recent history, those who leave have typically done so because they are shown the door, or are retiring. Ahrendts’s departure was all the more eye-catching because she had often been touted as a successor to Tim Cook, Apple’s chief executive, and because it came less than a month after an exceedingly rare sales warning.
It would be premature to link Ahrendts’s departure (she will leave the company in April) to the second point. iPhone sales are declining owing to a slowdown in China, because the company has overcharged for them in some markets, and because consumers have fewer reasons to upgrade to the latest models. The biggest sellers at Apple stores are not iPhones, which are largely sold through mobile networks, but Mac computers, which set an all-time sales record at the end of 2018.
“In retail, the phone is not our largest category,” Ahrendts said in a recent interview.
Nor can Ahrendts’s time in charge of Apple’s retail division, which comprises more than 500 stores and 70,000 staff, be seen as the failure that Browett’s was. In 2018, direct sales accounted for about 29% of Apple’s $266bn in revenues, the highest share since 2013. In her half-decade at the company, Apple has opened more than 100 new stores. More significantly, the company’s stores have gone through a dramatic, and expensive, redesign. Tills have been replaced by iPhone-toting staff, and large open spaces have been filled with trees in an attempt to create a “town hall” motif.
“Our whole concept was: how does the store become more like a town square? ... almost a community hub,” Ahrendts said in 2017. “We want people to say: ‘Meet me at Apple. Did you see what’s going on at Apple?’”
The redesign has required a substantial cash outlay for the company. “Because of their unique design elements, locations and size, these stores require substantially more investment than the company’s more typical retail stores,” the company’s annual report says. Apple, which has more than $200bn in cash, can no doubt afford the cost. But the store redesigns have not been universally welcomed. “Are very long Genius Bar waits the new normal?” asked one forum user in 2017, citing their week-long wait for a meeting with an Apple employee to fix their computer.
It has also been difficult for some customers to actually find Apple employees to buy devices. “We haven’t been able to keep up with traffic since I started eight years ago,” an Apple store employee told Business Insider in 2017. “I wouldn’t even walk in the store because of how crowded it gets. During Christmas you can hardly move.”
Wall Street did not take Ahrendts’s resignation as a blow. Apple’s share price was up 1.7% at the end of trading on Tuesday night. Daniel Ives, an analyst at Wedbush Securities, said: “This move by Ahrendts is a surprise as she was one of the key executives at Apple and a linchpin around running 500-plus retail stores on five continents, and potentially was seen by some as a future heir to Cook. “Apple is entering a critical period, with iPhone demand sluggish and driving demand on the retail front will be critical. While the timing of this departure is a head scratcher, change could be a good thing for Apple as the last year has been nothing to write home about.”
Ahrendts has been one of Apple’s most high-profile executives, linking the technology business to the worlds of fashion and retail. No announcement has been made of Ahrendts’s next role, with Apple’s statement about her departure saying only that she left Apple “for new personal and professional pursuits”.
It’s likely that Ahrendts’s time at Apple will make her an even more attractive candidate for retail businesses looking to bring in a high-profile executive to run their stores. And there’s always a potential return to the world of fashion. Ahrendts joined the board of Ralph Lauren in 2018, signalling that she’s not done with fashion just yet.
Whatever Ahrendts’s future plans, her departure hasn’t been pleasant for Apple’s top executives. “A bittersweet set of announcements today,” said Cook, her boss, on Tuesday evening.
– © The Daily Telegraph