When Supply and Demand Switch Places: Apple Reinvents Selling

How is this feasible, let alone economically sustainable? Most retail stores try to provide one employee for every five customers. Apple stores frequently staff at a one-to-one ratio - on non-peak days.

Is this just because the company's margins are so ridiculous that they can afford overstaff as part of some customer satisfaction obsession?

Or, are they leading a significant change in what is actually for sale and what it takes to sell it?

The answer, as you undoubtedly guessed, is the latter. What Apple and its key competitors have discerned is that the product is simply is vehicle for the more valuable intangibles associated with it. Lots of big auto and heavy equipment companies figured this out a while ago, when it became apparent that the real profits were in the service and financing programs wrapped around the product itself. But what Apple has done is apply this equation to a product you can fit in your pocket.

The staffing levels at its stores reflect the value inherent in upselling the customer on everything from premium products to services to software and even to the shatter-and-waterproof cases they offer to protect the customers's investment. The company also recognizes that its success hinges on selling something people didnt realize they needed until Apple invented it for them. From the iPod to the iPhone to the iPad and whatever lies beyond, the company had to make the case for its supply in order to assure its demand.

Competitors like Amazon are now introducing their own devices in order to lock in the same sort of advantage, bolstered by the seemingly inextricable nature of the relationship once it is solidified.

So the investment in people is an investment in reassurance, in loyalty, in brand equity and in happiness with the entire economic ecosystem that goes way beyond satisfaction. JL

Chris the Brain expounds in his blog:

We no longer buy products to match our daily needs and habits. We are beginning to model our lives around the systems created for us.

If you go to an Apple Store on a slower day, you may notice there is still a pretty large amount of “blue shirts.” A second look, and it is easy to discover the reason for this: they aren't just selling anymore. Just about any other retail store in the mall will have a ratio of about one employee to five customer. Apple is running almost one-to-one on non-peak days. This isn't just because of Apple’s popularity. No, it is a sign of the next era of retail: selling expertise and ecosystems.
When Supply and Demand Switch Places
Supply and demand has been the pillar of economic development for centuries. Innovations have largely been centered around delivering more “in demand” products at lower cost and with greater efficiency. Demand came first, and then business would respond by producing supply. The iPhone is, however, a great example of a new phenomenon beginning to emerge: supply coming before demand. More specifically, the ability to create something no one was asking for, and suddenly everyone wants.
Not that Apple is the only company to do this, inventions have been creating demand from Thomas Edison's light bulb to Sony’s Walkman in the 80s. However, there is something unique about Apple’s revolution, creating demand for a product people don’t know how to use. For that one, I can only think of Henry Ford’s Model-T as a possible parallel. Even today, we all still have to learn to drive a car before we can buy one. But in all, there haven’t been a lot of world-changing products that weren't pretty easy to just pick up and use.
Because We Aren't Smart Enough to Know What We Want
Modern emerging products, such as cloud based solutions, software as a service, and integrated technologies are all being developed PAST the demand curve. Meaning that we have more supplied products and solution that most of us even know how to use or integrate into our daily lives. So where are these companies coming from if we aren’t demanding their products and services? Well, investors have come to realize that the marketing doesn’t really know what it wants next. Everyone is betting on the next Bill Gates and Steve Jobs to tell us what we want.
Selling a Lifestyle
In order to get the most from your shiny new Apple products: MacBook, iPhone, and iPad (the holy tech trilogy), you have to have a certain amount of base knowledge for using them. Apple, Google, Microsoft, and Amazon (sorta) are all now competing on lifestyle solutions more than the actual products. Each company providing a whole range of integrated software and tech to handle our lifestyle needs. In other words, we no longer buy products to match our daily needs and habits. We are beginning to model our lives around the systems created for us.
Education and Accessibility: The New Battleground
So this comes back to the INVASION OF THE BLUE SHIRTS at Apple retail stores. Apple is still showing they are ahead of the curve by throwing their resources at helping as many people as possible adapt to the Apple/iCloud lifestyle. Microsoft is learning to follow suit, and Google is still hoping their loyal geeks will be enough to bring their immediate families up to date (*guilty*). Samsung has also been proving their obsession with copying Apple by trying to do the same thing at Best Buy stores (but not very well.)

In-store training, access to advice and experts, classes on how to maximize products and software tools, large support communities; these are the new ways retail is going to have to grow their competition. And as we keep growing this competition, switching from one ecosystem to another is going to become harder and harder, meaning that converting a customer is worth more than ever before.

Tech Retail is Only the Start!
Furniture retail has learned that you can’t just sell furniture, you have to sell rooms and designs. Kitchen retailers are starting to teach customers how to cook. There are even new online clothing retailers coaching their customers on how to dress! (http://www.trunkclub.com/) Everyone thinks the Internet is killing retail, but really it is just changing its core purpose.

Before the Internet we needed retail to SHOW us what we could buy, something the Internet does a hundred times better. However, a physical retail store can still have an advantage with showing us how to USE products, especially when we need to use multiple products together. Retail stores that innovate ways to be a gateway for customers to better their life or enter a lifestyle are the ones that will last through the next couple decades.