Are Apple stores overstaffed?

ifoAppleStore’s Gary Allen alleges that John Browett, head of Apple Retail, felt the stores were “too bloated”. He cites “numerous tipsters” that Browett ordered a reduction in the number of employees. As the information on employees and visitors is public, we can quickly test the assumption.

The following graph shows the relationship between Retail employees and Visitors on a global basis.

The total figure for the last quarter was 41,000 employees for 83 million visitors. This is above the expected ratio as shown by the line shown in the graph. Reversion to that line would imply that about 35,000 employees should have sufficed during that quarter.

However, Apple’s business is cyclical and employment is not–or at least not on the same frequency of cycle.

During a slow, transition quarter, there will be over-employment and during a rush holiday period there would be under-employment. Consider the right-most point in the chart. It represents Q4 2011 when there were 110 million visitors and only 800 more personnel than during the last quarter.

Overall, this ratio of visitors per employee has been relatively steady, though declining.

Perhaps the company should check this decline. Perhaps the company has not been able to match demand with supply as well during the last six months. Perhaps they are overstaffed. However, I doubt that there has been a decision to reduce the overall level of service offered. Or that service is not paramount.

The accusation that employment is being sacrificed for the sake of profits seems disingenuous. The stores were never designed as a profit center. They have to be profitable in the sense that they have to justify themselves. But we need to recognize that they rely on a brand and product mix that is unique to that store. In return, they are designed to sustain that brand and offer a service rather than merely a sales channel.

For the head of the division to misidentify this fundamental purpose for the operation would be catastrophic and I would expect a lot more evidence to support such an extraordinary claim.

  • In the NYC Grand Central Station store, they are showing people how to check themselves out. You pay via your phone. Is this going on everywhere? Related to hope to reduce staff? I’m thinking about how there’s the “check yourself out” line at a place like Home Depot or some grocery stores.

    • SpeechGuys

      Yes in most stores.
      Even better than Home Depot, I just walk in use the Apple Store App to check out and walk out. No line, no fuss.
      It’s not so they need less employees, it’s so they can focus on people that need service, not someone to upsell me or register the DVI dongle I just bought.

      • Well said!

      • Richpmd

        Sounds like a potential enhancement in user experience. This constitutes a reasonable experiment with little downside risk unless it leads to a permanent and significant reduction in staffing.

  • bobloblawlobslawbomb

    Seeing the reduction in hours at my Apple Store was a tragedy. All the part-time staff, most of which were so because of school, had their hours evaporate. A lot of great people quit.
    While I would previously tell interested folk that we are always hiring and have interviews every month or two, my store has not hosted one since March. Again, a lot of great people applying and suddenly not being given the opportunity.

    So on the sales floor we regularly had minimal closing staff, two of which are doing iPhone contracts and another two doing personal setup or accessory sales. Not to mention a front greeter, who becomes the one turning customers away by this point. I regularly see a solitary specialist/expert running all the iPad and mac sales alone.

    Apple stores should never need to turn customers away because it will simply take too long to talk to someone.

  • Henry

    Thanks for this post. I’ve been surprised at the hysteria about this news item, and that people would think the new guy is that stupid.

    Having been to about five Apple stores in the last year, sometimes they do feel bloated in terms of sales staff, with many staff just standing around, and at times even outnumbering the customers. These are some of the NYC stores and in other locations.

    Browett seems to have approached the staff rationalization insensitivitely but I’m guessing he’s not an idiot. Which makes me wonder why Gruber and Dalrymole are picking on him…

    • Tatil_S

      Johnson is not doing too well at JC Penney so far and Browett is not doing too well at Apple. Maybe, each brand type requires different approaches and these guys have only one play book. Whether that would qualify them as idiots, I don’t know. There are many great brands ran to the ground by boneheaded management mistakes that did not get reversed despite becoming very obvious to the untrained eye on the ground. Managers who don’t use their own products (or shop at their own stores) do not notice what is going on. They gotta have passion for their own products. Do you think Starbucks would be as successful if its CEO did not drink coffee? Or Blockbuster CEO who don’t rent DVDs? Wait, I think we know the answer to the latter one. 🙂

    • Poindexter

      As you can see from the DF blog…he does not produce any significant content, just jumps on the Hype/Hater bandwagon to sensationalize.

      • JohnDoey

        That is the definition of a blog.

      • As one can clearly see, trolling takes many forms. Gruber does produce content. That you don’t see it is more than telling.

    • The staffing in stores is designed to handle peak situations, holidays, school season and, of course, new product launches. It’s very naive to “trim” people when there’s a bit slower time and rush to hire in the last moment when you have a product launch.

      Those are people, not iPads. You can’t produce a quality Apple Store employee in several hours.

      Many quality people have left because of Browett’s “mistake” as he calls it. And the morale is now low. And honestly Apple’s been into screw up after screw up last year.

      I don’t want to say it, but maybe the naysayers are right, and the execs currently running Apple aren’t up to the task. What a huge disappointment.

    • JohnDoey

      They are picking on him because he is doing a bad job. That kind of high standard making over the past 15 years is part of why Apple products don’t suck. Even smart people with great résumés are criticized when they screw up. Your argument sounds great for Microsoft Stores, though.

      • Henry

        This is not a very helpful comment. As Horace showed, there is currently more apple staff per store than normal. So just because apple has good customer service which depends on many staff per store doesn’t mean staff levels must never be reduced. As a thought experiment, suppose apple stores had twice as much staff per customer than they do now. Would there be any doubt that apple should reduce staff? So the relevant question is whether the current level staff is optimal and not whether there should be a high staff to customer ratio. We all agree on the latter, but some people seem to be confusing these questions.

  • Interesting take; and rational as usual.

    Small typo in the penultimate paragraph:

    “But we need to recognize that they on a brand and product mix that is unique to that store.”

    Seems there’s a word missing between ‘they’ and ‘on’ but I can’t figure out what…

    • There should be a “rely” between “they” and “on”. Fixed now.

  • gprovida

    A voice of reason versus a lot of assumptions. However, a new senior manager whose past experience is not Apples may make mistakes. There is considerable evidence that the Apple Stores are the most intensely metered retail operation imaginable. This creates huge data sets that can be seductive and without strong sense of humility and fragility of human judgement [not a strength of most senior successful managers] they can find the data that meets their expectations.

    I am not saying this is what happened, but the implication in the Apple announcement that what was intended and directed was a mistake and that mistake has been corrected suggests that Apple and its old/new management is still learning how to handle such a unique, public, and very complex environment.

    The real test will be Sept/Oct with the roll out at a minimum of iPhone 5th gen as well as other rumored products. This will seriously stress the supply chain [but seems manageable] but more importantly the Apple Store retail experience. A lot of new processes from buy with your iPhone app, pre-order pickup, new store layouts, new staff training and workforce structures, etc. will be in the mix for Q12013.

    I have to admit the recent mess up with environmental standards, weak commercials, and now the retail store, does show a pattern that things are not hitting on 100%.

    • Tatil_S

      The first and third points are valid, I found the commercial funny and cute. Web commentary and tech bloggers also denigrated iPhone 4S (or the origial iPad if you’d like), which turned out very successful. These groups have their biases, some nefarious, some good, and they do not make a good representation of the public at large.

    • JohnDoey

      To be fair, the commercials have sucked for 2–3 years now. Steve Jobs liked exactly one of the iPad commercials he saw. That is in his bio.

  • r.d

    After the Chinese workers got raises.
    1. Apple retail employees used the media to get raises.
    2. Apple started running Genius ads.

    So either Apple didn’t like giving raise or there was slow down
    in growth of retail.

  • def4

    I think there is a fair amount of confirmation bias at play caused by the customer experience offered by Browett’s previous retail leadership.

    • JohnDoey

      Yes, but only people in UK know who he is. Here in the US we are just wondering WTF happened to the stores?

  • George F

    Horace, there is no doubt Apple Retail is going through cost cutting. Go to a store and ask about the hours. Check out the reduced events in store. This is not just about staff, it’s the knife across the lot. More will surface on this in time, unless the about face on staffing also indicates a reprieve for the other cuts.

  • Michael Long

    This seems pretty clear… “Browett disagreed with his staff, and said the chain needs to learn to run ‘leaner’ in all areas, even if the customer experience is compromised.”

  • dmarcoot

    John Browett is on youtube stating that “service is sales”. His reputation from previous retail experience shows no evidence he has a grip on Apple’s fundamental purpose. His reputation is for creating the most un-Apple experience possible.

    • JohnDoey

      Outside of Apple, RETAIL SUCKS. Browett is an iconic example of that.

      I had my first bad experience at an Apple Store about 2 months ago and I haven’t been back. Not deliberately — they just made it feel like Macy’s for me one day and it’s hard to get excited about going to Macy’s. It is a pit of despair.

  • Rich

    For Browett to only see the stores as a retail function in Apple’s model is too narrow. While most retail have cyclical seasons for sales and staffing. The Apple retail store’s purpose is not to move product but a place to build customer relationships, the ability to experience a Apple products, and customer support which is difficult to quantify.
    On a personal level when visiting a few Apple stores I have found that many employees are standing around talking among themselves. This does not mean the customer is not being served, but there are times the customer is a repeat or understands technology that they dont need assistance.

    • JohnDoey

      Stopping employees from talking to each other is NOT what I pay Apple for.

  • Pingback: Friday links: a costly illusion | Abnormal Returns()

  • RobDK

    Many readers, especially if they are from the UK, will have a very colored view of John Browett after having suffered the Dixon retail ‘experience’ for many years…

    Putting that aside, is not the logical reason to be found in the macroeconomic downturn that the global market is experiencing, and which surely had a role in Apple’s near miss in the last quarter? Things are sliding into recession in Europe, and it does not look good in the US, so maybe they took precautionary measures, but the new guy did not communicate and execute as one expects for Apple? Maybe there has been a parallel small scaling back in production, which we have not seen or noticed?

    • Simon

      Maybe there has been a parallel small scaling back in production, which we have not seen or noticed?

      Of course there is a scaling back in production and it’s not small either. It’s called iPhone transitioning which everyone knows. Just wait until the new iPhone and the new iPad Mini, etc, are available. The stores will be flooded with people again. Unlike other retail stores, Apple has two types of seasonalities, one from the literal seasonal cycles and the other from product cycles.

      However the real contentious point is that the claim the new head of retails sees the Apple retail stores as a profit center; i.e. he wants these stores to be as profitable as possible, even it means compromising the experience. Horace seems to be very sceptical of the matter but Browett does have history of doing exactly that: compromising the store experience in the search of the highest profit.

      Nobody’s still sure if Browett was really looking into make fame for himself within Apple by making stores a true maker of profit. But seeing his previous history I’d think it’s still very possible Browett was indeed thinking Apple stores should be more profitable by themselves instead of being mere accessories to the main Apple business.

  • Relentlessfocus

    What I found most encouraging was the speed with which this decision was turned around and a mea culpa issued. Like others from the UK I’m suspicious about Browett’s potential Dixon’s mentality but I also assume that the interview process he went through was thorough and thoroughly Appelesque. Dixons undoubtedly got brought up frequenly during the interviews and he must have said the right things or he wouldnt have got the job, So I’m willing to see Browett as a new manager learning the ropes if a bit clumsily.

    I think it unlikely that he changed his own mind so quickly which suggests someone(s) is watching over him closely. Mark Papermaster cost Apple a great deal to hire esp. as it ruffled IBMs feathers but Apple let him go when it became apparent that he didn’t get Apple’s way of thinking. Sometimes that happens even with the best of intentions. I imagine that the leadership circle at Apple will be watching closely.

    • JohnDoey

      Watching is no good. Firing is good.

    • If you have to watch over someone do their job and correct them for basics, it means you’re doing their job. Which means they’re useless.

  • LRLee

    I view any speculation on Browett’s motivations as just guessing. However, if he or anyone at the top wants to experiment with Apple’s retail experience, then now is the time. The stores are strong, growing, and can withstand and recover from failure. Changes can be backed out or doubled down on. The antibodies against change (things are going great, change might lead to failure) will always fight anything that might harm success. Disrupting the retail experience now has a better chance of succeeding than trying to do something should the stores start seeing problems of some kind. Easier to change the course of a ship that’s not sinking.

    • JohnDoey

      That is absurd. This is the worst time to experiment. The stores are the most successful in the world, Apple is moving into the mass market go-for-share period of iOS (think iPod nano) when we will likely see Apple ship the best $300 computer ever made, and we are in the year after the founder died. Now is the time to run at full speed on muscles that were built up over the past 10 years, not the time to hit the gym and do squats hoping to gain more strength.

      Apple has not changed course for 15 years. It is one straight line the whole time. This Browett character is certainly not the one to do it.

    • Richpmd

      I disagree. This seems too early for Apple to be disrupting it’s current retail model. Even though very profitable Apple’s market share in all of it’s product lines (except iPad) is low. The “overstaffed” stores are a great catalyst and support for customers converting from other platforms. Even if no new product lines are developed these conversions will be a powerful growth engine for years to come. The retail model may well benefit from tweaking but it’s hard to see how cutting staff would be a productive tweak.

    • LRLee

      Saying it is “too early for disruption” or “the worst time for experimentation” implies that there is a “right time” for disruption or experimentation. If so, when would the right time for disruption be? If not when the stores are at their strongest, then when the stores are in distress? My opinion is the Apple Retail Experience is either strong or it is in distress. There is no middle ground, Apple cannot achieve a stasis acceptable to the blogosphere, Wall Street, investors, etc. The first time Apple closes a retail store because of perceived performance, the skies will rain fire. (My guess is that closing Apple stores will be the next great disruption to the Apple Retail Experience.) I don’t believe that Browett meant to disrupt the Apple Retail Experience. It just wasn’t that big of a deal it seemed to me. But the cries for his head are exactly why change is hard to do. Perceived failure is hugely magnified. The complacency of success is the most difficult to fight for the forces of change. After all, haven’t you won? Aren’t you winning? The champions that were RIM, Nokia, Dell, Sony, etc. reveled in their success. They weren’t going to let anyone just walk in and take their stuff. Were they?

  • Rbthinks

    Is “hours worked” info available? I’d find that a more useful vertical axis than employee numbers … I think that could address the seasonality issue

    • Tatil_S

      I think the numbers released are quantified in “full time employee equivalents”.

    • Employee numbers are equivalent to hours worked as they are FTE or Full-time Equivalent employees.

  • N8nnc

    FYI – The heading for the second chart has a typo: “vistors” for “visitors”

  • JohnDoey

    It is a failure of the head of Apple Retail that this story even exists. I have been shopping at Apple Stores for 10 years under Ron Johnson, and never heard anything like this. I don’t actually care what happened or whose fault it was. It is Browett’s fault by definition and he has to go and go now. If Apple is run like any other retailer there is zero point in the stores existing.

  • JohnDoey

    This is like if there was a new head of the App Store and iTunes Store who decided that a 1% profit is not enough and started monkeying with developers and content producers. Do not fix what is not broken.

  • stevenjklein

    My mother recently bought a new iMac and a One to One agreement. Now she often finds when she visits their website that every appointment slot is filled.

  • This is really nice information. I’m looking for something similar like this. Thanks for this useful information.