The Man Who Built the Apple Store Never Tried to Sell You Anything

Motley Fool Hidden Gems Investing

In this episode, Ron Johnson, the architect of the Apple Store, discusses his career journey from Target to Apple and the lessons learned fr

Key takeaways

• Ron Johnson helped implement a service-oriented strategy at Apple focused on 'securing the good' of the customer.
• The Apple Store success was built on the principle of serving customers rather than transactional selling.

Main topics

• Creation of the Apple Store
• Steve Jobs's leadership style

Notable quotes

We're not going to sell our way to success. That's transactional... We're going to serve our way to significance.

Conclusion

The episode serves as a profound lesson in how brand loyalty is built

Transcript preview

Speaker 2 (0:02) Turn back the clock to 2000. Apple was a 25-year-old company that had largely been defeated. Now, they invented the personal computer. Steve came back in 97. Apple had 5 % market share. Microsoft had 95. Now, if you translated that to a baseball game, they were behind 19 to 1. Speaker 3 (0:35) That was Ron Johnson, creator of the Apple Store and author of Shop Different, on why the world's most powerful retail brand never tries to sell you anything. I'm Motley Fool analyst Jason Moser. Ron spent years working directly alongside Steve Jobs to build the Apple store from the ground up. And his new book reveals what that experience taught him about retail, leadership, and what makes customers stay genuinely loyal for life. In this conversation, Ron and I talked about the inside story of Apple's retail gamble, why he thinks new Apple CEO John Ternes doesn't need to be in a hurry, and what... his very public stumble at JCPenney taught him that no amount of success ever could. We hope you enjoy. Welcome to Motley Fool Conversations. I'm Jason Moser, and today I am excited to welcome the creator of the Apple Store, Mr. Ron Johnson. Now, prior to Apple, Ron was a merchant leader at Target. And post-Apple, he served as the CEO of JCPenney. And he's also an author. His new book, Shop Different, How Retail Revealed Apple's Genius, is out now and available wherever you get your books. Ron, welcome to the show. Well, Jason, thanks for having me on. It's great to be with you. That's a big thrill to meet you here. And I just looking forward to the conversation. I think I just want to get started here. You know, your career is unique. It covers such a broad cross section of the overall retail environment. So I guess I'd like to start at the beginning. Sure. Talk about your time at Target. What was it that drew you to that opportunity? Speaker 2 (2:12) Well, I was in business school. I went to Harvard Business School, but I'd grown up in a suburb of Minneapolis where Target was founded. Yeah, where Dayton Hudson was based. And I loved being in stores. And so when I was graduating from business school, I had offers like a lot of the kids did to go into investment banking, like at Goldman or Salomon, both offered me jobs. But I kind of wanted to do something I might love for a lifetime. And I didn't think it was banking. And so I picked retail. I loved being in stores. And so I went to work with a subsidiary at the time of Dayton Hudson. which got renamed Target as most of your people now, called Mervin's on the West Coast. And I started after business school, I got to unload trucks, which was really fun. I could do it really fast. I could get a big trailer done in about 45 minutes on a good day and filled on the floor and in the stock room. And then they let me work on the cash wrap and straighten clothes. But eventually I, you know, ended up at Target. At about age 30, it was a great time to be there. It was about 1990. And that's when the discount wars were at their peak. You know, the U.S. had about 10 to 12 discount stores, one for every region it seemed. But it was clear it was going to come down to Walmart and Target. And Target was the higher-priced suburban differentiator. And Walmart was the low-cost rural operator. But they were now moving into the suburbs. It was a great battle. And so I kind of cut my teeth in retail really as a merchant at Target. And that was a big part of what I did. Speaker 3 (3:56) Okay. So now we're getting to a seminal moment in your life and that of Apple's, I might say as well. You go to Apple. Now, how did that unfold? I mean, going to such an important and amazing business, and even at that time, maybe it wasn't quite where it is today, still a big move. How did that unfold? Speaker 2 (4:15) Well, it was actually pretty controversial. No one thought it was a good idea for me to go there. Because if you go, turn back the clock to 2000. Okay, this is when I went to Apple in 1999, late 99. Apple was a 25-year-old company that had largely been defeated. You know, they invented the personal computer. Steve came back in 97. Apple had 5 % market share. Microsoft had 95. Speaker 2 (4:46) Now, if he translated that to a baseball game, they were behind 19 to 1. I mean, that's how tough it was for Apple. But Steve concluded he wanted to open stores. And that says a lot about Steve, because this was 2000 when the Internet was going to take over the world. And prominent venture capitalists like Marc Andreessen said, you know, stores in the future will no longer exist. It's like people today saying, the AI, we're not going to exist. You know, people thought this technology would change the world in that way. But Steve knew, after 25 years, if Apple had better products but couldn't win. You know, with technology without a store, that was the missing link. And he wanted to improve Apple's go-to-market. He called me to talk to me about it because I had done some pretty significant work at Target. I was the guy who brought design to Target. You know, I get all the credit for it. A lot of people did that together. But I brought a partnership with Michael Graves, which kind of changed Target. For your investors out there, Target would have been a good buy in 1990. It went up 12 times during the decade. Oh, yeah. 12X was pretty good. It really outperformed Walmart during that period. Walmart's now won the last 25 years of that battle. But I went to Apple to work with Steve to create Speaker 3 (6:15) the stores. Speaker 2 (6:15) Now, the reason it was controversial is Apple was trading a little above cash value. Speaker 2 (6:21) You know, Apple was seen as a high-risk company. Steve was kind of legendary for firing people in the elevator. And I've had this great career at Target, which is just doing awesome. You know, people