By Patrick May
pmay@mercurynews.com
SAN JOSE — Along with the iPhone and the iPad, one of Apple’s (AAPL) biggest successes of the past decade has been its chain of streamlined and shimmering retail outlets where its streamlined and shimmering gadgets are sold.
The news Tuesday that the mastermind behind the Apple Store was leaving to become CEO of J.C. Penney raises some intriguing questions, not just about how Ron Johnson’s mojo might transform the department-store giant but also about what his departure may mean for the company he helped grow into a cultural icon.
“Ron is truly extraordinary at retail and has done some amazing things with the Apple Store,” said Van Baker, a retail marketing analyst at Gartner. “It’s not like the wheels will come off at Apple when he leaves, but it’s still a huge loss.”
Johnson’s move, the first high-profile departure from Apple’s executive team in several years, comes at a time of both soaring profits and speculation over the long-term health of CEO Steve Jobs, battling cancer and currently on his third medical leave. The uncertainty over Jobs and his eventual legacy adds an extra level of resonance to the sudden exit of the senior vice president of retail. Most observers see his decision to leave Apple, just as his brainchild is coming to fruition, as driven mostly by a desire to run his own company.
J.C. Penney announced that Johnson will take over the reins as CEO from Myron Ullman on Nov. 1. The company, which had been courting Johnson for several years, said its new chief also was ponying up $50 million of his own money to show his confidence in Penney’s future, agreeing to purchase warrants to buy millions of shares of Penney stock at a future date. At the same time, J.C. Penney said it would give him $50 million of Penney stock that vests next year to make up for Apple stock, also set to vest next year, that he is giving up. The company did not make Johnson, who’ll earn a salary of $1.5 million, available for an interview.
Apple wished Johnson well in a short statement, saying “we’ve got a great retail team in place and are actively recruiting for his replacement.”
Widely considered to be the master architect behind Apple’s retail strategy, Johnson has overseen the opening of more than 300 of the computer maker’s popular stores since he joined the Cupertino company in 2000 after 15 years as a marketing executive at Target. From the first Apple Store’s opening in 2001, the concept has proved to be a wild success, captivating consumers with the stores’ spotless display areas, clean design lines and the staff’s use of handheld checkout devices.
Other retailers, including Penney, looked on in envy as the stores not only brightened up their host shopping malls but became something between high-tech bazaars and cultural shrines. These were enclaves for Apple fans not just to buy their favorite Apple products, but to hang out and revel in their collective love of them.
“He’s proven he can turn a tech company into a retail giant and do it with phenomenal success,” said Yankee Group research director Carl Howe, who has estimated that Apple Stores pull in about $5,000 per square foot in revenue per year, blowing away even Tiffany’s roughly $2,700 per square foot. “The question is, can he now take a traditional retail outlet like Penney and literally reinvent it? Because it does need reinventing.”
Analysts are divided about where Johnson’s departure leaves Apple, as it rides the booming popularity of devices like the iPhone and expands its chain of stores into upscale neighborhoods and growth areas like China. Howe thinks Apple will do just fine, hiring someone from the outside who can “take those 300 stores to 1,000. The game plan is pretty well understood.”
Contact Patrick May at
408-920-5689.
Some facts about the Apple Store
First store opened in 2001 at Tyson’s Corner in McClean, VA
There are now 326 stores worldwide
There are Apple stores in 11 countries, including France, Australia and China
Source: Apple