Breakout

A huge overhaul may be coming to Apple's retail stores

Apple’s (AAPL) stores have been wildly successful, helping sell millions of iPhones and iPads, but lately momentum has stalled. Former Burberry (BURBY) CEO Angela Ahrendts joined Apple this month as head of retail and online sales and looks to be readying some major changes.

The late Apple CEO Steve Jobs was intimately involved in designing the groundbreaking stores, which eschewed cash registers and check out lines and introduced the genius bar concept. But the design hasn’t changed much since the first store opened almost exactly 13 years ago in a Washington D.C. suburb. And although the stores still generate more revenue per square foot than any other retailer, even Tiffany’s (TIF), some key retailing metrics have stagnated.

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Current CEO Tim Cook recruited Ahrendts to reinvigorate the retail business and the fashion expert has been visiting various Apple outlets in her first few weeks on the job, quizzing employees about their operations, according to a report by longtime Apple beat reporter Mark Gurman. Ahrendts plans to focus on overhauling several key areas, Gurman says.

First, she will alter the shopping experience, including bringing closer ties between Apple’s online and offline stores, Gurman reports. That may include offering a new mobile payments system to ease the checkout process. She will also focus on opening many more stores in China, one of the fastest growing sales regions at Apple but one where it has just 10 stores currently.

Gurman tapped his wide network of Apple sources to report on Ahrendts’ early days but Apple has not confirmed his report.

Ahrendts, who was born in the United States and graduated from Ball State University, first came to prominence as president of Donna Karan International in the 1980s. She later worked at Liz Claiborne and took over the top job at London-based Burberry in 2006.

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The problems with Apple's retail chain might be best summarized by the old Yogi Berra joke: that place is so popular nobody goes there anymore. With over 400 stores up and running and total revenue of almost $21 billion last year, up 9% from 2012, the retail unit is certainly not in a crisis.

Still, much of the growth has come by opening new stores, a tactic that will eventually run its course. The average number of visitors per store and revenue per store has been flat for a while now. And many of the outlets are overcrowded and less appealing as a showcase for Apple’s newest gadgets.

There isn’t much detail yet about just how Ahrendts will change the shopping experience, but there is room for improvement. Finding an Apple employee for a question or to check out can be a frustrating experience at some of the more crowded stores. Customers can use Apple’s iPhone shopping app to pay for their items without needing an employees’ assistance though the app still includes a fairly standard online shopping cart-like checkout process.

Apple has been rumored to be creating a quicker and simpler mobile payment system that could be used by all kinds of retailers and would rely on the fingerprint sensor in some iPhones. If Apple convinced a substantial number of its 800 million iTunes customers to start using the new system, it could gain ground quickly in the lucrative global payments market now dominated by credit card companies Visa (V), Mastercard (MA) and American Express (AXP).

Ahrendts developed a successful strategy to pitch Burberry’s luxury goods in China, and she could help bolster Apple’s already solid sales strategy in the country.

Ahrendts expertise may not be limited to just aiding Apple’s retail chain. The company is rumored to be developing an assortment of wearable gadgets, which could be the next big market for the tech industry. Ahrendts obvious strength in fashion, along with another recent Apple hire -- Paul Deneve, former CEO of Yves St. Laurent – could aid the design and marketing of wearables, as well.

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