When Ron Johnson left Target in 2000 to join Apple as senior VP for retail, conventional wisdom held that a computer maker couldn’t sell computers. Johnson tossed out the retailing rule book and, working alongside Steve Jobs, built the Apple Store from scratch. In November 2011 Johnson took the reins as CEO of the venerable J.C. Penney department store where investors and the board hope he’ll work some of his magic. In this edited interview, HBR senior editor Gardiner Morse talked with Johnson about innovation, leadership, and when to trust your gut.
HBR: Brick-and-mortar retailers are struggling, in part because of the growth of e-commerce. Is the traditional retail model broken?
Johnson: I don’t think the model is broken at all. Many stores are executing it very well. Look at the Apple Stores, which have annual sales averaging $40 million per store in a category that in 2000 everyone said would move entirely to the internet. Today the Apple Stores are the highest performing stores in the history of retailing. Physical stores are still the primary way people acquire merchandise, and I think that will be true 50 years from now.
Aren’t consumers dramatically shifting their buying to the internet?
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It varies a lot by category, but only about 9% of U.S. retail sales are online today, and that rate is growing at only about 10% a year. And a lot of that buying is from the online businesses of physical retailers like J.C. Penney and Apple. In reality, what’s growing is physical retailers’ extension into a multichannel world. It’s not as though there’s a physical retail world and an online retail world, and as one grows, the other declines. They’re increasingly integrated. But physical stores will remain the main point of contact with customers, at least for the stores that take the lead in this integrated environment.
via Retail Isn’t Broken. Stores Are – Harvard Business Review.