One day last summer, my world shattered.

advertisement

advertisement

I was in my parents’ kitchen in Reno, Nevada, talking to my mom and waving my iPhone in the air when I dropped it on the floor. (Spanish ceramic tile.) I picked it up and let out a moan. “What’s wrong?” my mom said. “Look!” I replied, showing her the phone’s back glass, which now resembled a mosaic of an intricate spiderweb. My mom, who still uses an unsmart flip phone, looked at me as if I were crazy as I devolved into a whirl of panicked activity. I grabbed my laptop, went on Apple’s website, found an Apple Store less than 10 minutes away, called, and made an appointment. A few hours later, I was in the store at the Summit Reno shopping center, where I was greeted seconds after I stepped in the door. The whole process of getting my iPhone fixed was miraculously efficient. In under 15 minutes, a receipt for Repair No. R96856205 was in my inbox, $31.24 was in Apple’s coffers, my phone was in my hand–and I was whole again. Days later, sitting at a white conference table in Burberry CEO Angela Ahrendts’s white, light-filled office in London, I have a mini flashback as she talks about the global march of mobile telephony and waves her iPhone in the air. (Hardwood floors.) “We have got to keep pace with how every consumer, from India to China to Brazil, is carrying the same devices,” she says. Mobile is transforming retail in ways that she finds essential but at times difficult to comprehend. She muses on how rapidly the technology has been changing–and how quickly tech-addicted shoppers are changing their behavior, too. “They’re just moving.”

advertisement

In eight years atop the venerable British brand, Ahrendts has more than managed to keep up. Working closely with designer Christopher Bailey (see “What’s Next for Burberry?”), she has overseen the strongest digital push in the fashion world, building relationships with tech giants including Google and Apple. In September, Apple dispatched a set of pre-release iPhone 5s’s–accompanied by a phalanx of security guards–so that Burberry could use them to shoot an entire runway show. The strength of that Apple partnership and the degree to which Ahrendts has been thinking about the transformative power of technology became clear about a month after that runway show, when Ahrendts, 53, revealed that she would leave Burberry in the spring of 2014 to become Apple’s senior vice president of retail. (She spoke with Fast Company extensively last summer and fall but declined further interview requests after the announcement was made.) At first, many observers reacted with puzzlement. Why would a CEO become someone else’s underling? For a talented and ambitious merchandiser like Ahrendts, though, revitalizing Apple’s enormous retail business might be the ultimate challenge. The Apple Stores’ annual revenue of just over $20 billion is more than six times Burberry’s, its 30,000-strong staff is almost three times as large, and–due respect to the trench coat–its products have insinuated themselves more thoroughly into consumers’ daily lives. Yet Apple’s retail business has also fallen into relative stasis. Its per-square-foot sales are still the envy of retail–just over $6,000, about twice what runner-up Tiffany records–and net sales rose 7% in fiscal 2013, but per-store numbers were flat, since Apple opened 26 new stores during the year. Morale has flagged as the retail operation has struggled first through a season under an ill-chosen leader and then a year without any chief at all. As envisioned and created by Apple mastermind Steve Jobs and his retail lieutenant Ron Johnson, the stores’ design and customer experience were radical, “but they haven’t progressed that much in the past five years. If you’re not reinventing your experience every five years, you’re behind the curve,” says a longtime member of the retail team. “Competitors have been trying to emulate Apple’s retail experience for quite a while, and Apple’s been lucky that nobody has done it better. But that’s not a great position to be in, where the competition just sucks more than you do.” Press-shy as ever, Apple, too, declined to comment for this story. But it’s not hard to see why, after a nearly yearlong search, the company settled on Ahrendts. A beloved manager, she transformed Burberry’s culture, more than tripled earnings, expanded its global footprint, and helped to restore its historic reputation as an innovator. All Apple wants her to do is exactly the same thing. “When you have trust and you get that trust in place throughout the company, people are empowered–people are free.” – Ahrendts Steve Jobs was famously empathetic–at least with consumers. Take the blueprints of the Apple Store. Tim Kobe, who has worked on Apple’s store design from the beginning, recalls how Jobs flew into a rage one day in 2004 when the team was gathered in Silicon Valley to look at samples of Indiana limestone for the facade of the Chicago flagship store. Jobs demanded a bucket filled with water, and when he got one, he threw it against the stone. It wasn’t a fit of pique–it was a lesson “in the way Steve wanted the brand to be perceived,” Kobe says. Jobs felt that the design team had not adequately considered how the limestone would look on a blustery, wet Illinois day, as opposed to in the California sunshine. “From the consumer-experience standpoint, it conveys that Apple is a brand that has a magical quality.”

advertisement

Empathy, toward Apple customers or anyone else, has been lacking in the recent days of the Apple Stores. The staff had adored Johnson, who developed the Apple Store concept with Jobs and ran the retail business for more than a decade. He could be cocky, but he was also charismatic and thoughtful. In the early years, he interviewed every store manager personally, because, says one Apple veteran who worked with him, “they were the ones delivering the brand.” Store associates appreciated his efforts to communicate regularly via video and lovingly joked “about how perfect his hair always was,” another Apple veteran recalls. After Johnson left in 2011 to attempt a turnaround of JCPenney, Tim Cook, with the help of the recruiting firm Egon Zehnder, replaced him with John Browett, then the CEO of the midmarket electronics retailer Dixons–basically, Britain’s Best Buy. Even at the start, it seemed like an odd choice. “Is that the image Apple wants when you walk into a store? Best Buy?” says BGC Partners analyst Colin Gillis. “No.” Cook frequently uses the term wicked smart to describe the people who already work at Apple, as well as the ones whom he wants to work at Apple, and Browett fit. Problem was, he proved less deft at navigating Apple’s often ferocious executive environment. “John was definitely wicked smart,” says someone who has worked with both men. “But even wicked-smart people don’t necessarily know how to figure out a culture.” Outside headquarters, Browett’s regime–light on inspiration, heavy on cost-cutting decrees–was, says a longtime store staffer, “demoralizing.” (The store employees I interviewed would only speak anonymously. “Don’t get me fired,” one pleaded, citing the company’s no-unauthorized-interviews rule. Also, a note to those at Apple HQ who keep sales records: The employees quoted are not the ones who fixed my iPhone or my MacBook or sold me anything.) The company has had no retail chief since Browett was fired in October 2012, after six months in the job. Following Browett’s departure–he is now CEO of Monsoon Accessorize, a British retailer that sells $34 linen tops and $11.50 rhinestone earrings in the shape of owls–Apple once again turned to Egon Zehnder. The criteria didn’t really change, but the priorities did. There were “big learnings when John didn’t work out,” says one company insider. “Wicked smart” was redefined more broadly and carefully. People skills and the ability to shape–as well as adapt to–culture “became more paramount.” In a companywide email announcing Ahrendts’s hiring, Cook wrote that she “places the same strong emphasis as we do on the customer experience.” But he also added, significantly, that “she cares deeply about people and embraces our view that our most important resource and our soul is our people.” (Of course, she was also deemed “wicked smart.”) Still, inevitably, nervousness rippled through Apple’s stores. “There was immediate concern, because she’s from the fashion industry,” says one retail employee. “We all saw The Devil Wears Prada!”

advertisement

Ahrendts is no Miranda Priestly–and it’s only a little hyperbolic to say that the angel wears Burberry. The third of six children born to businessman Richard Ahrendts and his homemaker wife, Jean, Angie (as she was then known) grew up in New Palestine, Indiana, a close-knit community about 20 miles from Indianapolis. Most Sundays, you could find her in the pews at New Palestine Methodist Church. From childhood, she was always “extremely approachable and genuine,” says Al Cooper, who attended New Palestine High School at the same time and is now its dean of students. Ahrendts, he says, was a varsity cheerleader, but never a Mean Girl. “She was front and center, but never condescending and acting like she was better than anybody else.” Nadine Shepler, who lived around the corner from and went to church with the Ahrendts­es, says that Angie and her sisters “were always fashion plates. They got it from their mom. Jean could take anything and put a bit of lace or something extra and make it look unique.” Shepler’s husband, Marvin, who taught Ahrendts history at New Palestine High, adds that this never came across as chicer-than-thou. The Ahrendtses “are a very down-to-earth family–one that you always wanted your children to play with and grow up with,” he says. “Angie was definitely a front-row-of-the-class kind of student. You were glad to see her coming through the door; when class started, you knew she was going to be ready.”

Apple Retail at a Glance Read More >> Ahrendts speaks often about the values she was taught by her parents. Three years ago, she gave the commencement address at her alma mater, Ball State University. It was entitled “From the Heart,” and it focused on the “Midwestern core values” that have “guided every aspect of my professional career.” From her father, she learned humility: “My dad would always say, ‘When you look at a photo, do you see yourself last?'” From her mother, excellence: “Whenever I would ask if something was okay or fine, she would consistently reply, ‘I didn’t raise you to be fine.'” From both, the need “to be aware and sensitive of my impact on others.” In 1981, Ahrendts carried these values with her to New York, where she climbed the ranks as a merchandiser at Donna Karan (where she met Christopher Bailey) and Liz Claiborne. Before moving to London in 2006 to lead Bur­berry, she had a long lunch with Bailey, who had joined the company five years earlier. They spent most of it talking about the need for a new corporate culture. At the time, “nobody talked about culture, and nobody talked about brand,” says Ahrendts. The whole operation–a business that was built largely on licensees and franchisees–felt fragmented and siloed. She and Bailey decided empathy and trust would be Burberry’s new cornerstones. “It’s compassion. It’s humility. It’s saying thank you,” Ahrendts says. She speaks in a tone full of silk and warmth, the voice of a mother of three kids on a happy day. A full-body conversationalist who waves her hands a lot, she occasionally shocks herself upright at the end of a particularly passionate sentence, as if she were a one-woman exclamation point. “It is always putting yourself in the other person’s position. I know it might sound weird, but empathy is one of the greatest creators of energy. It’s counterintuitive, because it’s selfless.” (!) In meetings, her focus on others takes the shape of lots and lots of questions. “She’s very intense,” says Jean-Charles Decaux, the co–CEO of outdoor-advertising giant JCDecaux, which counts both Burberry and Apple among its major clients. Her tone and tactics with his team have struck Decaux repeatedly. It’s her curiosity. It’s her desire to talk less and listen more. “‘Why are we doing what we’re doing?’ ‘Where?’ ‘What is new?’ She has the lead, but it’s really something that is teamwork,” Decaux says. “Normally, meetings are much less interactive. From a CEO, it’s quite rare. And even in meetings where we had things we didn’t really agree on, there is never negativity in her intensity.”

advertisement

Ahrendts poses with will.i.am and Christopher Bailey backstage at Burberry’s autumn/winter show in London in 2012. Photo by Dave M. Benett | Getty Images Apple’s retail team should expect plenty of interactivity from Ahrendts. At Burberry, she communicates constantly with her 11,000 employees, sending emails to thank them for a particular contribution and frequently jetting to offices and stores around the world (she tries always to be home by Friday night to be with her husband and her kids, who are 18, 17, and 13). She is adamant that significant news be shared first with staff, so that they never learn about their own company by reading the papers. She does a weekly video update–soon, perhaps, Apple staff will joke about how perfect Ahrendts’s hair is, just as they did with Johnson. Her main message is usually “thank you.” Sometimes that’s an epilogue to an all-hands call to action: “I will sit there on the webcast and say, ‘Okay, guys, we’re nearing the end of the quarter and it’s really tight, but I know we’re gonna make it because there’s 11,000 of you out there,’ ” she says. “‘Could you do me a favor? Just one extra call to a customer? ‘Cause if you do that, we’ll win.'” Despite external appearances, Ahrendts claims not to be an extrovert. Her alone time comes early each morning, shortly after she wakes around 4:30 or 5. She draws a bath and spends about half an hour meditating on inspirational books–some days, the poetry of Maya Angelou; others, some Jim Collins or The 21 Indispensable Qualities of a Leader, by the Christian writer John C. Maxwell, a book she has read and reread. “That is my peace. That is my space,” she says. “The world is moving fast. Unless I can come in in the morning and smile, walk in the lobby and say, ‘Good morning!’–if I am stressed–I am not going to do a good job. Everybody is watching us. They are feeding off of our energy.” “I don’t want to be sold to when I walk into a store. The job is to be a brilliant brand ambassador. Don’t sell! No! Because that’s a turn-off. Build an amazing brand experience, and then it will just naturally happen.” – Ahrendts After months of obsessive prototyping in a Silicon Valley warehouse, the first Apple Store opened in May 2001, in Tysons Corner, Virginia, a few months before the iPod’s debut. This store established an architectural template–stark white walls, pale wood floors, utilitarian tables (the white ones in this store were eventually replaced with the maple ones you see today). Expert Advice We asked retail whizzes, industry analysts, and a former Apple insider what Ahrendts’s first order of business should be when she takes the reins.

Marc Heller Managing partner, Retail Sails “There’s an opportunity in accessories. In-store, there are [products from], like, 500 different companies—it’s like a grocery store. Who is to say she can’t come up with something unique in accessories as opposed to [just] selling 10 different brands of iPad covers?”

Michelle Lam CEO, True & Co. “I think Apple should use the data it tracks—like the apps you use and locations you visit—to create a personalized Genius Bar session or a list of songs, apps, and devices that are perfect for you. It could even remind you to upgrade your phone and book an appointment for your next store visit.”

Georg Petschnigg Cofounder, FiftyThree “I’d like it if you could buy hardware accessories through the App Store. For instance, there’s a Nest Thermostat application on the App Store already. If you could also buy the thermostat itself as you download the app, the crossover there would be huge for Apple.”

Michael Preysman CEO, Everlane “Burberry was well known for its social outreach, and Apple doesn’t touch

social media whatsoever. I think it’d be interesting to see the most valued consumer brand change its presence on social media.”

Nadia Shouraboura CEO, Hointer “I would put software developers and designers inside Apple Stores to try out new ideas live. It allows continuous experimentation and fast customer feedback.”

Andy Spade Cofounder, Partners & Spade “Apple can do colors, but they should be done tactically as limited editions, maybe even bring in some fashion designers to work on them. Bring Martin Margiela out of hiding to do a secret collaboration–an exclusive deal they could

never do with anyone else.”

Dan Walker Former chief talent officer, Apple; HR consultant “Apple is moving toward wearable technology. Angela will bring a sense of style and put the shine back on the retail experience, especially if she can bring in another person from fashion. Steve was loath to change things; Angela isn’t.” Illustrations by Sodavekt Those tables displayed the entire family of Apple devices–desktops, laptops, iPods. But fully half the floor was devoted to what Jobs labeled “solutions,” a nod to his intentions: This was more a gallery than a traditional, transactional retail space. The emphasis was on things unseen, less the still-relatively-small constellation of products than the universe of user possibilities they enabled. “People don’t just want to buy personal computers anymore–they want to know what they can do with them,” Jobs said in an introductory video. He showed off sections of the store focused on demonstrating how Apple computers could transform your experience with music, movies, photos, and–as if they were just another form of media–your kids. “There’s something for everybody here.” The Genius Bar, with its knowledgeable technicians and a hotline to Cupertino for anything they couldn’t puzzle out themselves, figured prominently in that first store. So was the service model that Johnson created, based on luxury hotels. The Ritz-Carlton was often mentioned in training. Store associates were encouraged to be the retail equivalent of the concierge, asking, “How may I help?” One Apple Store employee says the focus on customer service, on “enriching people’s lives,” was wonderfully relentless at first. He recalls enjoying the luxury of taking time to walk people through their problems and think through possible solutions. “But when the first iPhone came out, things started to change to make us more of a typical retail establishment,” he says. At the Genius Bar in his store, early expectations were that you would help three customers an hour if you were working on Macs, four if you were working with iPods and iPhones. Then “they wanted us to essentially double that. It felt absurd.” Other longtime employees say that they felt the biggest spike in sales pressure–including a pointed change in language to direct people more quickly to products and services–after the iPad’s 2010 debut. “At times, it just feels like OMG, OMG, OMG,” says one. “Can’t you just hire more people?”

advertisement

Cook added more pressure last year, noting at an internal sales summit that only 20% of iPhones are sold in Apple Stores. He believes that the other 80% are missed opportunities to sell the rest of Apple’s suite of products. According to data from Consumer Intelligence Research Partners, 52% of consumers who bought their iPhones from the Apple Store also own iPads and 30% have Mac laptops; among those who got their iPhones from their cellular carriers, only 37% have iPads and 20% have Mac laptops. While these numbers don’t prove causation, the recent introductions of iPhone sales incentives as well as a trade-in program at the stores suggest that the company sees more than mere correlation. Whether they’re truly busy selling, selling, selling or they’re just psychologically swamped, Apple’s official, blue-shirted brand ambassadors have occasionally sunk into inconsistency and sloppiness, at least by the company’s stratospheric standards. At the Hillsdale Mall in San Mateo, California, where the Apple Store is incongruously sandwiched between Guess and Coldwater Creek, I left after 19 minutes; nobody ever greeted me, though associates were standing around chatting to each other. I wasn’t sure whether I was even welcome to enter the Menlo Park Mall store in Edison, New Jersey, because a sign at the entrance said it would be closed for training until the next day at 10 a.m. When I asked an employee whether it was really closed, he said no. They just hadn’t bothered to take the sign down after a training session a couple of days before. Selling has always been distasteful to one camp within Apple that believes that the products should sell themselves–and that happy users are the greatest brand ambassadors. A leader of this cohort: designer Jonathan Ive. Even in the store’s earliest days, he had some sharp criticisms. “For Jony, they were always selling too hard,” says Jeff Zwerner, a former Apple creative director who worked closely with Johnson and the rest of the retail team. Ive may have a kindred spirit in Ahrendts. At Burberry, Ahrendts–who worked retail during college, selling records at Musicland in Muncie Mall–has proved a master of the gentle sell. With Bailey, she has spearheaded storytelling that creates a halo around Bur­berry and technology that gives customers shopping experiences at every price point, even if they might never spend a penny. For instance, the Art of the Trench website is Bur­berry’s selfie central, where those who have coats can show off how they wear them and those who want them can imagine which of these people (thousands have uploaded photos so far) they would like to be. This alchemic mix of accessibility and aspiration, mass market and luxury, is what Ahrendts cultivated so well at Burberry–and what she will need to repeat at Apple. In London, she did it with an enormous back-end effort. Believing that good service requires knowledge and that more personal service needs more intimate knowledge, Ahrendts has ensured that Burberry’s sales team is the best prepped in the fashion industry. During the past year, the company has activated a system allowing all associates, in all 330 Bur­berry stores, to have at their fingertips, on their iPads, all relevant customer information gathered from their activities at Burberry.com as well as in-store. When I toured the Regent Street store in London last summer, I was assured that browsers like me–I get all Garbo whenever I shop for clothes–can even be registered as preferring hands-off treatment, though I wonder how that really works. (“What is your name?” an associate might ask. Tap, tap, tap. “Oh, Mr. Chu! I see you like to be left alone! Bye-bye!”) Such tools required a revamp of Burberry’s tech infrastructure. Two years ago, Ahrendts approached software corporation SAP for help. “I remember that meeting,” says Vishal Sikka, who heads all development at SAP. “Hasso [Plattner, SAP’s cofounder] and I were sitting with her. She showed us this video of some kind of runway show inside a store, and everyone was taking pictures of what was going on. She said, ‘Look, Hasso! Look, Vishal! They are all taking pictures of each other!’ “

advertisement

She saw a wealth of information in that flurry of flashes–what did customers respond to? What did they like or dislike? What did they share on social media? She thought there must be a way to collect and share such data with the whole Burberry team, as well as combine all six of Burberry’s consumer-intel databases into one salesperson-friendly interface. “She wanted to merge the digital experience with the in-store experience,” Sikka says. She did not know how to do that herself; she freely acknowledges that she is no digital native nor is she fluent in the language of coders and engineers, but she is very good at asking for help. “She is not a geek. She is not technical,” Sikka says. “But she has a vision for things she wants to see, and she has a profound understanding of what technology can do for people.” Sikka praises Ahrendts for “reimagining the Burberry store experience.” When she showed him around the “massive” Regent Street store last year, he was particularly impressed at the store’s use of RFID technology. “Every piece has a tag in it. You walk to a mirror and a video comes up of a model wearing the coat that is in your hand! You can actually see it! And when you walk into the fitting rooms . . .” As he gushes for a few minutes, I realize that Ahrendts has transformed Vishal Sikka–an übergeek whose Stanford computer science PhD thesis was entitled “Integrating Specialized Procedures Into Proof Systems”–into a Burberry brand ambassador too. “Online, offline–it’s gotta be the same.” – Ahrendts For as long as there have been Apple Stores, they have been run independently of the online sales operation. Understand the stores’ genesis and Jobs’s intentions, and you get why, in theory, this happened–retail creates auras and halos while online drives sales. In practice, says analyst Horace Dediu, this has been “a historical failure” at Apple, neglecting how shoppers actually shop. An Apple veteran says the setup is “totally retro,” a relic of a time when the boundaries between online and offline were more discrete. Under Ahrendts, the two will be united for the first time. At Burberry, she pushed for a seamless consumer experience between online and brick-and-mortar. Everything about the messaging was unified, from the music played on the website and in stores to the photography and displays, all of which Bailey’s team curated and produced in-house. “The most vital thing is whatever they see on that landing page, they see in the windows,” she says. “If you walked into Men’s, in London, you should see those same looks on the mannequin at exactly the same time.” In November, Apple introduced an Apple Store app for the iPad, a move that was widely seen as welcome but extraordinarily tardy. (There was already an Apple Store app for the iPhone, which was recently augmented with location-based technology.) The app quickly won praise for its design and user-friendliness, but it also highlighted incongruities with the website, which suggests that much work remains to be done to make all the different retail properties feel like parts of a whole rather than manifestations of the company’s fiefdoms.

advertisement

This points to an even bigger challenge: How easily will Ahrendts merge the digital and retail staffs, who have never worked well together? The online team, long the less-favored child, will especially need a morale boost. “Online has such an inferiority complex. It has always had something to prove to retail,” says one former online team member. “But retail didn’t give a shit. Retail totally thinks they’re superior. There’s a real opportunity for Angela to bring a breath of fresh air and warmth to the culture.” Warmth shouldn’t be mistaken for weakness, and her smile can turn into a scythe when it encounters incompetence or a lack of thorough preparation. At a recent financial presentation, an analyst from a major investment bank asked an ill-informed question about Burberry’s product mix. Ahrendts interrupted him, smiled, and said lightly, “You obviously have not been online recently!” Then, as the audience laughed, she cocked her head and gazed at him, eyebrows raised, as if to say, “Do better next time!” Interestingly, after Ahrendts’s Apple appointment was announced, there was chatter about the blurring of the physical and the digital in an entirely different sense: wearable technology. It’s an easy assumption, but one made with only a superficial understanding of Ahrendts’s gifts. Yes, she does come from the world of fashion, but she has always been strongest at marketing and merchandising product, not developing it. According to an insider with knowledge of Apple’s executive search, wearable technology was not on the company’s priority list at all. “Apple will probably do wearable, but that’s not what she’s there for,” says this source. “She’s there to run a retail store, and that’s really hard.” “We always had the mantra, ‘What’s best for the brand?’ ‘Cause the brand is going to outlive every one of us, right? And this is a global brand.” – Ahrendts China has a long tradition of wordplay and symbolism. Ancient Chinese paintings often depict blossoms of magnolia and apple together, because, in combination, the words sound like a blessing for riches and abundant beauty in one’s household. The first character in the word apple–ping guo–is also a homophone for peace. Apple hasn’t lived up to its name in China–its turbulent experience there could fill a B-school course with case studies about what to do better. It once controlled more than half of the Chinese tablet market, but as of last fall, its market share had slipped to just under 30%. It also placed fifth on the smartphone sales charts, with market share in the single digits. While shipments rose a decent 32% in the third quarter of 2013 compared with the year prior–the iPhone 5s and 5c debuted strongly in September–Samsung blew Apple away, recording year-over-year gains of 156% on the quarter and cementing its position as the top phone seller on the mainland.

advertisement

Apple has never made market share a top priority, but Samsung has clearly had several significant advantages. One: its deal with China Mobile, by far the country’s largest cellular network, with more than 750 million subscribers. Two: cheaper phones. Three: a much stronger retail-distribution network in China. Though Ron Johnson said back in 2011 that Apple had plans to open as many as 25 stores on the mainland in that year alone, it still has only nine today. After years of negotiation, Tim Cook finally took care of China Mobile in late 2013; the mobile operator, which began its iPhone rollout in December, could deliver as many as 20 million new Apple customers this year. On the second count, Apple hasn’t been interested in competing on price–and Ahrendts won’t be either. As at Bur­berry, she has little incentive to dilute the brand. Instead, she will likely seek to maintain an appropriately upscale position in the marketplace even as its competition, not just Samsung but also local upstarts such as Xiaomi, offers more affordable models. Ahrendts well understands the premium that Chinese consumers will pay for luxury; over the past three years, she has reintegrated the Chinese business, which Bur­berry bought back from a franchisee, and she has seen firsthand how her target consumers–the 250 million–plus citizens who are now at least middle class–clamor for what she likes to call “great global brands.” Expect a strong, sensible push to open new stores. While Apple is present only in Beijing, Shanghai, Shenzhen, and Chengdu, China has 15 cities with populations of more than 5 million. Burberry, which now has 71 stores on the mainland, is in 13 of them. (It also has seven stores in Brazil and eight in India; Apple has none in either.) Burberry generates about 14% of its global revenue in China, but that number is misleadingly low. First, if you see the stores as brand ambassadors, this isn’t primarily about sales in the current fiscal year; it’s about investing in brand awareness and prestige over the next 10 or 15. Second, Chinese shoppers don’t just buy within China. Ahrendts recognized early that the nearly 100 million Chinese tourists who travel abroad each year are boosting sales in all 25 of Bur­berry’s flagship stores, and Chinese shoppers in Bur­berry stores outside China spend, on average, 10 times what they spend back home. Ahrendts has ensured that Mandarin-speaking associates are always available in all of Burberry’s major stores. And she instigated such innovations as a mobile team of Mandarin speakers who can be dispatched quickly to flagship stores worldwide during peak Chinese travel seasons. “Thirty percent of our shoppers in Paris are now Chinese,” says Burberry board member Ian Carter, the president of Hilton Hotels. “Angela has been great at seeing that gap in the market.” Ahrendts believes the importance of–and the opportunities in–the major emerging markets will only continue to grow, and she is confident enough to speak of actively changing consumer behavior. She offered a clear cue at Burberry’s November earnings announcement, speaking about shifting analysts’ and investors’ understanding of the “festive period” that, in the West, is traditionally anchored by Christmas. “Chinese New Year has the ability to be every bit as big as Christmas,” she said. Her question: “How do we sell them more gifts?” “It’s like racehorses, and they are just waiting to go. The question is, Have we really solidified the vision properly in order to let the racehorses run?” – Ahrendts It may sound odd to say that Burberry and Apple are both heritage brands, but it’s true. Both carry the blessings and the burden of having been started by noted innovators–Thomas Burberry, who invented a waterproof fabric called gabardine that nobody knew they needed, and Steve Jobs, who did the same and more with wondrous iterations of computers. With such a history comes higher expectation. Both companies have had obituaries prematurely written, and both have surged back, reclaiming their prestige as trailblazers.

advertisement



What is next for Burberry? Read more >> Ahrendts describes Burberry’s historical roots as “sacrosanct,” a key part of the corporate DNA. The challenge for all heritage brands is to retain the genesis story and the genesis spirit–inventiveness, conviction, energy–while continually refreshing the storytelling. At Bur­berry, Ahrendts has done that splendidly, aided ably by Bailey. At Apple, other executives will control branding and marketing, product development, and third-party-vendor relationships–all things for which Ahrendts had ultimate responsibility in London. The pressure on Ahrendts in Cupertino will be more intense than in London–she’s trading the somewhat forgiving “there’s always next season” fashion world for the fanboys and fetishists who obsess over every rumor and report leaking out of Apple HQ. She will also have to deal with hopes that are perhaps unreasonably high. From the day her hiring was announced, there has been abundant speculation that she could someday be Apple’s chief executive. For instance, Marc Benioff, CEO of Salesforce and a onetime Apple intern, tweeted, “I just saw Future Apple CEO @AngelaAhrendts on her farewell @Burberry tour! The most important hire Tim Cook has ever made!” But no executive creates–or fixes–problems alone. Jobs, singular visionary that he was, did not build the Apple Stores by himself; he had Johnson. Browett may have made some unfortunate decisions, but he also revealed an organizational structure that enabled questionable calls not only to be made but also broadcast across the whole retail operation. If Ahrendts restores the shine to the company’s sales force, it will be a joint effort involving at least 30,000 people, much as her wins at Burberry resulted from the work of 22,000 hands. Ahrendts, who will become one of only a handful of female members of Apple’s tight inner circle over the years, has always been more of a “we” person than a “me” executive, using the plural pronoun whenever she reflects on Burberry’s success–sometimes referring to her close partnership with Bailey and often the entire company. The approach should serve her well as she enters the upper ranks of Apple, which has always been a far more collaborative place than people realize. Ive was Jobs’s most recognized partner in engineering the company’s storied revival, but other executives, such as former chief software-tech officer Avie Tevanian, onetime head of hardware engineering (and “Podfather”) Jon Rubinstein, SVP of Internet software and services Eddy Cue, and, of course, then–COO Tim Cook, accomplished minor miracles to help Jobs turn a beleaguered computer manufacturer into the most valuable company in the world. They even partnered with one another to rein in some of Jobs’s misdirected passions: Tevanian and Rubinstein would meet every other week to plot their “get around Steve” strategy. Life at the top of Apple can be brutal–witness the swift dismissal of Browett–but those who succeed often develop a key ally to help them accomplish their goals. If there’s anyone Ahrendts is likely to pair with, it’s Ive. Her accomplishments with Bailey demonstrate what she can do when working with the right designer, and if she can collaborate with Ive the way she did with Bailey, there would only be an upside for Apple. Ive has shown repeatedly that he can be a good partner with Jobs, with Cook, and with the company’s newly promoted head of software, Craig Federighi. If Ahrendts can mesh well with Ive, who best embodies the heart and soul of Apple now, she’ll succeed. While Benioff’s tweet about Ahrendts being poised to become the company’s next CEO was both premature and moot–Cook is a strong leader with the trust and confidence of the small executive group he manages–Ahrendts can sometimes sound like Jobs. She likes to say that she is equal parts right brain and left (Jobs described himself as “an artist trapped in the body of a businessman”) and at Burberry, she sought to build an organization that balances and honors both. “We cherish right and we cherish left,” she says, “but more important, we cherish when you are able to use the whole mind that you were born with.”

advertisement

To succeed at Apple, Ahrendts will need to bring her “whole mind” and more. She’ll need her empathy, her people skills, her merchandising expertise, her conviction about the possibilities of technology, and her knowledge of emerging markets. She’ll also need continuing confidence in a key intangible that she says has guided her throughout her career: her gut. “All I have are my instincts,” says Ahrendts. “They’ve never failed me.” When she’s talking about Burberry, that sounds like an explanation. Put it in the context of Apple, and it could be a promise. But it needs to be a prophecy.