- 8 minutes ago
When Ron Johnson joined Apple in 2000, he was tasked with developing the brand's physical stores. Apple Stores eventually grew into retail giants, but at the time they were a risky bet, as conventional wisdom predicted online shopping would replace in-person stores.
Johnson's new book, "Shop Different," details the strategy behind the stores and offers a broad look at Johnson's retail career. In this live Q&A with Business Insider's Ana Altchek, he explains what it was like to work with Steve Jobs and why he found success at Apple but not in his next role as JCPenney's CEO. Johnson also shares his insights on the challenges and opportunities facing retail today.
Johnson's new book, "Shop Different," details the strategy behind the stores and offers a broad look at Johnson's retail career. In this live Q&A with Business Insider's Ana Altchek, he explains what it was like to work with Steve Jobs and why he found success at Apple but not in his next role as JCPenney's CEO. Johnson also shares his insights on the challenges and opportunities facing retail today.
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00:07Hi, everyone. Welcome to the Business Insider Newsroom. I'm Anna Olchek, a senior reporter
00:12here at BI. I focus on careers and leadership, and I'm very excited to be joined today by Apple's
00:18former retail chief, a man who spent 11 years working alongside Steve Jobs and helped launch
00:24the Apple Store. At the time, people said the internet would make physical stores obsolete.
00:30But the Apple stores grew into one of the world's most successful retail operations. Ron Johnson
00:36is the executive who made those stores a reality. He has a new book called Shop Different, How Retail
00:42Revealed Apple's Genius. Ron, welcome to Business Insider. Well, it's great to be here. Nice to be
00:47with you. As a reminder to all of you tuning in, we'd love to hear your questions for Ron,
00:53questions about Apple, about retail today. It's all fair game. Drop those questions in the chat,
00:59and we'll try to get to as many of them as we can. Okay. So I can say our audience
01:05is already
01:06looking forward to this. Jim in San Francisco wrote about five minutes ago to say, this is going to be
01:11fantastic. I remember when they hired Ron for this role. Can't believe it's been 26 years. So people are
01:18very excited. Today, it's hard to imagine that the retail landscape could have existed without Apple
01:25stores. But when you started in 2000, it wasn't a guarantee that it would be successful. What concerns
01:31did you have to overcome at the time? Yeah, the big challenge in 2000 is Apple was a pretty small
01:36company. We had 5% market share of the computer business. We had four products, two desktops and
01:44two laptop computers. And people buying PCs were buying them online through Dell. And so why would Apple
01:52open stores? Even Gateway, which had 300 plus stores selling PCs, was shutting down their stores.
01:58So most people thought it was a bad idea. But Steve had come back to Apple, famously launched the iMac.
02:04It didn't change the game. So Steve believed if Apple was going to win, it had to reinvent and control
02:10the customer experience. And I got picked to help him do that. Awesome. Do you feel like what made Apple
02:17successful back then is true for today as well? Are people looking for the same things from a retail
02:22experience when they shop today? They're absolutely looking for the same thing. People go to stores
02:27because they want to try products, they want to get help, and they want to connect with people.
02:33And those are things you can't do online. And so there's a big myth that stores are dying,
02:40and it's just not true. If you look at 2000, when the era was coming on, people said stores will
02:47go
02:47away. But we were in a position where we were very over-stored as a country. Too many malls,
02:52too many stores. When online came out, it took a while for the physical retailer to build their
02:57own online strategies. But once they integrated those into omnichannel, almost all of them got better.
03:05So like Walmart, for example, the market cap is eight times today what it was in 2000. And Amazon's
03:12a pretty big competitor of theirs. And if you walk through New York, I'm in Williamsburg this weekend,
03:18the streets are dotted with all of these direct-to-consumer brands that are building out
03:23stores. So you have to have a physical presence, and you have an online presence. They're definitely
03:30better together. Do you think that's true for every type of brand, though? Like, are there certain
03:36retail stores that aren't working, like big department stores, or maybe shopping for clothing?
03:40Sure. Yeah, you know, people, formats evolve, right? So the department store, in 1960, when I was born,
03:48I was born two years before that, the department store is the king of retail. There were 150 department
03:54store unique nameplates in the U.S., right? That's where we all went to shop. Over time,
04:00the department store has become less important, especially stores grew, online shopping grew,
04:06big box off-mall retail grew. You know, the world changed, but the department store still has a place.
04:13You know, famously, Macy's, based right here, is having a pretty good period right now.
04:18Bloomingdale's is copying at 10% a quarter, which is exceptional for retail. Macy's is growing again.
04:25So the department store is a place, but it's a lot smaller than it was, you know, 40 years ago.
04:31Right. You helped design hundreds of Apple stores. What would you say is your favorite store and your
04:37least favorite store? Oh, I've never been asked that before. Can I talk only about my favorite? No, I'm
04:43kidding. No, my favorite store has to be the Fifth Avenue store here in Manhattan. It was, you only
04:51get one chance to open a store on Fifth Avenue, and we took a bold bet that we could put
04:55a store
04:55underground, and all we had was a 32-foot cube, and that store, you know, changed the skyline of
05:03Manhattan. I remember a couple years after it opened, it was the most photographed building
05:10in Manhattan ahead of the Statue of Liberty. Wow. That's a retail store. Yeah. And that's a brand
05:15that people thought shouldn't open stores. Right. You know, so that's my favorite. My least favorite
05:21were, back in 2004, Steve challenged me. He said, Ron, we're succeeding with these big stores. Everything
05:27we're doing is working. Have you ever thought about making really small stores? What if we opened an Apple
05:34mini store? Right. You might remember those. Yeah, yeah. And we opened 13 of those, you know,
05:39and they just couldn't offer the full Apple experience that we dreamed, and so we ended up
05:44closing those down, but I think that whole genre store was probably my least favorite. Yeah. What do
05:51you think stores are getting wrong today about customer experience? Well, I think that the big thing
05:58stores are getting wrong is the importance of people. You know, you've got to be well staffed,
06:04and you've got to hire people that are great at building relationships. You know, fundamentally,
06:10a retailer is in the relationship business. At Apple, we only had 25 million customers worldwide
06:19when we launched the store. Today, Apple has nearly 2 billion users. I can guarantee every one of those
06:26people came to Apple one product at a time, and an employee helped them make that purchase decision.
06:33Right. And so what you need is employees to launch relationships with your brand to get you to buy
06:38that first product, whether you're an activewear brand, you're an optical, like a Warby Parker customer,
06:45someone's got to get you to buy that first purchase, and someone's got to help you deepen that
06:49relationship when you come back to buy something more and get going. And if you have a problem,
06:54they've got to restore the relationship. But in retail, you're in the relationship business.
06:59You're not in the product business. You're not in the transaction business. I remember telling Steve,
07:05we're not going to sell our way to success. We're going to serve our way to significance,
07:10one customer at a time. Yeah. Knowing that you worked under Steve Jobs, and you talked a lot about
07:17how you admired him, we asked the following poll question to our LinkedIn audience. We said,
07:23What makes a great leader most memorable? We got over 2,500 responses, and kindness won
07:29with 58% of the vote. So what is your take on that? Seriously? That's so exciting. You know,
07:35in my book, the last chapter is called Choose Kindness. Right. So that really warms my heart.
07:42Well, you know, I'll react it this way. You know, Steve was famously, people thought,
07:47a pretty difficult person to work with. Right. But one day, we were talking about kindness.
07:53And he said, Ron, you know what my definition of kindness is? I said, No. He said, You wear your
07:59opinions on your sleeve. You tell people exactly what you think. And they'll always know where I stand.
08:06Mm-hmm. And that was the beauty of working with Steve. For those of us who got to work closely
08:11with
08:11him, he was obviously super smart, super passionate, high standards. But you always knew where he stood.
08:18Yeah. And when he would get, you know, hard on me at times and say, Ron, that's a stupid idea.
08:24Or,
08:24Ron, I know you can do better. He wasn't criticizing me. He was criticizing the work or the idea.
08:30Yeah. So I never lost self-confidence working with Steve. Yeah. But I learned a lot. And I always knew
08:37where I stood. Yeah. I want to go back to your relationship with Steve Jobs in a second. But
08:43do you think that kindness always makes for an effective leader? Like, do you think it's necessary
08:48to be kind to be a successful leader? I personally do. Okay.
08:52Yeah. You know, I think kindness is a choice we make every moment of every day. You know,
08:58we're constantly interacting with people. Mm-hmm. Or we're interacting with ourselves.
09:04You know, we're having a conversation now. The first conversation we have is one with ourselves.
09:10Right. And I think we're all pretty hard on one another. You know, it's difficult. Life can be hard.
09:15You got to be kind to yourself. You got to be kind to others. Yeah. And there's no reason not
09:19to be kind.
09:20You can have high standards. But kindness inspires people. You know, I think people work better
09:27when they're in a culture of love versus fear. And so many leaders, you know, hold people accountable
09:34and really tough standards. And you really don't know where you stand with them. And that creates
09:40an uncertain environment. Yeah. And I'd rather be in an environment like Steve had,
09:43where you know exactly where I stand, or an environment like I led, where I'm encouraged.
09:48Mm-hmm. How can I help? Yeah. What can we do better? You know, those are the kind of questions
09:53you ask when you're being kind. You talk about how Steve was kind in the sense that you always knew
10:00where you stood with him. But he was also very unpredictable at times and intense and also very
10:06magnetic. What do you think made him so compelling as a leader? His standards. You know, everyone who got to
10:13work for Steve knew you were going along on a ride of a lifetime. You know, Steve wanted to do
10:20great
10:21things. Right. He wanted to do things that changed the world. And I think that's because at age 24,
10:27when Apple went public or when he launched, you know, the first Apple computer, it changed the world.
10:34Yeah. He went to Pixar and he invented the movies. For him, that was his life mission to make life
10:42better for people. And whether it was launching stores or the iPhone or the iPad, you knew you were
10:49going to work on a once in a lifetime project. Yeah. And so it's very inspiring to work for someone
10:54like
10:54that. Can be hard. Mm-hmm. He's on all the time. He's very direct. Yeah. Some days he's not quite
11:02in the
11:02same spirit as others, like all human beings can be. Yeah. You know? But you knew you were on a
11:07ride
11:08of a lifetime. What would be your advice to someone who is working under a boss, who has that intensity
11:15and, at times, volatility? Uh, read deep. Have confidence. Okay. You know, leaders like Steve want
11:24someone to stand up to them. Mm-hmm. You know, the tendency is, I want to be approved by him
11:29or her.
11:31I want to go along. What they need to hear is the truth. And each of us has an inner
11:37voice
11:38based on our unique personal geography, where we grew up, where we've worked,
11:43the experiences we have. And that's the only true knowledge we bring to any conversation.
11:50And so if you work for someone tough, breathe deep, tell them what you think, and let it go.
11:56Yeah. After your tenure at Apple, you were CEO at JCPenney, which was in big need of a turnaround.
12:06Mm-hmm. And you talked about in the book how a lot
12:09of people discouraged you from taking this job. Right.
12:11And you even had a lot of doubts before you took it. So how did you end up there?
12:16Well, I was, I'd been at Apple for nearly 12 years. Right.
12:21Everything we were doing was working. My work had become a hobby. I had a great team.
12:26Mm-hmm. I felt like a parent watching your kids
12:29play sports. Yeah. And you're kind of cheering them on.
12:32Yeah. And I missed the challenge of doing something really hard.
12:35Yeah.
12:35Like when I had been at Target, we brought design to everybody. That was really fun.
12:41Having to imagine the Apple stores and get through those difficult early years and
12:45build those first flagship stores was really fun. I kind of wanted one more challenge.
12:51Mm-hmm. And for a variety of ways, JCPenney came into my hands and I thought
12:56kind of trying to reinvent a hundred-year-old department store chain would be a fun thing to do.
13:03Yeah. It turns out it wasn't. It turns out it made a lot of mistakes. It was a,
13:09you know, by every measure, a big failure. But I learned through it, you know. And I wrote a lot
13:15about in the book about that because I thought they were great lessons. Yeah.
13:18You learn a lot through success and you learn an equal amount through failure.
13:23What was the aftermath of that like? What was it like leaving JCPenney and kind of moving forward
13:30after that experience? Well, I, you know, after about a year and a half, I went to the board on
13:37three occasions and said, look, you seem really like you want to go back. If you want to go back
13:43to the old model, the sooner you go, the better. I won't stand in your way. And I offered to
13:49resign.
13:49They finally called and said, we're going to go back. You know, for me, in many ways, was relief.
13:54Yeah. You know, it was very difficult for me personally. Yeah. I wish I had stuck it out
14:00because I think we would have eventually got somewhere. Maybe not America's favorite store,
14:06but I think it would have been a good competitive store. But regardless, it was difficult. And it's
14:15taken a long time to process that. Yeah. You know, because so much of who we are as people
14:20as a function of what we've accomplished and what we didn't accomplish. Yeah. And that's a big part of
14:26my life story. Yeah. And it's been, you know, kind of a lifetime of trying to process that and learn
14:32from it. Yeah, I'm sure it was also a difficult period. You know, you had just left Apple as well.
14:40I'm going to shift a little bit. So we're in an era where the job market is hyper competitive
14:45and job candidates are desperate to stand out. I remember reading in your book that, you know,
14:52after Steve's recruiter called you, he later told you that, you know, you had Steve at hello.
14:57Yeah. What would be your advice? You've obviously also hired a lot of people since then. What would
15:03be your advice to people who want to make a really strong first impression? Absolutely be yourself.
15:09Be authentic. You know, when I met Steve, we spent three hours. It was just a beautiful conversation.
15:17You know, and the recruiter said you had him at hello. I think he just found me to be a
15:21nice person
15:22who loved retail. And I could have a lot that I could teach him about retail. So I just believe
15:29in
15:29being yourself, you know, and then when you get a job, the key to doing the work, especially in the
15:37early years is execute what's expected as well as you can, but then do something unexpected.
15:46You know, if you just do what the job's expected of the job, there'll be a lot of other people
15:52doing what's expected. And that's where things get hard. Who do we pick? You know, someone does this,
15:57someone does that. When you do something unexpected, that's how you stand out. And that's what it takes
16:03for any business to succeed. You've got to do what hasn't been done before. And so like every job I
16:08had
16:08throughout my career, I try to 90% of the time, just doing what's expected, get along with people,
16:14work hard, be a good team player, but then find what's that one thing that might permanently change
16:20the area that I'm working on, that it's going to be better forever. Because if I just do what's
16:26expected and I move and someone comes in who doesn't do as good as I did, the company hasn't
16:31changed. Yeah. It's just managed differently for a period. Right. You got to do what's unexpected.
16:37We have some questions from viewers. I'm going to start with Rob in Cape Town. He said,
16:43on the topic of recruiting the right people, what were some of the traits that sat at the top of
16:48the
16:48list other than the relationship development ability? We wanted, and I've always believed in what
16:53Steve encouraged me to do, hire interesting people. Okay. And they're easy to pick up.
17:00You know, when you have a conversation, interesting people by definition think differently.
17:06That's why they're interesting. Yeah. Right. And so I think that's an important thing.
17:10And when you get a lot of interesting to people together, you're going to get a very big diversity
17:15of ideas through all the conversations you have. So I think you want to hire people that have
17:20demonstrated they can succeed. They're great team players. But then look for people that are
17:26interesting. A viewer from the UK asked, can businesses realistically sell enough products
17:34in expensive malls to cover high rental costs? Or is it often more profitable to sell fewer products
17:40through lower cost online channels without the burden of rent? What's your take on that?
17:45Well, without question, this is a solved problem. Okay. Stores are much more profitable than online
17:51shopping. You know, an online store is just like a physical store. When you launch a new brand,
17:59it's good to start online and you're going to do all your outreach. And pretty soon, everyone will
18:04try your store. They'll come into the website and it's really expensive to get them back or to convert them.
18:11So eventually, you have the same problem the physical store has. How do I get people into the store?
18:15Right? And that's where online marketing becomes so expensive over time. Physical stores have a
18:21proven track record of higher economic returns. And that's why almost every DTC brand is building out
18:29a lot of physical stores at the same time. Yeah. So, Rob wants to know,
18:34what aspects of the Apple store model will remain important in the future of retail?
18:43I think, you know, the good news, we kind of got Apple right. You know, if you're a brand,
18:49you want to locate where your customer would say, that's exactly where they belong. And for Apple,
18:55that's in the heart of the best shopping districts in every market. You know, you want to have a store
19:01that's uncluttered, where you can have easy access to try the products. That's going to stay the same.
19:08You want to have a store where you have great employees who are well trained, and it's easy to
19:13interact with them. And they're, you know, they're there to help. That's going to stay. But then more
19:20importantly, with certain like certain products like technology, you want to be able to help people.
19:24Yeah. So you need places like Genius Bars. You know, I just read this week that Apple is going to
19:30bring back the physical Genius Bar to have a dedicated place to get that help. And that's a
19:36good idea. Yeah. You know, so I think, I think we got the Apple store pretty right. The team continues
19:42to do a phenomenal job executing. I find the Apple store still is the most vibrant store in almost every
19:50market I walk into. They're packed with people. Yeah. And I'll tell you this, in October, the store
19:54is going to be busier than they've been in years. Yeah. Because when the iPhone Duo comes out,
20:01everyone's going to want to see it. Right. Whether you buy it or not. You know,
20:04you love your iPhone. You're walking down. You know that Apple store is there. Right.
20:08You're going to want to go and check that out. I would agree. And I do think the Apple store
20:14does
20:14a really good job. It is a very vibrant environment. I want to shift, actually, to what's going on
20:20at Apple right now. Because your book is coming out at a time when Apple is going through massive
20:25change. Tim Cook just finished his tenure as CEO. The foldable iPhone was just announced. So what do
20:32you think about this next era that Apple is in? What defines it? Well, you know, it's interesting.
20:37Apple's been a top-performing company for over two decades now. Right. And Tim did an amazing job
20:48leading Apple. Yeah. That's inarguable. Yeah. And Tim did in his own way. But, you know,
20:53Steve brought out a lot of the products with the team. Tim's the one that built that customer base.
20:59And it's really hard to do that globally to get to two billion users. Yeah. And they're loyal and
21:04they're sticky and they're more engaged because of the cloud, because of how devices work together,
21:10because of, you know, everything Apple does with its app store. And so it's an amazing place. But
21:17you've got a new leader coming in. Right. And every leader at Apple has put their unique stamp
21:22on the company. I think it's great that John comes out of a hardware background. Yeah.
21:27You know, because Apple has put a lot of energy into channel expansion, what's on the inside of
21:35products. Yeah. But I think it's really interesting to start to think about what are the new form
21:40factors that are going to matter in a world where it's all about kind of this artificial intelligence
21:45and how that changes how we interact with products. Yeah. And I think having a hardware leader is a
21:50really good thing. Yeah. You said in your book that part of what Steve Jobs did so
21:57well was keep things simple. So what do you think about the foldable iPhone? Are you a fan of it?
22:02Well, I've got to see it. I haven't tried it yet. Right.
22:06But all of the reviews I read, I mean, people who see it are surprised how much they like it.
22:14You know, my impression is a lot of people think Fold has been around for seven years,
22:19led by Samsung who invented it. And that's all true. Yeah.
22:23But a product is always about the hardware and the software and how they magically work together.
22:31Right. So while the form factor is supposedly improved,
22:35the magic will be the software and what that experience is. And my guess is that a very large
22:43number of people are going to covet that phone. And to me, it's going to come down to one simple
22:49question when the phone is folded, it's got a nice big screen, is can I do what I normally do
22:55on my
22:55iPhone really well on that single screen? Yeah. Because then I've got something in my pocket that's
23:00actually smaller than the iPhone. Right. But then I get to open that up and do things I can't do
23:06on
23:06the iPhone. Right. You know, so I think it's got a chance to be a very significant device for Apple.
23:13Are there routines or habits that you learn from Steve Jobs that you practice today,
23:18either in your work life or personal life? Yeah, the big one is don't be in a hurry.
23:24Be present. Okay. You know, Steve was always present.
23:28You know, we'd talk on the phone a lot. He'd call me. I don't think I ever called him. He
23:33didn't pick
23:33up the phone. Wow. How can I help? And we would talk for whatever it took. You know,
23:40Steve would come to a meeting. He didn't carry a phone. His assistant would say, hey, Ron,
23:43have a phone in case I need to get a hold of him. Yeah. But he would spend time and
23:47just focus.
23:49And the next meeting, he remembered everything we talked about the week before. Wow.
23:53Yeah. So I think the power of being present, I learned from Steve. The power of not being in a
24:00hurry,
24:01I learned from Steve. You look at what he accomplished in his life from computers to phones
24:08to movies to music stores to, and he did things one at a time. Yeah. Apple launched the iPod in
24:162001.
24:17The phone didn't come out until six years later. We're a consumer electronics company. Yeah.
24:24You know, he wasn't in a hurry. He wanted that iPod to be great. And then we earned the right
24:29to do a
24:29phone. So that's a big lesson. Don't be in a hurry. Yeah. I would say Tim Cook had a similar
24:35leadership style, I think. The company is very focused in general. We have a question from our
24:42LinkedIn audience. In your opinion, how much of bricks and brick and mortar retail has actually
24:48become an extension of hospitality? That's a really interesting thing. I think it is,
24:54you know, the most important thing is, especially in the higher price point products. So you look at
24:58luxury over the last decade. I mean, luxury has just grown globally, led by LVMH, Hermes,
25:07even brands like Xenia in the men's area are growing. And that is a hospitality business. You watch how
25:14they take care of customers, the beautiful stores they build. You know, it really is influenced by
25:20hospitality. Yeah. The Apple store is influenced by hospitality. Right. You know, we patterned the
25:25store after the Ritz Carlton. Right. How do you deliver a five-star hotel experience in a store?
25:31So I think at the high end, when you're selling higher priced products, it's a really important
25:36part of it. When you're selling lower priced products, it does get into a little more of
25:42transactional convenience. And how do you make the shopping experience, you know, wonderful.
25:46Yeah. You love being there, but it's got to win on the efficiency as well. Yeah.
25:52Or people buy online. Jim has a question. I wanted to know if any of the Apple designers
25:59and engineers helped with the aesthetic of the stores? Not during my time. Okay. Interesting.
26:05You know, Steve famously, Steve had this belief that, you know, you can be good at one type of
26:11architecture or design. Okay. That doesn't mean you'll be good at another one. Right. So for example,
26:17Apple has great graphic design. You know, you see their billboards all over the world.
26:22That's two dimensional design. We had window displays in the early stores. They were really
26:27one of the fun parts of the store. He said, no, our team doesn't know how to do it. You
26:31need a 3D
26:32designer. Someone who can think in three dimensions. Right. Same thing. You know, Johnny was busy with
26:39products. Right. You know, he didn't want Johnny to get distracted and help with the stores.
26:44Now, Johnny's obviously a world-class designer, one of the best in the world. Yeah. But Steve thought
26:49architecture, designing spaces, is very different than designing products. Yeah. You know, so he wanted
26:57expertise and people that did spaces. So we used an architecture firm that did his Pixar headquarters that
27:04he loved, which is a beautiful thing, you know, to help us with the stores, but not one of the
27:10internal
27:10hardware designers from Apple. Got it. Kimberly from San Francisco wants to know,
27:17what do you feel is your greatest achievement and why? Oh, for me, I think it has to be helping
27:26imagine the Apple stores and creating a culture which has thrived for 25 years. You know, and I was in
27:37a store in Nice, France a month ago and I kind of meandered in and by the time I'd been
27:46there a while,
27:47people discovered I was there. 15 people came up to me who had met me or been involved with Apple
27:54when I was there 15 years ago. So you think about having a place that people work for that long
28:02a
28:02time in retail and love their job and love taking care of customers. So I think the most important
28:07thing I did was help create the Apple stores and build a place that employees love and customers love.
28:15Well, I think we're going to leave it there, Ron. Thank you so much for being here and thank you
28:20to all of you for tuning in. We will see you next time.
28:50We'll see you next time.
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