July 2, 2026

EP 340 — Ron Johnson, the Man Who Built the Apple Store

EP 340 — Ron Johnson, the Man Who Built the Apple Store
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Apple Podcasts podcast player icon Spotify podcast player icon Overcast podcast player icon PocketCasts podcast player icon Amazon Music podcast player icon Audible podcast player icon Youtube Music podcast player icon RSS Feed podcast player icon

We're unapologetic fanboys of Apple and great retail experiences on this show, so for Apple's 50th anniversary — and the 25th anniversary of the first Apple Store — we brought on the person who actually created the modern Apple Store concept: Ron Johnson.

Ron built his career in 10-year cycles, and each one changed retail. At Target, he dreamed up the first designer collaboration in retail history (Michael Graves) and helped turn a Midwest discounter into a place people bragged about shopping. At Apple, he opened the first stores in 2001 — when Gateway was folding, Dell was winning, and everyone thought a 5%-market-share computer company had no business signing mall leases. He named the Genius Bar (Steve Jobs told him nobody would buy it), killed the cash register with a mobile checkout built on an iPod Touch, and left in 2012 with a million people a day walking into Apple Stores. Then he took the hardest job in retail — CEO of JCPenney — and he's refreshingly honest here about what went wrong.

What we get into:

→ The Michael Graves deal, and why "design" beat "fashion" at Target → Why Steve Jobs hated the idea of mall stores — and how Ron changed his mind → Where the Genius Bar name came from, and the meaning behind it → Killing the cash wrap: mobile checkout in 2008, self-checkout in 2010 → Spending the morning of 9/11 with Steve Jobs → JCPenney, situational arrogance, and the change-management lesson he owns → Why omnichannel won — stores didn't, online didn't → What agentic commerce and AI actually do to shopping (and Satya Nadella's "token capital")

Ron's book, Shop Different, comes out September 22nd from HarperCollins. It's built around the Harvard Business School case study of his career — Harvard's most popular first-year case — and it's going to be one of the must-reads of the fall for anyone who loves retail. Links to buy it are in the show notes.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy.AI and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Episode 340 of the Jason & Scot Show was recorded on Friday, June 19th, 2026

WEBVTT

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Welcome to the Jason and Scott Show. This is episode 340 being recorded on Friday, June 19th.

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I'm your host, Jason, Retail Geek Goldberg.

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And unfortunately, Scott had an unexpected emergency and isn't able to join us.

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But we have a very special guest in his place.

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Regular listeners of the podcast will know we are unapologetic fanboys of Apple

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and awesome retail experiences on the show, and this year marks the 50th anniversary of Apple.

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So who better to help us celebrate than the actual creator of the modern Apple

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store concept, Ron Johnson.

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Welcome to the Jason Scott Show, Ron Johnson.

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Hey, it's great to be here, Jason. Thanks for having me, and it's a big year for Apple.

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You know, the 50th year for the start of the company, but it's also the 25th

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anniversary of the year we opened the first store. Yeah.

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Yeah, that's amazing. That was Tyson's Corner, right? Was that?

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Tyson's Corner. Yeah, Tyson's Corner and Glendale opened the same day, May 19th, 2001.

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That is amazing. It kind of dates me because I do remember a world without Apple stores.

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It's sad to think I've been doing this so long. You, of course,

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were a very young man when you started that first store.

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And Ron, I'm super excited because I understand that you have written a book

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called Shop Different that's going to release this September,

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which is coming fast, September 22nd.

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Why did you decide to write a book? What's the thesis of the book?

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Yeah, well, I wasn't going to write a book, but it turns out there's this case

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study that was written at Harvard Business School that's used by almost every business school.

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And to this date, it's Harvard's, according to the school's,

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most popular first year case.

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And I've gone back to the school a couple of times and talked.

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And it's just packed with lessons. And that case looks at my career from Target,

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Apple, and JCPenney and asks the questions, what worked at Target,

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what worked at Apple, and what happened at JCPenney?

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And as I thought about it, I said, you know, the way to give back is to really

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share the inside story of all of those.

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And after a lot of time, I decided, you know, I'm going to write a book.

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And I found a great person to help me write it and we've been working on it

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for three years and HarperCollins is publishing it and it comes out September 22nd, this September,

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And I think it's a really beautiful book.

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Well, we are all really excited. Obviously, everyone that is generous enough

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to listen to this podcast is someone that loves retail.

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And this is unquestionably going to be one of the must-reads for us this fall.

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So thank you very much for writing it.

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We'll double-click on it a little bit more. But one of the ways we always start

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the show, and it's kind of a perfect segue, is kind of understanding the background,

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of our guests. And so we alluded a little bit to Target. Is that where you started your retail career?

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Yeah, I did. I grew up in the Twin Cities and went to Stanford Harvard Business

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School and then decided coming out of business school, I didn't want to go into

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investment banking like everyone else. And I had offers to do that.

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So I want to go into retail. But you got to remember, your listeners will know this.

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The 80s were the greatest period of retail innovation of any decade in the history of retail.

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And just like venture capital today is funding ai venture capital is funding

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retail growth you know 84 is when mickey you know repositioned the gap and that's

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when the limited started to open all their stores and that's when all these big off,

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mall big box stores started to come out and when the outlet center was invented

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and on and on and so the 80s were a big time for retail so i said,

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I'm going to join that parade.

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And I started at a division of Target called Mervyn's, which was their most

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successful strategy at the time.

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And I started unloading trucks down in Glendale, California.

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Yeah, I do feel like that was a golden age of retail, although it's always a

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golden age. There's always cool stuff happening.

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But I'm going to say the vast majority of great people we get into retail,

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especially back then, were not coming from Stanford and Harvard.

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So, you were probably a little bit of an outlier with the super fancy degree.

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So, we're grateful that you did that. It's maybe a little more common path today.

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And I've spent a lot of time walking the halls of Target.

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And one of the things I hear a lot about your tenure there is you were intimately

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involved in the Michael Graves deal, which I would argue is seminal at Target.

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Can you tell our listeners a little bit about that?

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Just a quick, this would be interesting.

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Yeah.

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You know, when I started my career, there were 13 regional discounters.

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You know, Walmart started in Veneville, was doing rural stores,

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and Target was in the Midwest. And wherever you're from, there is a regional

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discounter. Just like there were department stores that were local.

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And by the 90s, it was pretty clear that only three were going to survive.

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And that was Walmart and Target. And then Kmart still had some life left at the time.

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But Target had the fundamental challenge of how do we beat Walmart?

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Because in the 90s is when Walmart started to open up in suburban areas.

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And Walmart had a significantly lower cost structure.

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So Target was known for hip fashion. But the problem is, you know,

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fashion is you get a good markup.

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But by the time you mark it down, you don't make much more than you do on basics.

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And so I had this idea that Target should come up with a third category, which was design.

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Design would let you get the markup of fashion.

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It's unique product. But design products should be in the assortment for a decade,

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not a season, like apparel can be.

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And so we launched a partnership. It was the first retail collaboration,

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believe it or not, ever. And these are commonplace today.

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But we went on, got Michael Graves to design home products for Target.

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That was my idea, my initiative I led with the team.

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And it just turned out to be fabulous. You know, the 90s had gone through a period of design.

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It was a decade of design. And it was happening, the Volkswagen Beetle.

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You know, Johnny and Steve did the iMac in 98 when that launched.

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You know, on and on and on. It was a decade of design and we caught the wave at Target.

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And during my time at Target from 90 to 2000, the stock went up 12 times.

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Yeah. Yeah. Yeah. Yeah. Hopefully you, you got to hang on to some of that equity,

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but that to me, that, that Michael Graves collab started this,

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obviously it started collabs across all of retail, but particularly Target, it started this whole

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surprise and delight thing that, that, uh, Target was.

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Well, that's what, you know, Target, you know, they had to get people to,

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And part of it was, you know, there was a lot of status in the 90s about where you shot.

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And people would whisper to the friends, oh, I got this at Target.

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Yeah.

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But when we did design, it was legitimate. And people started to shout, look what I found.

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And people would go on these Target runs to see what was new. Because we were really,

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really exciting merchandise. Some was designed by us. Some was from Europe.

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You know all these things we were doing and then you know of late unfortunately

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target lost its way a little bit you know hopefully target target finds its

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way back um and the stock price has gone up yeah yeah and i think they will,

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But that was a great period for Target.

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Yeah.

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And I love being a part of it.

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Yeah. They did have a good quarter last quarter. So we're hoping that's the

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beginning of a turnaround for them.

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I think that's funny. It used to be that you were kind of quiet about your patronage at Target.

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But during that era, it became Target. And I think of you and Michael Francis

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as really kind of making it cool and hip to shop at Target.

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Michael did. Target had great marketing.

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You know, there's a guy, John Pellegrin, who did an amazing job and Michael

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was at the department stores and he came to Target and did a fabulous job building

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out the Target bullseye, that it became one of the most recognized symbols, you know,

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in business, not just in retail.

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Yeah, it's this whole story is going to come full circle because he's at the gap now.

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Um so so what what i'm curious and i honestly don't know the answer to this

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is how how did you go from target to apple were you recruited were you looking

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for your next challenge interesting.

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I got a call one day from a recruiter and he said ron remember in 1991 he said you were 20 How old was I?

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I was in my late 20s. And he said, you know, there's a guy named Mickey Drexler

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who wants to open up a new concept called Old Navy.

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Would you like to talk to him about running it?

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And I said no, because I was early on in my career at Target and wasn't ready to move.

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And he said, you know, you turn that down. Look at how Old Navy's done.

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I've got another one for you.

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And he said, Steve Jobs wants to open stores at Apple. Yeah.

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He asked me to look for who's that guy doing all the design work at Target because Steve loved design.

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And so I decided to go out and meet Steve and I met him. We interviewed for

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three hours the first night and I walked away saying, I have to work for this guy.

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You know, it was one of those moments and Apple was struggling.

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You know, it wasn't doing well. Target was on fire. People couldn't understand why I would do that.

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And then a lot of my friends said this was 2000. I said, Ron,

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the dot-com boom is what's happening in retail. Don't go to Apple.

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Go to one of the dot-coms. Start a dot-com company. I said, no,

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no, I want to go to Apple. I believe in physical retail, and I believe it's

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a great brand, and if we do the stores right, it can really make a difference.

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Yeah.

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So I joined Apple.

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That's amazing. And I do think, in fairness, in hindsight, that seems like a

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no-brainer decision, but people have to remember that at that point,

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It was not clear that Apple was going to be the runaway success that they'd become.

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And it for sure was not clear that manufacturers should own their own retail stores. Like there was.

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Well, no one thought that was a good idea. Well, remember back in 2000,

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the PC had 95% share. And who was the big PC one? Dell.

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Yeah. Direct to consumer online.

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They had built out online shopping starting in 94 or so. And they were just killing it.

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Yeah.

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But the reality is, was selling mainly to business, not to consumers.

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Yeah.

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But then Gateway had gotten up to 300 plus stores. And when we're going to open

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the Apple stores, they were folding.

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Yeah.

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You know, they closed down the year we opened our stores. So people are going,

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what's Apple doing? They can't make money in stores.

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Dell's winning. Apple's got 5% market share.

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And they're going to put stores in malls, expensive real estate in those big

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stores. These guys are crazy.

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Yeah. Yeah. So I can imagine some people were questioning your career choices at the moment.

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And then your choices and my business strategy. Yeah, mostly it wasn't.

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It wasn't just that Apple was going to open stores.

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It was that we weren't going to test it.

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We were going to open them and we're going to do everything different.

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Yeah. And.

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The I I'm trying to put myself in your shoes and I literally can't do it.

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But like you'd both to work with someone like Steve would be like so exciting and such a privilege.

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But it also would be, quite frankly, terrifying because he's he's famously fast,

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sharp and not not very tolerant of people that that can't keep up.

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That's true. But, you know, that's one of the reasons I wrote the book.

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And one of the things I'm delighted with is I was able to portray the Steve

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I knew and the Steve I knew would be the same kind of person Johnny Ive knew

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and Tim Cook worked with.

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You know, Steve was actually a great person to work with. No one inspired you

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more, taught you more, helped you more.

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And if you were one of his close, you know, I was on the executive team.

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He was a great leader. He delegated better than anybody I'd ever worked with.

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High standards you know and you know he it could be tough sometimes yeah but

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that's what you want you want to work with people who are smarter than you who

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stretch you who challenge you if you don't you know i think that's a big issue.

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No for sure i i'm curious how like how did that work like did was he super involved

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did you have to build the concept store and did he get did he get involved in

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approving it like did you.

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Have to he was very involved he he was involved in the things he loved,

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so he cared about design so he got involved with the development of the initial store,

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and from then on he kind of helped with some of the big like the fifth avenue

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store the all glass cube yeah you know but after that he just delegated he didn't

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get involved with the culture the people who i hired,

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it was really his input was in the design of the store And, you know,

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we had a lot of great conversations early on about conceptually how we are going to compete.

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And those were really good conversations. Like, he hated the idea of putting stores in malls.

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You know, but I said, Steve, your goal is to reach the 95% who don't use a Mac.

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They're not going to get in a car and drive 10 miles to a store.

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You might get them to go 10 feet out of their way. You know,

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and Steve, once he understood that, he said, okay, we'll be in malls.

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Awesome.

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So, you know, and.

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Yeah. So you were able to convince him. He was open-minded. Yeah.

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Steve is extremely open-minded. You know, his strength is his ability to innovate through conversation.

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You know, some people call it, David White would call it conversational commerce.

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You know, but it's really a great conversation is when no one has an agenda,

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they want the best idea to win.

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And you're both absolutely present. You're debating an issue.

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You're bringing your own personal geography to it and the best idea wins and

00:14:36.182 --> 00:14:42.223
steve never never never did something because it was his idea,

00:14:42.842 --> 00:14:47.172
it was only if he thought it was best but he was very open to input and there

00:14:47.172 --> 00:14:49.802
are many examples of that throughout the book you know.

00:14:50.006 --> 00:14:56.042
That's that's gratifying to hear i i am curious by the time you left apple stores

00:14:56.042 --> 00:14:59.047
were were universally regarded it as a wild success.

00:14:59.047 --> 00:15:02.582
And there are all these crazy stats about the revenue per square foot being,

00:15:03.302 --> 00:15:06.342
higher than Tiffany's. And it was at the top of the ecosystem.

00:15:06.662 --> 00:15:10.452
And they say imitation is the most sincere form of flattery.

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Everybody, of course, was inspiring their new work based on the success of that store.

00:15:14.924 --> 00:15:17.873
I'm kind of curious, though, from you, from the horse's mouth,

00:15:18.672 --> 00:15:23.062
what do you think about and what are you most proud about in that Apple concept?

00:15:23.062 --> 00:15:24.125
What do you think were...

00:15:24.676 --> 00:15:27.582
There was a lot of innovation in there, but what was the secret sauce that really

00:15:27.582 --> 00:15:30.017
caused consumers to resonate.

00:15:30.220 --> 00:15:34.040
The secret sauce is we created a place that people wanted to belong.

00:15:34.776 --> 00:15:37.585
You know, the store, it was, and it was interesting because it was the time

00:15:37.585 --> 00:15:41.366
of the internet, when the internet was all about a transaction.

00:15:42.009 --> 00:15:46.119
And if a store was going to survive the internet, you had to build an experience.

00:15:46.708 --> 00:15:51.245
And so part of the benefit of the Apple store coming out at the time when the

00:15:51.245 --> 00:15:54.120
internet was just taking off is they were our competitor.

00:15:54.707 --> 00:15:58.165
And we had to do something that they could never do. you know and so ultimately

00:15:58.165 --> 00:16:02.653
what i'm most proud of i think is you know i was in the apple store in milan

00:16:03.088 --> 00:16:07.627
two days ago a beautiful store and the experience was fantastic,

00:16:08.237 --> 00:16:13.135
and the store was essentially the same layout same vision that we established

00:16:13.135 --> 00:16:19.312
25 years ago yeah with all the changes and that that's hard to do in retail to keep something,

00:16:19.963 --> 00:16:24.850
vibrant and working but i think the strength of the apple store has always been its people,

00:16:25.546 --> 00:16:30.635
you know they're not on commission they love people they love serving people,

00:16:31.231 --> 00:16:35.495
they're not in a hurry you know they take time to welcome you to the store to

00:16:35.495 --> 00:16:39.145
get to know you to find out what you're trying to do and then they present a

00:16:39.145 --> 00:16:41.725
solution that's exactly what you need not more than you need that.

00:16:42.735 --> 00:16:47.429
You can take home today you know and then the store's got great support,

00:16:48.047 --> 00:16:52.585
after you buy whether you want to learn more through classes and theaters or

00:16:52.585 --> 00:16:56.655
you want to get help like in a genius bar yeah but it just it turned out it

00:16:56.655 --> 00:16:58.244
was just a well-conceived store,

00:16:58.819 --> 00:17:05.500
that has stood the test of time and when i left you know i think there were 370 stores open,

00:17:06.206 --> 00:17:13.025
we had another 50 in works today apple has 530 stores so in our first 12 years

00:17:13.325 --> 00:17:19.475
we got about 80 of the footprint done globally and you know in the u.s you know

00:17:19.475 --> 00:17:20.851
there's Apple stores within,

00:17:21.496 --> 00:17:25.454
you know, seven, a 10 minute drive today of 90% of the population.

00:17:26.059 --> 00:17:30.835
Yeah. So it's, it's, but I have to digress for one second. When you walk into

00:17:30.835 --> 00:17:33.546
Milan, do, does anyone know who you are? Do people recognize you?

00:17:34.355 --> 00:17:35.256
They didn't this time.

00:17:35.256 --> 00:17:35.506
Okay.

00:17:35.926 --> 00:17:41.931
But it's interesting. Most of the stores I visit, especially in Europe, people recognize me.

00:17:42.372 --> 00:17:42.696
Yeah.

00:17:42.696 --> 00:17:46.706
Because, you know, they stay around a long time. You know, like I was in the

00:17:46.706 --> 00:17:49.696
niece store three weeks ago and I was having this girl. I said,

00:17:49.696 --> 00:17:53.839
you seem so familiar. She goes, Mr. Johnson, I helped you five years ago.

00:17:54.266 --> 00:17:55.911
I had forgotten. But she didn't remember.

00:17:56.126 --> 00:17:56.746
That's amazing.

00:17:56.746 --> 00:17:59.521
She's worked at that store since it opened 16 years ago.

00:17:59.700 --> 00:18:04.166
Yeah. And in some ways, I feel like that, I know it's not directly analogous,

00:18:04.166 --> 00:18:07.446
but the evolution of consumer electronics in the U.S., like,

00:18:07.446 --> 00:18:10.596
you know, there was a time when there was this big battle between Circuit City

00:18:10.596 --> 00:18:13.266
and Best Buy. And Circuit City was the commission-based model.

00:18:13.626 --> 00:18:17.196
Best Buy was not. And obviously, Best Buy won because they're here and Circuit

00:18:17.196 --> 00:18:20.106
City isn't. But Best Buy was very low touch, right? And,

00:18:22.467 --> 00:18:26.166
you know, there was huge turnover. And so then the Apple stores emerged and,

00:18:26.753 --> 00:18:29.387
they're non-commissioned but much higher touch.

00:18:29.573 --> 00:18:32.456
And you know they certainly you you invested a lot more in you.

00:18:32.456 --> 00:18:35.376
Know best buy under Herbert Jolie Mr.

00:18:35.376 --> 00:18:39.726
Jolie did a great job oh yeah he had a book what I found kind of funny is,

00:18:40.586 --> 00:18:44.962
our two-word goal for the apple store for service was to enrich lives,

00:18:45.682 --> 00:18:52.066
and in 2012 or 13 best buy said our goal is to enrich lives yeah but they started

00:18:52.066 --> 00:18:55.796
to put in store within a store throughout the store You know,

00:18:55.796 --> 00:18:57.239
Apple was probably the first one,

00:18:57.886 --> 00:19:01.924
and they have many of those, and those are sometimes staffed by partners.

00:19:02.371 --> 00:19:05.796
You know, so it's become a great place to buy consumer electronics.

00:19:05.796 --> 00:19:06.248
Yeah.

00:19:06.353 --> 00:19:08.721
And I'm a great admirer of Best Buy products.

00:19:09.434 --> 00:19:13.371
They've survived. It's a difficult category, but they've done a great job.

00:19:13.371 --> 00:19:20.001
Yeah, no, I totally agree. And I am also a Best Buy alum. So I appreciate that. It is funny, though.

00:19:20.861 --> 00:19:23.971
It was almost a self-fulfilling prophecy. Part of the reason that we had to

00:19:23.971 --> 00:19:26.941
open shopping shops at Best Buy is we used to have this great traffic driver

00:19:26.941 --> 00:19:29.382
in the middle of the store called Music.

00:19:29.718 --> 00:19:32.534
And people used to buy music on these plastic circles.

00:19:33.601 --> 00:19:37.261
And Apple may have had a role and making those plastic circles a little less

00:19:37.261 --> 00:19:41.931
popular. And so we had to find alternative uses for some of that excess footprint

00:19:41.931 --> 00:19:42.661
in the middle of the store.

00:19:42.721 --> 00:19:45.581
Oh, that's so funny. That's true. Yeah.

00:19:46.121 --> 00:19:50.351
You know, my moniker is Retail Geek, and I was accidentally involved in Best

00:19:50.351 --> 00:19:56.781
Buy's acquisition of Geek Squad, which was founded by an entrepreneur in the Twin Cities.

00:19:56.781 --> 00:19:59.441
Yeah, that was like 1996.

00:19:59.441 --> 00:20:02.161
Yeah, Robert Stevens. History. Yeah.

00:20:02.161 --> 00:20:02.851
I knew Robert.

00:20:02.851 --> 00:20:03.471
Yeah, Robert.

00:20:03.471 --> 00:20:05.241
And then he moved to the Bay Area.

00:20:05.241 --> 00:20:05.675
Yeah.

00:20:05.948 --> 00:20:09.501
After later, after he sold Geek Squad to Best Buy. Yeah.

00:20:10.181 --> 00:20:14.711
He would say after after Geek Squad acquired Best Buy is how he would he would put it.

00:20:14.711 --> 00:20:17.941
He would say, no, it's kind of funny because when I presented the idea of the

00:20:18.348 --> 00:20:21.361
genius part of Steve, I first talked about we're going to serve people through a bar.

00:20:21.681 --> 00:20:21.891
Yeah.

00:20:21.891 --> 00:20:25.781
We're going to dispense advice just like a bartender dispenses alcohol.

00:20:25.781 --> 00:20:27.380
He goes, I like that. He goes, what are you going to call it?

00:20:27.934 --> 00:20:30.531
I said, I'll come up with the name. I don't have it yet. So I called him up

00:20:30.531 --> 00:20:32.948
a week later and said, genius bar.

00:20:33.535 --> 00:20:40.495
He goes ron you can't call it that and he said because the people who are going to be behind the bar,

00:20:41.150 --> 00:20:44.131
they don't know how to talk to people if you want to call it the geek bar you

00:20:44.131 --> 00:20:48.141
can well he wouldn't have known about the geek squad steve wasn't in touch with

00:20:48.141 --> 00:20:53.793
that sure but that you know it's interesting that that was the name that you know,

00:20:54.414 --> 00:20:58.471
the original founders of the geek squad chose because that's kind of who technologists

00:20:58.471 --> 00:21:02.121
were back then they were these people that love technology kind of geeks and

00:21:02.121 --> 00:21:05.121
they spend all their time over themselves and yeah we're great with customers

00:21:05.121 --> 00:21:06.941
but they know how to fix products yeah uh,

00:21:07.721 --> 00:21:12.201
but we we changed flipped that on said and called it the,

00:21:13.107 --> 00:21:16.230
probably the most you know relevant part of the store to most people.

00:21:16.544 --> 00:21:20.310
I would i i certainly would agree it's a lot of pressure though to get a title

00:21:20.310 --> 00:21:24.170
like genius in your title seems geek seems a lot lower pressure i will.

00:21:24.170 --> 00:21:29.274
Say can i explain to you why we did that yeah please you know the key the key,

00:21:29.863 --> 00:21:34.220
you know i really think people want to have meaning in their life,

00:21:34.825 --> 00:21:38.780
and when we were opening our first store i said think of the i'm from minneapolis

00:21:38.780 --> 00:21:42.029
you know we're gonna have our first store at the Mall of America in Minneapolis,

00:21:42.615 --> 00:21:45.529
we're going to hire three geniuses, maybe it's four.

00:21:46.180 --> 00:21:50.691
You have to be, you're going to be credit for being the smartest Apple person,

00:21:51.289 --> 00:21:53.419
in Minneapolis and St. Paul.

00:21:54.394 --> 00:21:58.004
Well, if you love technology, what a great job.

00:21:58.740 --> 00:22:02.536
You are the smartest Apple person in the state of Minnesota.

00:22:03.196 --> 00:22:06.160
You know, and that gave people meaning and they'd stand behind that bar and

00:22:06.160 --> 00:22:07.950
they had to answer any question on the planet.

00:22:08.556 --> 00:22:12.742
And they were proud. that they could do that and they were proud that they were

00:22:13.090 --> 00:22:17.320
a genius at a genius bar yeah and that's just part of conveying meaning and

00:22:17.320 --> 00:22:19.249
that's really important to people who work in retail.

00:22:19.539 --> 00:22:24.260
That that seems totally fair and in that same era robert and i were we're desperately

00:22:24.260 --> 00:22:27.780
telling everyone that geek is not a pejorative so that was kind of our right

00:22:27.780 --> 00:22:30.950
you know still a negative thing back then so i do want to touch on two things

00:22:30.950 --> 00:22:33.234
that are super interesting to me about the genius bar

00:22:33.606 --> 00:22:35.438
i i worked for a lot of retailers that

00:22:35.879 --> 00:22:38.680
opened stores and were inspired by by apple,

00:22:39.200 --> 00:22:41.130
And my hypothesis is they always got it wrong.

00:22:41.130 --> 00:22:45.290
Like, of course, every attribute of the store contributes to the experience

00:22:45.290 --> 00:22:48.713
and the success. I'm not trying to say there's one thing that makes you success and one that not.

00:22:48.991 --> 00:22:54.470
But the things that people always noticed and tried to emulate are like negative

00:22:54.470 --> 00:22:59.260
space, wooden tables, better lighting, right? And those are all important things.

00:22:59.260 --> 00:23:00.474
I'm not saying they're not.

00:23:00.601 --> 00:23:04.580
But when I look at Apple stores and say, hey, here's why they stood out.

00:23:04.580 --> 00:23:06.952
Here's why they won the hearts and minds of their consumers.

00:23:08.901 --> 00:23:12.591
Steve Jobs might disagree with me. It wasn't as much about those design elements

00:23:12.591 --> 00:23:16.091
as it was the service model that you had.

00:23:16.091 --> 00:23:19.861
You had more people per square foot, that you had those people well-trained,

00:23:19.861 --> 00:23:24.153
that you had the service in the Genius Bar. And so I always felt like all these

00:23:24.461 --> 00:23:27.822
emulators were emulating kind of the wrong parts of your plan.

00:23:28.443 --> 00:23:34.021
You're exactly right. You know, when I left Apple in 2012, we had a million

00:23:34.321 --> 00:23:36.442
visitors a day to our stores.

00:23:37.197 --> 00:23:41.761
I think a million people a day came to the Apple store and they came for,

00:23:41.761 --> 00:23:44.480
like we said, there were a lot of reasons to come.

00:23:44.613 --> 00:23:48.311
And it wasn't about buying a product. It was so many other things.

00:23:48.311 --> 00:23:56.630
And but, you know, the reality is most people, what they call innovation is really improvement.

00:23:57.409 --> 00:24:00.210
Because when they do innovation, they go look at what someone else did,

00:24:00.210 --> 00:24:03.742
and they apply it to their store or their situation.

00:24:04.173 --> 00:24:06.849
And the customer sees that as a copy.

00:24:07.389 --> 00:24:10.041
It's good to do, but you never get it right.

00:24:10.599 --> 00:24:12.857
You know, Microsoft tried to open retail stores.

00:24:16.172 --> 00:24:21.971
And they made the obvious, so many mistakes, it's hard to, it's not laughable, it's sad.

00:24:22.527 --> 00:24:26.950
But you know they're the big gorilla and they go open a store right next to

00:24:26.950 --> 00:24:31.890
an apple store that's the same size so basically legitimized apple but they

00:24:31.890 --> 00:24:34.160
didn't understand what made the apple store great,

00:24:34.980 --> 00:24:40.660
you know and it just felt different and they never even got traffic in the stores

00:24:40.660 --> 00:24:46.680
you know you'd go buy an apple store with people and this company serving 90

00:24:46.680 --> 00:24:49.582
market share had nobody in its yours.

00:24:49.867 --> 00:24:51.183
Yeah. Yes.

00:24:51.351 --> 00:24:51.642
Yeah.

00:24:51.787 --> 00:24:54.650
I remember well. And they, I mean, they, they literally followed your footprint.

00:24:54.650 --> 00:24:57.630
I think the first Microsoft store was also in Tyson's corner.

00:24:57.630 --> 00:25:01.879
So that, yeah, yeah. Funny, unsuccessful part.

00:25:02.094 --> 00:25:06.810
But when I look at that store, one of the things that I think someone may have

00:25:06.810 --> 00:25:09.547
had an idea before, but it'd never been executed before.

00:25:10.020 --> 00:25:12.840
One of the things that was really interesting to me was, was mobile checkout

00:25:12.840 --> 00:25:17.850
that we went away from, from a cash register and know line of people checking

00:25:17.850 --> 00:25:24.040
out to sort of checking out in situ um was that like an accident or was that.

00:25:24.440 --> 00:25:29.120
A very intentional choice yeah it's a great part of the book i think we tell

00:25:29.120 --> 00:25:33.240
about all those innovations but you know it was interesting because in 1984

00:25:33.240 --> 00:25:35.198
when i was at unloading trucks,

00:25:35.742 --> 00:25:39.829
someone at headquarters said i feel sorry for that harvard mba guy down there unloading trucks,

00:25:40.456 --> 00:25:44.450
why don't we have do a little write-up on what should we do with the cash wrap,

00:25:45.038 --> 00:25:47.459
and i spent about three months studying the cash rep.

00:25:48.062 --> 00:25:51.290
And I just concluded, everyone hates, everyone loves to shop.

00:25:51.290 --> 00:25:52.602
Nobody likes to check out.

00:25:53.326 --> 00:25:56.379
You know, it's just a really terrible experience no matter what you do.

00:25:56.844 --> 00:26:02.081
And so my dream was always to get rid of the cash wrap. And in 2008, we did.

00:26:03.141 --> 00:26:06.735
And what was the amazing thing is we had technology. We basically turned an

00:26:06.735 --> 00:26:10.664
iPod Touch into a mobile cash wrap. We gave one to every employee.

00:26:11.258 --> 00:26:16.105
And as the stores got really busy, you know, I remember the iPad launched.

00:26:16.570 --> 00:26:19.530
We had stores with 300 employees on the phone.

00:26:20.006 --> 00:26:22.102
Each was a mobile cash wrap.

00:26:22.264 --> 00:26:27.505
Yeah, which scales a lot better than some super expensive NCR point of sale terminal.

00:26:27.865 --> 00:26:28.965
We had no constraints.

00:26:28.965 --> 00:26:29.308
Yeah.

00:26:29.547 --> 00:26:33.023
We were selling 300 iPads a minute.

00:26:33.629 --> 00:26:33.785
That's crazy.

00:26:34.005 --> 00:26:34.651
Can you imagine that?

00:26:34.993 --> 00:26:35.605
No, I cannot.

00:26:35.605 --> 00:26:38.889
And other retail stores would have lines at checkout.

00:26:39.167 --> 00:26:39.475
Yeah.

00:26:39.864 --> 00:26:42.923
We had lines outside the stores to get your hands on the product to try it.

00:26:43.295 --> 00:26:45.495
We had no operational hiccups, you know?

00:26:45.495 --> 00:26:47.025
Yeah, that's amazing.

00:26:47.025 --> 00:26:48.025
No, I was really proud of that.

00:26:48.025 --> 00:26:52.655
Yeah. And then I feel like eventually you even expanded that to self-checkout.

00:26:52.655 --> 00:26:55.625
So your app was also one of the first. Yeah.

00:26:55.625 --> 00:26:59.560
2010, we just said, you know, we got this app. Let's create an app,

00:27:00.170 --> 00:27:04.326
put it in the Apple's. Just let someone just scam the barcode and check out themselves.

00:27:04.674 --> 00:27:04.999
Yeah.

00:27:05.121 --> 00:27:08.152
Not a lot of people did it. It's like most new technologies.

00:27:08.686 --> 00:27:10.363
But in 2010, you could do that.

00:27:10.743 --> 00:27:18.406
And I don't think mobile checkout really became a thing until the 2018, 19, 20 period.

00:27:19.247 --> 00:27:23.725
And now you've got people like Inditex and Uniqlo have the most amazing checkout

00:27:23.725 --> 00:27:24.714
experience I've ever seen.

00:27:24.970 --> 00:27:25.205
Yeah.

00:27:25.845 --> 00:27:27.657
And the world's changing.

00:27:27.785 --> 00:27:31.445
No, no, no. It's certainly having a moment now. I do a lot of work with our

00:27:31.445 --> 00:27:33.105
friends in Bentonville, and it's

00:27:33.105 --> 00:27:36.876
one of the most beloved experiences at Sam's Club is that scan and go.

00:27:38.187 --> 00:27:41.767
And yeah, in my mind, it all started in those Apple stores.

00:27:42.005 --> 00:27:45.487
I remember when you first launched that, I shopped one of your New York stores,

00:27:46.486 --> 00:27:48.347
the one in the train station. Is that Union's?

00:27:48.947 --> 00:27:50.407
Yeah, Grand Central. Grand Central.

00:27:50.407 --> 00:27:54.157
Grand Central store. And it was such a surreal experience because already you

00:27:54.157 --> 00:27:56.317
made that store feel like part of the environment.

00:27:56.317 --> 00:27:59.607
It didn't feel like you were necessarily like walking over the threshold of

00:27:59.607 --> 00:28:03.447
a store, right? So you're kind of, you're browsing, you see something you want,

00:28:03.807 --> 00:28:07.187
you scan it with your phone and you walk out. and I literally felt like I was

00:28:07.187 --> 00:28:10.207
shoplifting when I left with my first Scantico purchase.

00:28:10.207 --> 00:28:13.488
Isn't that great? Yeah, I remember. Well, you know, that was a real fun store because,

00:28:14.175 --> 00:28:17.757
it turned out to be just a hugely successful store because so many people in

00:28:17.757 --> 00:28:21.209
New York, all the people from Greenwich and up north are going through that

00:28:21.535 --> 00:28:25.797
train station every day and they'd stop in to get help at the Genius Bar.

00:28:25.797 --> 00:28:27.874
They'd buy their Christmas gifts on the way home.

00:28:28.472 --> 00:28:31.417
It was a great store. But you know what? It was the lowest cost store we ever

00:28:31.417 --> 00:28:35.483
built because you didn't have to touch the walls. You couldn't touch the floor.

00:28:36.058 --> 00:28:40.527
We just put in our little wood tables and a little lighting, and we were good to go.

00:28:40.847 --> 00:28:42.544
Yeah, it's nearly a pop-up store.

00:28:43.062 --> 00:28:46.917
Yeah, it's a beautiful store, though. It's a beautiful building, beautiful space.

00:28:47.097 --> 00:28:49.937
Yeah, yeah. No, that was super fun. And then one other thing,

00:28:49.937 --> 00:28:52.860
and in my mind, this might have evolved a little more over time, but like...

00:28:53.691 --> 00:28:58.427
So one interesting thing when you do mobile checkout versus a traditional cash

00:28:58.427 --> 00:29:01.907
wrap is you kind of move from this adversarial thing where the customer is on

00:29:01.907 --> 00:29:07.947
one side of a desk and the clerk is on the other side and they're taking money from each other.

00:29:08.367 --> 00:29:11.286
They're negotiating. It doesn't feel like a collaborative win-win.

00:29:12.859 --> 00:29:15.907
You move to the shoulder-to-shoulder experience where two people are working

00:29:15.907 --> 00:29:17.896
together to solve a problem, which I love.

00:29:18.413 --> 00:29:22.157
And I feel like Genius Bar evolved to that over time as well.

00:29:22.157 --> 00:29:25.077
There may have been a time when people sat across from each other in the Genius

00:29:25.077 --> 00:29:29.877
Bar, but over time, the Genius Bar moved to those tables, too.

00:29:29.877 --> 00:29:34.907
They're bringing back. Some of their newer stores now, they're bringing back a bar.

00:29:34.907 --> 00:29:35.354
Okay.

00:29:36.407 --> 00:29:41.694
And I think what happened is, and I've talked to them about it,

00:29:42.159 --> 00:29:44.806
people like to walk in the store and know what's going on.

00:29:45.482 --> 00:29:48.327
And the challenge when you have a lot of tables with people sitting side by

00:29:48.327 --> 00:29:50.068
side, what are they doing? Where do I go?

00:29:50.656 --> 00:29:54.327
You know, because there's setup at those tables, there's classes at those tables,

00:29:54.327 --> 00:29:56.449
there's genius bar at those tables.

00:29:56.710 --> 00:30:02.307
It's very flexible, but you lose a little bit of the understanding of what's

00:30:02.307 --> 00:30:04.267
being offered here, you know.

00:30:05.343 --> 00:30:07.073
And so things evolve.

00:30:07.289 --> 00:30:11.247
Yeah. And so speaking of evolve, I am curious, and I'm not trying to throw shade

00:30:11.247 --> 00:30:14.857
on anyone, but like when you walk in an Apple store today, is there anything

00:30:14.857 --> 00:30:17.587
that's changed that you go, oh, man, I wish we didn't cave on that?

00:30:18.927 --> 00:30:22.261
Is there anything that bothers you at all in the current Apple experience?

00:30:23.247 --> 00:30:31.845
No, there's one thing we did, though, that I absolutely love that they eliminated is, you know...

00:30:33.163 --> 00:30:37.401
We wanted to find a way to create perfect placement where every product was

00:30:37.401 --> 00:30:39.165
exactly where it should be every time.

00:30:39.807 --> 00:30:44.033
And when the iPad came out, we created these beautiful acrylic displays.

00:30:44.370 --> 00:30:45.978
You might remember these with an iPad.

00:30:46.088 --> 00:30:46.465
Yeah.

00:30:46.657 --> 00:30:52.050
There was a point of sale device and the products like the phones would be right attached to that.

00:30:52.450 --> 00:30:56.441
And we powered the phones through the acrylic display and we just updated the

00:30:56.441 --> 00:30:58.254
software, but we could tell stories.

00:30:58.556 --> 00:31:00.791
So if the store is busy, you could read about it right there.

00:31:00.791 --> 00:31:02.347
It's like going online and learning.

00:31:02.800 --> 00:31:06.531
You could check all the configurations all the price points you could and so

00:31:06.531 --> 00:31:11.391
we had really reinvented what i'd call point of sale how you communicate to

00:31:11.391 --> 00:31:16.549
a customer shopping on their own and for some reason apple decided not to continue up,

00:31:17.238 --> 00:31:21.421
you know and i and i think it then it requires you when you're in the store

00:31:21.421 --> 00:31:23.195
on your own if a person's not there,

00:31:23.934 --> 00:31:28.437
what do you do now with some products like a computer they put it on the screen,

00:31:29.017 --> 00:31:32.599
but with the phone it's too small you know that was an interesting one to me.

00:31:32.744 --> 00:31:37.471
Yeah. Yeah. That is, I do, I think that in my mind, and this maybe only a geek

00:31:37.471 --> 00:31:40.231
would notice this, another innovation of the store, like, you know,

00:31:40.231 --> 00:31:43.491
traditionally you put product on the shelf and then you put merchandising around

00:31:43.491 --> 00:31:44.929
the product to try to tell the story.

00:31:45.190 --> 00:31:48.499
And it's all static merchandising. And so you can't tell a super rich story.

00:31:49.163 --> 00:31:51.951
I would actually argue Bose was doing this for quite a while,

00:31:51.951 --> 00:31:54.421
even before there were Apple stores, but in the Apple stores,

00:31:55.221 --> 00:31:58.901
every device in that store had software on it to tell a story about that device

00:31:58.901 --> 00:32:03.981
like like you kind of built the custom the shopping customer experience into

00:32:03.981 --> 00:32:08.221
the device which is one of the nice advantages when you're the manufacturer of the device,

00:32:08.961 --> 00:32:12.871
exactly and and so i do i think that no you're in there's a that's.

00:32:12.871 --> 00:32:16.236
A big part of the store because we delayed our first store six months.

00:32:16.833 --> 00:32:17.571
Because we.

00:32:17.571 --> 00:32:21.221
Went from the whole store was organized like a,

00:32:22.012 --> 00:32:27.521
And then it's a great story, but Steve decided he's going to reposition the Mac as the digital hub.

00:32:28.109 --> 00:32:32.387
And that means the Mac is about not about the computer.

00:32:32.811 --> 00:32:37.641
It's about the software that allows a digital device like a camera to become

00:32:37.960 --> 00:32:43.654
something you can create with, you know. And so then all the software got put on the computers.

00:32:44.176 --> 00:32:47.102
And that's what people love. They get on those computers to learn how to do

00:32:47.102 --> 00:32:48.495
something they'd never done before.

00:32:48.994 --> 00:32:49.272
Yeah.

00:32:49.272 --> 00:32:53.278
You know, and the stores came out when we were still in an analog world,

00:32:53.743 --> 00:32:57.394
you know, in 2001, 90% of people owned analog cameras.

00:32:58.212 --> 00:32:58.750
Oh, yeah.

00:32:58.750 --> 00:33:02.501
They were still good. They were walking to the grocery store to get their phone to go.

00:33:02.652 --> 00:33:05.270
Yeah, it's a little known fact, but in the early days, a lot of people walked

00:33:05.270 --> 00:33:09.356
into that Apple store to get Internet access. Like it was like the public library.

00:33:09.582 --> 00:33:13.450
They would sit on the devices and use the device for free and have Internet

00:33:13.450 --> 00:33:17.709
access. And I think there's some some really popular social creators that actually,

00:33:18.474 --> 00:33:20.140
did all their content in the stores.

00:33:20.140 --> 00:33:24.630
No, you're exactly right. No, even when Facebook came out, you know,

00:33:24.630 --> 00:33:28.233
kids would come in there and that was the way they could do their Facebook thing

00:33:28.587 --> 00:33:32.644
because they didn't have couldn't afford a phone and they come use the Apple computers.

00:33:32.993 --> 00:33:37.930
But no, we had someone write a book for 30 days. He came into the Soho store.

00:33:37.930 --> 00:33:40.290
I don't know how she wrote a book in 30 days. It took me three years.

00:33:40.290 --> 00:33:40.640
Yeah.

00:33:40.640 --> 00:33:43.170
But now it's 10 minutes with a robot.

00:33:43.170 --> 00:33:43.993
But that's it. Yeah.

00:33:44.260 --> 00:33:47.198
She just wrote a novel in the store and we let her do it.

00:33:47.354 --> 00:33:47.830
That's amazing.

00:33:47.830 --> 00:33:51.278
Well, see, the thing is, I always said good things happen when people come to the store.

00:33:51.843 --> 00:33:55.320
And people would walk by the mall. And the truth is, Apple was a free internet

00:33:55.320 --> 00:33:59.800
cafe. Yeah. In 2001, 2002, no one was buying Macs.

00:34:00.639 --> 00:34:03.435
No one understood why we were learning to sell them, et cetera,

00:34:03.893 --> 00:34:06.135
how to create an experience that we get someone to buy.

00:34:06.622 --> 00:34:09.322
But the stores were packed with people on their computers.

00:34:09.443 --> 00:34:09.830
Yeah.

00:34:09.830 --> 00:34:13.750
And they thought the Mac was so fast, and they didn't realize it was just high-speed internet.

00:34:13.896 --> 00:34:15.250
Yeah. That's amazing.

00:34:15.250 --> 00:34:16.960
But it's interesting.

00:34:16.960 --> 00:34:22.160
Yeah. You know, you referenced 2001. I feel like you and I both had some novel

00:34:22.160 --> 00:34:25.845
experiences around, you know, the unfortunate event that year, which was 9-11.

00:34:27.169 --> 00:34:30.332
On 9-11, I was in a conference room in Minneapolis.

00:34:31.721 --> 00:34:39.151
Jeff Bezos as Target was signing a contract to outsource e-commerce to Amazon,

00:34:39.151 --> 00:34:42.146
which would end up being an ill-fated decision.

00:34:42.861 --> 00:34:46.101
We were all stranded in Minneapolis with Jeff.

00:34:46.441 --> 00:34:50.861
He found better accommodations than I did for a number of days.

00:34:51.641 --> 00:34:54.673
I understand you have a special memory of 9-11 as well.

00:34:55.294 --> 00:35:00.586
Yeah the same it's just that was a really tragic day but,

00:35:01.410 --> 00:35:08.060
I was up early, as I always got up early, and I got an email about 7 o'clock from Steve.

00:35:08.733 --> 00:35:14.233
And it said, in light of today's events, you know, you're welcome to stay at home.

00:35:15.279 --> 00:35:19.368
And then he followed up with a note to me. He said, Ron, I know we have a meeting

00:35:19.368 --> 00:35:22.419
with your team at 9 o'clock at the warehouse. We're designing our store.

00:35:22.919 --> 00:35:25.705
He says, I personally would love to come in and be with people.

00:35:26.296 --> 00:35:31.308
I said, I'll be there, too. dude but i remember telling my wife said karen what

00:35:31.308 --> 00:35:35.901
happened today and we turned on the tv and we saw all the images of the tower

00:35:36.151 --> 00:35:40.754
yeah and so i spent that day with that morning for three four hours with steve,

00:35:41.361 --> 00:35:45.548
and it was a day to reflect it was eerie i mean you know cupertino's right where

00:35:45.548 --> 00:35:50.073
san jose airport all the planes are coming you're driving there's no planes in the sky,

00:35:50.646 --> 00:35:52.972
it's quiet nobody's on the roads,

00:35:53.540 --> 00:35:57.598
nobody knew what was happening that tragic day oh my gosh it was also,

00:35:58.218 --> 00:36:01.248
it was also you know it's interesting to think back,

00:36:02.042 --> 00:36:05.358
because that was the birth of e-commerce and everyone had to figure out what

00:36:05.358 --> 00:36:10.458
to do but target didn't think they had the skills to build their own site so

00:36:10.458 --> 00:36:16.592
they literally farmed it out to amazon till 2008 yeah they you know and yeah.

00:36:16.951 --> 00:36:21.378
They were not alone. It was, you know, Borders and Toys R Us and Dick's Sporting

00:36:21.378 --> 00:36:26.618
Goods and lots of, but yeah, I was both involved reluctantly in outsourcing

00:36:26.618 --> 00:36:30.068
it. And then I was involved in bringing it back in-house a little later. So it worked out.

00:36:30.068 --> 00:36:33.438
You know, I thought I had the most fun job in retail. I think you had it.

00:36:33.438 --> 00:36:34.538
You were doing all these cool things.

00:36:34.678 --> 00:36:38.888
No, no, no. You and I were in similar places. You were just wildly more successful

00:36:38.888 --> 00:36:41.239
in each one of those places. And now I know the secret.

00:36:41.465 --> 00:36:47.158
It's because you get up early and I sleep in. I feel like that's the path not traveled for me.

00:36:47.628 --> 00:36:50.808
I do want to do a hard pivot, though, because there's a chapter of your career

00:36:50.808 --> 00:36:54.998
everyone's always super interested in. It's a whole other discussion point is

00:36:54.998 --> 00:36:57.101
at the peak of Apple's greatness.

00:36:57.339 --> 00:37:00.599
You you decided to leave Apple and take on a new challenge.

00:37:01.212 --> 00:37:03.354
Yeah. Yeah. I was turning 50.

00:37:04.327 --> 00:37:09.336
And I had looked at my career in 10-year cycles. I was at Target for 10 years.

00:37:09.336 --> 00:37:10.922
I had been Apple for 12 years.

00:37:11.491 --> 00:37:16.140
And I kind of asked the question, because opening Apple stores had become a hobby.

00:37:16.721 --> 00:37:20.709
I had such a great team, 60,000 employees.

00:37:21.625 --> 00:37:26.766
I was just having the fun of imagining an e-store, designing it,

00:37:27.106 --> 00:37:28.646
bringing it to life. They all worked.

00:37:29.286 --> 00:37:33.146
It really wasn't a challenge. It was just recreational.

00:37:33.726 --> 00:37:38.966
And and I kind of felt like I want my favorite days were creating the Apple

00:37:38.966 --> 00:37:41.307
store, bringing design to Target.

00:37:42.015 --> 00:37:46.408
You know, figuring out to resize kids' clothes. And I wanted to have one more

00:37:46.408 --> 00:37:48.196
chance to do something really hard.

00:37:48.786 --> 00:37:54.833
And this after he came around, a couple of investors had taken a stake in JCPenney.

00:37:55.414 --> 00:37:58.612
Bill Ackman, who's still quite famous, most people probably know on this show.

00:37:59.222 --> 00:38:04.219
And Steve Roth was running one of the large real estate funds, Vornado.

00:38:04.759 --> 00:38:08.984
And they wanted another board member. So they asked if I'd do that. I met them.

00:38:09.837 --> 00:38:12.068
And then in the process at the

00:38:12.068 --> 00:38:17.891
next meeting the ceo longtime ceo a very nice man got in a car accident,

00:38:18.454 --> 00:38:21.088
and it made the board get a little worried about succession plan because he

00:38:21.088 --> 00:38:26.668
was probably 66 anyway so they pivoted and said ron would you be interested in running jc penny,

00:38:27.314 --> 00:38:31.358
and i look back you know i'd started at mervins which is a competitor pennies

00:38:31.358 --> 00:38:35.738
yeah you know i've been watching department stores my whole life and i said

00:38:35.738 --> 00:38:37.967
wouldn't it be a great challenge,

00:38:38.501 --> 00:38:44.153
challenge to try to see if the American department store can be reinvented, transformed.

00:38:44.851 --> 00:38:48.048
And, you know, I was led to believe that JCPenney wanted to do that.

00:38:49.108 --> 00:38:53.098
You know, it turned out, I don't think there was as much passion for change

00:38:53.098 --> 00:38:54.779
as I had. And it was very difficult.

00:38:55.220 --> 00:39:00.992
But I made a ton of big mistakes doing that. It was the hardest year, 18 months of my life.

00:39:01.610 --> 00:39:04.888
I was situationally arrogant where I really believed, you know,

00:39:04.888 --> 00:39:10.618
I'd been very successful at Target, Apple, and I think I believe that I could

00:39:10.618 --> 00:39:14.063
convince anybody that this is what we ought to do and let's go do it.

00:39:14.667 --> 00:39:20.118
And it turned out the team wasn't ready for it. Our board wasn't ready for it.

00:39:20.118 --> 00:39:22.260
Our customers weren't ready for it.

00:39:22.854 --> 00:39:26.458
And, you know, I went from being kind of the top of the retail world to the

00:39:26.458 --> 00:39:29.101
bottom, you know, reputationally and all that stuff.

00:39:29.656 --> 00:39:35.068
But it was a good learning experience. And I address it head out on the book,

00:39:35.508 --> 00:39:37.631
and I think people will enjoy reading that.

00:39:38.405 --> 00:39:40.815
Because it was a tough time for me.

00:39:40.988 --> 00:39:46.120
Yeah, I can well imagine. As an independent observer, I mean,

00:39:46.120 --> 00:39:50.750
there's this debate we've had in retail for 6,000 years, everyday low pricing

00:39:50.750 --> 00:39:54.550
versus high low pricing, right? And of course, the Walmarts of the world are

00:39:54.550 --> 00:39:55.768
famous for everyday low pricing.

00:39:56.013 --> 00:40:00.550
Before you came to JCPenney, they were one of the most extreme practitioners

00:40:00.550 --> 00:40:03.210
of high low pricing, right? And so there were tons of promotions.

00:40:03.210 --> 00:40:08.157
Oh, they were the most. No, the average item. pennies sold,

00:40:08.997 --> 00:40:12.637
less than 1% of its merchandise at the everyday price.

00:40:12.782 --> 00:40:13.118
Yeah.

00:40:13.118 --> 00:40:16.520
And the average item was over 60% off.

00:40:16.735 --> 00:40:17.095
Yeah.

00:40:17.800 --> 00:40:22.498
And the company began with the golden rule where JCPenney, James Cash Penney,

00:40:22.498 --> 00:40:25.712
said, we will never offer a product on sale.

00:40:25.996 --> 00:40:27.813
Truth begins on the price tag.

00:40:28.033 --> 00:40:28.399
Yeah.

00:40:28.806 --> 00:40:33.028
You know, look how that evolved. But, you know, the reality is we all know today

00:40:33.028 --> 00:40:34.151
everyday pricing won. Yeah.

00:40:34.998 --> 00:40:39.318
Yeah, there are people that look at look at what's happened to Ross and Marshall's

00:40:39.318 --> 00:40:42.510
and the off price industry that continues to grow.

00:40:42.777 --> 00:40:43.102
Yeah.

00:40:43.706 --> 00:40:49.000
It's everyday pricing and they they pretend it's 60 percent off 40 to 60 of department store.

00:40:49.447 --> 00:40:51.786
Well, none of this merchandise sold at department stores anymore.

00:40:51.978 --> 00:40:52.309
Yeah.

00:40:52.511 --> 00:40:55.891
But but it's an everyday low price strategy. Walmart's everyday place.

00:40:56.001 --> 00:40:56.368
Yeah.

00:40:56.368 --> 00:40:59.048
Targets a large, you know, everything's everyday place.

00:40:59.048 --> 00:41:04.998
Yeah, I do think the conventional wisdom today is everyday low pricing is a

00:41:04.998 --> 00:41:12.688
better business model, comma, if you're already high-low, it's very hard to roll that back.

00:41:12.688 --> 00:41:13.028
It's very hard.

00:41:13.028 --> 00:41:18.848
It is. And JCPenney would be one of the top case studies of how hard that was,

00:41:18.848 --> 00:41:21.988
although not the only one. Macy's and others went through similar struggles.

00:41:21.988 --> 00:41:26.028
But, you know, it is interesting. Our sales went down the first year because

00:41:26.028 --> 00:41:28.234
we just basically took off all promotion.

00:41:28.490 --> 00:41:28.839
Yeah.

00:41:29.105 --> 00:41:31.020
And our sales went down 20%.

00:41:31.304 --> 00:41:31.559
Yeah.

00:41:31.751 --> 00:41:36.952
Our plan was to be down 15. It was, you know, 5% worse because it's hard to predict these things.

00:41:37.063 --> 00:41:37.388
Yeah.

00:41:37.388 --> 00:41:42.448
When I was at Apple in 2002, our sales went down 40%.

00:41:42.568 --> 00:41:42.844
Oof.

00:41:43.617 --> 00:41:47.315
As we transitioned the operating system and our processors.

00:41:47.907 --> 00:41:52.577
And that was really comfortable for Apple because we knew that we had to get

00:41:52.577 --> 00:41:57.597
to a new processor family, get off Motorola, get to Intel, to get to the other

00:41:57.597 --> 00:41:58.688
side to continue to grow.

00:41:59.283 --> 00:42:03.446
But in retail, people are saying, why would you fire your customer?

00:42:03.771 --> 00:42:04.096
Yeah.

00:42:04.403 --> 00:42:07.747
Well, we had an old customer. We wanted to get young people to shop at Penny's.

00:42:07.747 --> 00:42:11.657
And to do that, we had to get these new brands to want to come.

00:42:11.657 --> 00:42:17.407
And we created a store with 100 store within a store. It's kind of like Best Buy is today.

00:42:17.407 --> 00:42:17.825
Yeah.

00:42:18.178 --> 00:42:24.597
And we're gonna fill those with all these DTC brands that now all have big footprints.

00:42:24.597 --> 00:42:25.860
Yeah. Look at Warby Parker.

00:42:26.418 --> 00:42:30.702
Look at Vori. Look at all these people. Who are just winning through stores.

00:42:30.940 --> 00:42:31.147
Yeah.

00:42:32.567 --> 00:42:37.317
In my mind, I think people look at your tenure at JCPenney, and if they want

00:42:37.317 --> 00:42:41.177
to be really superficial, they're like, oh, man, he came in with the wrong strategy,

00:42:41.177 --> 00:42:43.108
and the customer didn't accept it and fired him.

00:42:44.255 --> 00:42:47.407
I look at that, and I've worked with a lot of very big retailers.

00:42:47.407 --> 00:42:50.867
And what I've learned in my career is the hardest thing is not ��� knowing what

00:42:50.867 --> 00:42:53.148
to do is very hard, but it's not the hardest thing.

00:42:53.375 --> 00:42:56.567
The hardest thing is the organizational change management.

00:42:56.567 --> 00:43:02.307
It's getting 1.7 million Walmart associates to do their job differently tomorrow

00:43:02.307 --> 00:43:06.047
than they did it yesterday or any of those things. And so I don't think the

00:43:06.047 --> 00:43:10.198
data is there to say that any of your ideas of JCPenney were necessarily wrong.

00:43:10.867 --> 00:43:15.607
I think it was really hard to implement those ideas, and it probably required.

00:43:15.927 --> 00:43:18.627
No, the way I implemented it was a disaster.

00:43:18.627 --> 00:43:18.998
Yeah.

00:43:19.927 --> 00:43:23.187
And if you look back, at Apple, I was the only retailer for a while.

00:43:23.187 --> 00:43:26.520
Then I built the entire team, and we created the store together.

00:43:26.915 --> 00:43:28.287
Yeah. So you didn't have the change.

00:43:28.987 --> 00:43:31.919
I didn't have the chance to. I went to Penny's. The board wanted to go.

00:43:32.511 --> 00:43:33.945
And I just said, here's what we're doing.

00:43:34.218 --> 00:43:34.427
Yeah.

00:43:34.727 --> 00:43:39.303
And that was bad. The team wasn't ready for it. They didn't understand it.

00:43:39.910 --> 00:43:43.160
You know, so it was, there's a lot, but there's a lot of good lessons.

00:43:43.747 --> 00:43:46.247
Oh, for sure. And that's, that's, you know, why I wrote this book.

00:43:46.247 --> 00:43:49.627
You know, when I look back at my career, you know, when I was young,

00:43:49.627 --> 00:43:51.171
you remember this, there were people like Tom Hanks.

00:43:51.821 --> 00:43:52.845
Tom Peters.

00:43:52.845 --> 00:43:53.225
Oh, yeah.

00:43:53.225 --> 00:43:54.795
In search of excellence. And,

00:43:55.237 --> 00:43:59.145
there are all these great books we used to read. Stephen Covey's books.

00:43:59.145 --> 00:43:59.602
Yeah.

00:43:59.730 --> 00:44:03.875
You know, and, you know, you read a book and you get one thought and you apply

00:44:03.875 --> 00:44:05.419
it to work and it can change the game.

00:44:05.564 --> 00:44:06.225
Yeah.

00:44:07.503 --> 00:44:11.595
Hopefully my book, someone will read it and say, I like how they thought about people.

00:44:11.595 --> 00:44:14.275
I like how they thought about culture, how they thought about real estate,

00:44:14.275 --> 00:44:18.405
how they thought about design, how they thought about change,

00:44:18.405 --> 00:44:22.975
you know, and hopefully people will you know think about it and and maybe it'll

00:44:22.975 --> 00:44:24.604
give them a chance to do something different.

00:44:24.865 --> 00:44:29.165
Yeah i i love that and i'm sure that that will happen uh my we're coming up

00:44:29.165 --> 00:44:33.039
on time but my listeners will murder murder me if i don't bring up two other topics,

00:44:33.538 --> 00:44:38.713
one is a debate we've been having for as long as the the internet's existed is the whole,

00:44:39.185 --> 00:44:42.375
role of brick and mortar stores versus digital right and we have this funny

00:44:42.375 --> 00:44:46.735
saying the internet saw buying but broke shopping and there there's a lot of

00:44:46.735 --> 00:44:50.915
people that say like oh man stores are done i think mark andreessen at one point

00:44:50.915 --> 00:44:53.802
said that you know stores are going to go away that hasn't happened,

00:44:54.680 --> 00:44:59.375
the i'm kind of curious where where you sit you lived through the whole digital

00:44:59.375 --> 00:45:00.405
revolution of retail like what,

00:45:01.826 --> 00:45:02.905
like are they it's.

00:45:02.905 --> 00:45:07.675
Not there's not even a debate anymore the answer is in front of us yeah stores

00:45:07.675 --> 00:45:10.575
didn't win online didn't win omni-channel one.

00:45:10.575 --> 00:45:10.986
Yeah.

00:45:11.547 --> 00:45:16.735
It just took time you know today 85 percent of revenue comes from well 70 of

00:45:16.735 --> 00:45:19.225
revenue comes from physical stores 30,

00:45:19.785 --> 00:45:25.075
from online but half of that is the online arm of a physical store like walmart

00:45:25.075 --> 00:45:29.545
or target or the gap yeah so there's only one out of seven dollars that comes

00:45:29.545 --> 00:45:31.505
from a pure play online store,

00:45:32.245 --> 00:45:35.396
and every online store has tried to open physical stores,

00:45:36.155 --> 00:45:39.294
Look at what Walmart's tried all these years or Amazon's tried all these years.

00:45:39.434 --> 00:45:40.289
Yeah, Amazon, sure, sure. Amazon.

00:45:40.515 --> 00:45:44.374
Yeah. And they're now building a 250,000 square foot super center in suburban Chicago.

00:45:44.374 --> 00:45:48.138
I know. I live in Chicago. I'm, I drive by. I'm, I'm super excited to see what they do with it.

00:45:48.694 --> 00:45:54.614
But the, the proof to me, the biggest proof point is if Amazon hurt any retailer,

00:45:54.614 --> 00:45:55.824
it would have been Walmart.

00:45:55.987 --> 00:45:56.319
Yeah.

00:45:56.748 --> 00:46:02.674
Walmart was the low price category killer. They had everything in the physical

00:46:02.674 --> 00:46:05.032
world and that's what Amazon became.

00:46:05.622 --> 00:46:11.044
But walmart today its stock prices eight times yeah now hit a trillion dollars

00:46:11.044 --> 00:46:16.824
recently it was worth 130 million back in 2000 when the dot-com thing started,

00:46:17.312 --> 00:46:22.384
yeah and so what truly happened in retail is retail got overstored in the 80s

00:46:22.384 --> 00:46:26.194
and 90s when there was abundant capital like we talked about early that's what

00:46:26.194 --> 00:46:28.994
people were doing the only way to grow is to add more stores,

00:46:29.514 --> 00:46:32.509
and if you weren't opening 10 new stores a year there was a problem,

00:46:33.078 --> 00:46:37.844
we had overstored when the internet came on it took time for retail to learn

00:46:37.844 --> 00:46:41.864
how to do online shopping look at target we talked about took eight years they

00:46:41.864 --> 00:46:46.634
brought it on their own yeah but eventually they figured it out then they could reduce the the.

00:46:47.494 --> 00:46:52.464
The overstoring they got to the right equilibrium and now you're in a position

00:46:52.464 --> 00:46:57.550
where retailers are stronger and customers sometimes go online sometimes go to stores,

00:46:58.102 --> 00:47:01.704
stores you know but only channel is how we shop yeah you know that's just the

00:47:01.704 --> 00:47:07.389
way it is so i think physical stores actually the online was the rebirth of the store,

00:47:07.976 --> 00:47:11.094
and gave them a chance to rethink that whole customer experience model,

00:47:11.694 --> 00:47:17.134
but it didn't kill stores stores have thrived amen and it's just the fact that

00:47:17.134 --> 00:47:21.944
you can't argue about it now stores did hurt small town yeah you know where

00:47:21.944 --> 00:47:24.270
you couldn't afford. You have people buy online.

00:47:24.635 --> 00:47:26.841
There's just not a lot of volume that supports stores.

00:47:27.690 --> 00:47:31.179
Stores online hurt tired retail. It always has.

00:47:31.733 --> 00:47:36.593
Tired retail never works. But most of the great stores, look at the gap today.

00:47:36.593 --> 00:47:39.713
The gap's on their way back at all their divisions, right?

00:47:39.713 --> 00:47:39.953
Yeah.

00:47:40.493 --> 00:47:45.273
It wasn't an online issue. It was a merchandising, a branding issue that Richard

00:47:45.273 --> 00:47:50.057
and team are bringing back. And so the reality is tired retail doesn't work. Omnichannel does.

00:47:50.348 --> 00:47:54.683
No, I think that's very evident. And so then forecast that to the next thing.

00:47:54.683 --> 00:47:57.343
All anyone wants to talk to me about these days is the robots,

00:47:57.343 --> 00:48:01.593
is AI, right? And so, you know, I started e-commerce in the 90s.

00:48:01.593 --> 00:48:05.168
We had to figure out card not present transactions because they were illegal.

00:48:05.504 --> 00:48:08.593
Now they're trying to figure out human not present transactions.

00:48:08.593 --> 00:48:12.260
And there's a bunch of talking heads that are like, oh man, the robot's just going to shop for us.

00:48:12.585 --> 00:48:16.956
We're going to stop shopping on our own. We're going to stop picking brands and going to stores.

00:48:17.793 --> 00:48:20.973
How do you see AI playing out and and what will.

00:48:20.973 --> 00:48:25.140
That add or subtract yeah we'll have a ai it's just it's another technology,

00:48:25.725 --> 00:48:29.410
you know and technology has always helped retail it's always helped business

00:48:29.847 --> 00:48:33.283
takes a while to learn how to use it there's a lot of fear that ai is gonna

00:48:33.283 --> 00:48:38.773
eliminate jobs and it will but it'll also create jobs you know it's so interesting you read now,

00:48:39.366 --> 00:48:42.393
the jobs report the last three months has been really good.

00:48:43.173 --> 00:48:48.203
And you read about people like block and you know meta laying all these people

00:48:48.203 --> 00:48:49.634
off. That's big headlines.

00:48:49.971 --> 00:48:51.463
The reality is we're still hiring.

00:48:51.997 --> 00:48:55.783
And most companies are using AI in really smart ways.

00:48:56.329 --> 00:49:00.993
But with retail, we're all starting to use agents to shop. Walmart's got the

00:49:00.993 --> 00:49:02.673
lead there, really doing a great job.

00:49:03.453 --> 00:49:07.513
Amazon's trying there. They have an agent shopping thing. It's very slow.

00:49:07.513 --> 00:49:10.822
And I don't think it's particularly good. I was playing around with it today.

00:49:11.454 --> 00:49:16.722
But the world's changing. But I expect, I really believe Like, you know...

00:49:17.357 --> 00:49:23.496
In a world of the world's gotten way too digital and the people in their 20s

00:49:23.496 --> 00:49:28.106
and 30s, they're joining running clubs and they're looking for human connection.

00:49:28.106 --> 00:49:32.076
And, you know, they're the ones going back to stores and, you know,

00:49:32.076 --> 00:49:36.596
malls where I live, Stanford Shopping Center, where people have been trying

00:49:36.596 --> 00:49:41.711
to put stores out of business for 30 years is the hardest parking place in the valley.

00:49:42.112 --> 00:49:45.336
You know, so I just think people are looking for a connection.

00:49:45.336 --> 00:49:50.346
And, you know, hopefully AI, because we'd be more efficient at getting general

00:49:50.346 --> 00:49:55.875
knowledge, will let us spend more time connecting, you know, is what I hope for.

00:49:56.119 --> 00:49:59.966
Yeah, I think I share your hope. And I think there's there's reasonable optimism

00:49:59.966 --> 00:50:01.296
that that's how it's going to play out.

00:50:01.296 --> 00:50:04.356
Yeah. And I just did build a build off that real quick. I read an article last

00:50:04.356 --> 00:50:08.620
week. Satya Nadella was talking about where he sees AI going.

00:50:09.218 --> 00:50:18.305
And he talked about human capital and he talked about, what was his word for it? Token capital.

00:50:18.954 --> 00:50:23.032
That's the same as physical retail and digital retail.

00:50:23.572 --> 00:50:27.281
Omnichannel is the intersection of physical and digital.

00:50:27.838 --> 00:50:32.086
What Satya is saying is really, it's almost like there'll be this new category

00:50:32.086 --> 00:50:37.680
called omniintelligence, which is agentic intelligence. It's general knowledge,

00:50:38.150 --> 00:50:40.013
applied with human knowledge.

00:50:40.550 --> 00:50:43.168
And the bringing of that together is really the future, I think.

00:50:43.777 --> 00:50:47.556
And I think we're going to rely more and more on people's own lived experience.

00:50:48.056 --> 00:50:50.906
And we're going to be bringing our own personal geography to work where we grew

00:50:50.906 --> 00:50:52.601
up, the lessons we learned.

00:50:53.106 --> 00:50:55.653
And that's what's going to matter. That's where the value will be.

00:50:56.100 --> 00:50:59.806
And how you bring that together with knowledge you get from AI.

00:50:59.806 --> 00:51:01.522
It's not going to be AI telling you what to do.

00:51:02.120 --> 00:51:04.304
It's how it enables you to think differently.

00:51:05.054 --> 00:51:07.717
Yeah, I think that is a really interesting way to think about it.

00:51:07.717 --> 00:51:10.617
And I think that's going to be a great place to leave it because once again,

00:51:10.617 --> 00:51:12.817
we have used up our listeners time.

00:51:12.817 --> 00:51:16.327
But this super interesting conversation. I'm so grateful for you taking the

00:51:16.327 --> 00:51:19.611
time. I'm so grateful for you writing the book. And I'll remind listeners,

00:51:19.948 --> 00:51:25.489
Shop Different is coming out on September 22nd, and we'll have links in the show note to buy it.

00:51:25.762 --> 00:51:28.800
But Ron, thanks very much for sharing some time with our listeners today.

00:51:29.424 --> 00:51:30.968
The pleasure of mine. Thank you.

00:51:31.259 --> 00:51:34.534
Yeah. And until next time, happy commercing. you.