Breaking News

Tweet TWEET

Apple Retailing Genius After Johnson Daunting for Outsider: Tech

For Apple Inc. (AAPL) the hunt is on for its next retailing genius. Finding another one like Ron Johnson, though, won’t be easy.

When Johnson announced plans in June to leave Apple for Plano, Texas-based J.C. Penney Co., he left behind a powerful legacy -- creating Apple’s retail strategy with Steve Jobs, then launching more than 350 stores infused with a look and experience that customers adore, centered around the stores’ now legendary Genius Bars.

His replacement faces a host of new challenges, most notably implementing an ambitious expansion strategy in China while maintaining the stores’ high standards and industry- leading revenue per square foot.

“It’s a relatively small pool of talent,” said Brenda Malloy, a managing director who specializes in retail recruitment for Russell Reynolds Associates, an executive-search firm in New York. She doesn’t have any specific knowledge of Apple’s search.

Finding just the right person may be so daunting that Apple Chief Executive Officer Tim Cook may instead turn to someone within the company, said Neil Stern, a senior partner at McMillanDoolittle LLP, a retail consulting firm.

‘Lots of Interest’

Only 64 companies qualify as global retailers, meaning they have $1 billion in sales and business on at least two continents, according to Russell Reynolds. Of those, five have total revenue in the range of Apple, which had sales of more than $108 billion last year.

Apple’s search is being led by search firm Egon Zehnder International, a person familiar with the matter said in August.

“The search is under way with lots of interest, and we are carefully selecting Ron’s successor,” said Steve Dowling, a spokesman for Cupertino, California-based Apple.

Johnson’s main deputies at Apple were Jerry McDougal, the vice president of retail, Steve Cano, who is global head of store personnel, and Bob Bridger, who is in charge of choosing store locations. Apple enthusiast sites reported that Cano was going to be tapped to replace Johnson -- a report Apple said isn’t true.

The retail division helped Apple launch stores in many marquee locations, such as Fifth Avenue in New York. According to Sanford C. Bernstein & Co., Apple’s sales per square foot were $4,355 in 2010. That’s about two-thirds higher than luxury jeweler Tiffany & Co. (TIF)

Different Job

Unlike Johnson, who was brought in from Target Corp. (TGT) to build Apple’s first stores, the new retail chief’s biggest challenge will be expanding overseas. Of Apple’s 40 stores opening in 2012, about 30 will be outside the U.S. For now, less than a third of the company’s stores are international.

Photographer: Tomohiro Ohsumi/Bloomberg

A woman walks past the Apple Store Ginza in Tokyo, Japan. Close

A woman walks past the Apple Store Ginza in Tokyo, Japan.

Close
Open
Photographer: Tomohiro Ohsumi/Bloomberg

A woman walks past the Apple Store Ginza in Tokyo, Japan.

“It’s a very different situation from when Ron was hired to go build something and they needed somebody who was visionary and could build something that didn’t exist,” said Colin McGranahan, a retail analyst with Bernstein. “That’s probably not what they are looking for now.”

For a search to replace someone of the stature of Johnson, a company typically needs to consider 300 candidates, which it then narrows down to about 10 finalists, according to Neil Sims, a managing director for search firm Boyden in San Francisco, who has done work for Apple in the past.

China, where Apple generated $4.5 billion in sales last quarter, is a focus for Cook. The company plans to expand beyond the six stores now open there.

Coach, Nike

If Cook looks outside Apple’s ranks, he may select somebody from a lifestyle brand rather than a technology retailer, said McMillanDoolittle’s Stern. Those include Victor Luis, Coach Inc. (COH)’s international head of retail, and Elliott Hill, an executive at Nike Inc.

Retail companies based overseas may yield candidates as well. In Europe, Alliance Boots Gmbh, Ikea Group and Next Plc all have a similar reach as Apple, according to Russell Reynolds. There’s also Fast Retailing Co. in Japan.

If Apple is committed to finding an external candidate, it may have to cast its net even wider, said Sims, who is not involved in the search to replace Johnson. The key will be finding someone who fits Apple’s culture of innovation, he said.

“If I were advising them, I would be telling them to look broadly, beyond retail,” Sims said. “It’s more of a way of thinking, than a resume.”

To contact the reporters on this story: Jeff Green in Detroit at jgreen16@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.