Burberry’s ‘wicked smart’ Ahrendts poised to make over Apple’s stores
Former fashion CEO Angela Ahrendts joins Apple this week as head of retail and online stores. Expectations are high that she'll bring a new burst of pizzazz.
Shara TibkenFormer managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
Angela Ahrendts might not, at first glance, fit in with Apple's jeans-and-button-down dress code. But the former CEO of British luxury retailer Burberry Group could be just what the consumer electronics maker needs to spruce up its retail operations.
"She shares our values and our focus on innovation," Cook said in an October email to employees announcing Ahrendts' appointment. "She believes in enriching the lives of others, and she is wicked smart."
Ahrendts' arrival comes at a critical time for the Cupertino, Calif., company. Its March quarter saw strong profits aided by surprisingly strong iPhone sales, but its iPad sales and revenue forecast were disappointing. While millions are still eagerly awaiting the next iPhone, the company is facing an assault on its main money maker, with rivals such as Samsung and HTC pressuring it in the premium phone segment and upstarts such as Huawei and Xiaomi scooping up the next billion mobile customers.
And Apple continues to face concerns about whether its best days are behind it, with many still waiting for the next new thing that will wow customers. Its last entry into a new category -- the iPad tablet -- came four years ago. While Apple has updated its existing products with incremental improvements, Apple investors want more -- now. For some, patience is wearing thin.
Enter Ahrendts. She joins after Apple's recent struggles with its retail operations. In addition to his day job as CEO, Cook has led the retail business since he fired retail chief John Browett in October 2012 after just six months on the job. Browett, former chief of British electronics retailer Dixons, admitted he didn't fit in with Apple's culture. He replaced Ron Johnson, the executive credited with much of Apple's retail success, after Johnson left in 2011 to become J.C. Penney's CEO. (Johnson was ousted as Penney's chief in April 2013 for what some deemed a misguided makeover of the budget-minded retailer.)
Meanwhile, sales growth at Apple's stores has slowed. In Apple's fiscal 2013, which ended Sept. 28, retail sales rose only 7 percent to $20.23 billion, a much lower growth rate than the 33 percent increase seen in 2012, 44 percent in 2011, and 47 percent in 2010. Some say the novelty has worn off, with Samsung and Microsoft successfully mimicking part of Apple's retail feel. Apple's online sales experience also differs greatly from in store.
Ahrendts will be the first Apple executive to oversee both Apple's more than 400 physical stores and its online retail efforts. The hope is that she can pull off the same trick she achieved at Burberry. After Ahrendts took over at the London-based clothing and accessories retailer in 2006, Burberry's revenue nearly tripled to about $3.9 billion in the year ended March 31, and today it's widely regarded as one of the most technologically savvy fashion brands in the world.
"[Ahrendts] helped Burberry to become a leader in the use of emerging technologies to connect and engage with the customer base," Macquarie analyst Ben Schachter said in a recent note.
And even though Ahrendts is just about to start in her role at Apple, she's already being mentioned as a possible successor to Cook, who took over as CEO from co-founder Steve Jobs in 2011. Shortly after she was named to the Apple job, Salesforce CEO Marc Benioff was among those crowning her the next Apple chief and describing her as "the biggest hire @tim_cook has made since Steve left us."
Ahrendts is the only person on Apple's management team who has run a large, global company before. And while she may not have the technical chops of senior Apple leaders like iTunes chief Eddy Cue or design leader Jony Ive, she does have something perhaps even more important -- a proven talent for transforming a company from a brand on the decline to a seemingly unstoppable powerhouse.
"We'll see what happens, but it might be interesting if they start to change the [retail] look," said Brian White, an analyst with Cantor Fitzgerald. "Apple stores are phenomenal today, but just think about all the capital and what they could really do to the stores to jazz them up."
Another plus in her column: Ahrendts has been an Apple observer and admirer for years: "If I look to any company as a model, it's Apple," Ahrendts told The Wall Street Journal in 2010. "They're a brilliant design company working to create a lifestyle."
Apple declined to make Ahrendts available for an interview. Burberry didn't respond to CNET's inquiries.
From modest roots to fashion powerhouse
Ahrendts was born in 1960 in New Palestine, Indiana, a small town with about 2,000 residents. One of six children, she says she "lived vicariously through fashion magazines," dreaming from the time she was young about working in that industry, Ahrendts said during a 2010 commencement address at her alma mater, Ball State University. After graduating in 1981 with a degree in merchandising and marketing, she moved to New York to pursue her dream of working in fashion.
"I was scared, trust me, but knew I was not alone and kept repeating to myself 'I will not live my life saying I wish I would have'," Ahrendts told Ball State graduates
As for her personal life, Ahrendts met her husband, Gregg, in elementary school. They dated long-distance for 17 years before getting married in their 30s. The couple has three teenaged children, and Ahrendts told the WSJ she's a devout Christian who reads the Bible every day.
In New York, Ahrendts worked at bra maker Warnaco before landing her first major fashion job in 1989 at Donna Karan, where she was promoted to president. Ahrendts also worked a short stint at Henri Bendel from 1996 to 1998, where she was tasked with expanding the high-end New York retailer into 50 new markets. Bendel parent company Limited Brands scrapped the idea a couple years after hiring Ahrendts, and she left to become vice president of merchandising and design at Liz Claiborne.
Ahrendts, who eventually took on the role of executive vice president, oversaw nearly two dozen Liz Claiborne brands, including Juicy Couture.
In 2005, Rose Marie Bravo, then-CEO of Burberry, asked Ahrendts to join the company as her successor. Ahrendts has said she initially turned the offer down, refusing to even have coffee to discuss the role with anyone at Burberry. She later agreed to talk with Bravo and to meet with Christopher Bailey, the Burberry creative director who Ahrendts had worked with at Donna Karan. After a long lunch, Ahrendts decided to take the job at Burberry.
"We had lunch that day, [Bailey] and I, for, 3-and-a-half hours and on the back of a napkin, put our dreams on paper," Ahrendts said in a 2010 interview with Charlie Rose. "I said, 'if I do this, what are we going to do ... in the next five years?'"
What Ahrendts did was re-energize both Burberry's sales and its image. One key step was buying out companies in Spain and other countries that had licensed the Burberry name to label their own lower-end products. That practice was hurting Burberry's image as a luxury brand. She also limited the number of products that could use Burberry's iconic pattern in a bid to make it exclusive once again.
Ahrendts credits "Midwestern core values" instilled by her parents for much of her success. She's said publicly that her father taught her compassion and humility, while her mother taught her to have faith and be the best she could be. Ahrendts also said during the Ball State commencement speech that it's important to follow your heart and not get sidetracked by technology.
"Technology has given us access to the world and its sea of content, allowing us to never speak to another person if we don't want to," she said. "Computers and smart devices are among the greatest intellectual gifts ever created for man, but if not balanced with human contact, may offer little to develop ones heart. Don't get me wrong, I am mesmerized by this Digital Tsunami, but Google doesn't have all the answers, and are all those people on Facebook truly your friends?"
Following one's feelings or intuition has been a common message from Ahrendts in recent years. In a TEDx Hollywood presentation she gave in March of 2013, Ahrendts delved into the power of "human energy."
"Think of energy almost like emotional electricity. It has a powerful way of uniting ordinary people, their connected spirit, to do extraordinary things," she said.
As for her role in helping to fuel the Digital Tsunami, Ahrendts took Burberry digital, allowing customers to buy certain apparel online before the items hit stores. She also started broadcasting Burberry runway shows online, and launched the Art of the Trench selfie site that lets Burberry owners flaunt their trench coats. She also built up the company's social media presence. Burberry currently has 2.85 million Twitter followers and 17 million likes on Facebook.
Former colleagues praise Ahrendts' management style, noting she puts in long hours, is fair to underlings, and isn't afraid of differing opinions. In a February 2014 profile, Fast Company noted that Ahrendts is "adamant that significant news be shared first with staff" so they're not surprised. She also "communicates constantly" with employees by sending them emails to thank them and by traveling to stores around the globe.
Ahrendts has already shown she has the right mentality when dealing with the Apple brand, as she shared in the interview with Fast Company: "I don't want to be sold to when I walk into a store," she said. "The job is to be a brilliant brand ambassador. Don't sell! No! Because that's a turn-off. Build an amazing brand experience, and then it will just naturally happen."