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Thursday, May 01, 2014, 01:44 pm PT (04:44 pm ET)

Angela Ahrendts joins Apple, Inc., tasked with polishing flat retail operations

Angela Ahrendts has been removed from the corporate listings of Burberry, signaling her move to Apple where she will take over the company's retail and online sales.



Last week, Apple's chief executive Tim Cook noted in the company's earnings call, "we are continuing to invest in our retail stores and since our last call, we had opened our first stores in Brazil and Turkey and we now have retail stores in 15 countries around the world. I'm looking forward to welcoming our new retail and online leader, Angela Ahrendts, who will be joining Apple's Executive Team next week."

Apple has been without a dedicated retail leader since the departure of John Browett, who was fired a year and a half ago in October 2012 after less than a year on the job. For the last year and a half, Apple's retail group has been reporting directly to Cook himself.

Browett had reportedly sought to make Apple's wildly profitable retail operations even more profitable by cutting staffing and freezing new hires, a strategy that Browett himself was said to have regarded as a "mistake" and sought to reverse before his ouster.

Staffing issues persist for Apple's retail store operations



Apple latest quarterly report notes that the company operated an average of 423 stores in the March quarter, 21 more than it had open in the year ago quarter. However, the total headcount of retail employees decreased from 42,600 to 42,400. That means the average workers per store has fallen by nearly 6 employees per store, from almost 106 to slightly over 100 over the past year.

Apple Retail 10Q


While that level of staffing is not significantly different from historical levels over the past two years, it does indicate that one task in front of Ahrendts is determining whether to increase staffing in stores, or to work on strategies that seek to do more with fewer employees.

In some areas, Apple has had apparent success in rolling out technologies like its Retail app supporting user-directed purchases and self-discovery of offers via iBeacons. In other areas, particularly in handling repairs, user complains of long waits or scarce appointment openings suggest that the company's stores could begin a hiring and training a significant number of additional new people.

As the chief executive of Burberry, Ahrendts worked with 11,000 employees and a retail chain of more than 500 locations in 50 countries, a very different operation with far lower staffing levels per store.

30 new stores for FY 2014



Apple earlier announced plans to open 30 new stores—about 20 of those outside the U.S.—within Fiscal 2014, which is already half over as of the end of March.

So far, the company has opened 8 entirely new stores, including Shanghai iapm - Shanghai, China; Väla Centrum near Helsingborg, Sweden; Haarlem in The Netherlands; Kö-Bogen Mall in Düsseldorf, Germany; China Central Mall in Beijing; the MacArthur Chambers Building in Brisbane, Australia; Village Mall in Rio de Janeiro, Brazil; and Zorlu Center in Istanbul, Turkey (below).

Turkey Apple Store

Turkish Apple Store in Zorlu Center. | Source: orbaygumus via Instagram


It also intended to remodel or expand 20 existing locations, most of which are in the U.S., including a new flagship store at San Francisco's Union Square, which is expected to open later this year.

A focus on growth in China



When Cook was asked a question about Apple's iPhone performance in China last week by analyst Shannon S. Cross of Cross Research, Cook replied with additional details about retail performance in Greater China (which includes Taiwan and Hong Kong).

"For the first half, including our retail stores, Greater China revenue topped $19 billion," Cook noted. "So this is [an increase of] 21 percent year-over-year, and is our fastest growing region. So, we're looking at this data and deciding to continue investing in a big way.

"We plan to triple the number of Apple Retail Stores [in China] over the next two years. We're continuing to expand in online. We're continuing to build out channels. We're up to 40,000 points of sales now in iPhone, but we're not nearly where we need to be on the rest of our product line and even the 40,000 is a low number in considering the broad landmass and the number of folks in China. And so, I feel like there's still loads of opportunity there, and feel really, really good about how we're doing."

Apple currently has ten stores in mainland China, including the China Central Mall it just opened in Beijing in January. Three existing stores in Hong Kong means there were 13 stores that Cook plans to triple over the next two years in the Greater China region, a plan that would create 26 new locations for a total of 39 by Q2 2015.

This September, Apple should have about 445 stores open worldwide, if its openings go as planned. With around 100 employees per store, that will require the hiring of more than 2,000 people just to staff the new stores opening this year.