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Big Apple in Boston

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Apple, Incorporated has unveiled its largest retail store in the country...here in Boston. It opened to much fanfare last night on Boylston Street.

The tech company has developed a cult following for its products. But Apple's new glass-front building also offers a window onto a retail strategy that's bearing fruit.

Here's WBUR's Business and Technology Reporter Curt Nickisch with that story.

TEXT OF STORY:

[OPENS WITH SOUND OF APPLE STORE ON OPENING NIGHT]

CURT NICKISCH: In the Back Bay yesterday, a crunch of customers waited in line for hours get into the store that's giving Boston a bigger Apple than the Big Apple.

Ethan Taranto-Kent and Craig Shannon — both films students at Fitchburg State College - were dazzled by the glass staircase spiraling up through the store's pastel palette.

ETHAN TARANTO-KENT: The glass is scary, but it's awesome. Makes me a little bit nervous walking on it, but it's really cool.

CRAIG SHANNON: I really like how they have brick on either side, and then this really PowerBook looking building stuck right in the middle. That's hysterical. It looks like a computer!

NICKISCH: At first glance, Apple's new store is just a giant version of the retail outlets it's been building around the country for the past seven years. But the company has taken the Boston store literally to a whole new level. Ron Johnson is Apple's Senior Vice President for retail.

JOHNSON: If we'd built this store back in 2000, given where Apple was and our customer base throughout Boston it would have been a one-level store. If we had built this store in about 2005 when the iPod had taken off, it would be a two-level store. But today in 2008 it is the largest store that we've opened yet in the United States.

NICKISCH: Because: there's a third floor just for customer service and training. With workstations and wandering techies, the space is big enough to tend to one thousand people per day. Last night, Fitchburg student Craig Shannon took his ancient iPod straight to one the reps.

SHANNON: Sometimes when I like scroll through music and stuff, it's get like blocked, and it's doing it right now.

SERVICE TECHNICIAN: What I might recommend is taking off the plastic... Because the way that this works...

NICKISCH: Apple is investing in hands on service, and it's paying off. Company V-P Ron Johnson says Apple now gets a fifth of its revenue from its retails stores; sales and traffic have been climbing each year.

JOHNSON: And we think that's part of the momentum that Apple has now, is that our stores have created these communities, which really help people enjoy our products more.

SCHADLER: When you dedicate so much space to service, it reflects the need for service to make these products actually work.

NICKISCH: That's Ted Schadler. He's a tech retail analyst with Forrester Research, based in Cambridge.

SCHADLER: And that's just a reality of the computer industry today. Consumers love computers, but they get stuck in just doing web or e-mail. To get all that value out of it, video or music, organizing your photos, whatever it happens to be, you need service to make that happen. It's not going to happen just because.

NICKISCH: That's a reality, Schadler says, that many companies have been slow to realize. He says Apple has cracked the code and is profiting, because it's turned service into marketing. The more customers get out of a product, the more they're willing to plunk down on the next gizmo.

But with that success, comes a downside. Schadler says as the company's sales soar, so does the potential of Apple stores getting swamped when there are product glitches.

SCHADLER: So if they have a software problem, it starts to impact not just tens of thousands of people but hundreds of thousands and maybe millions of people. And when you get to that size you have to be really careful that you've built systems, and in this case retail stores, that can scale up to meet those demands and solve those problems.

NICKISCH: It's why Apple has scaled up the size of its Boston store. Beantown should enjoy first place while it can. Because Apple's next store may have to be bigger still.

For WBUR, I'm Curt Nickisch.

This program aired on May 16, 2008. The audio for this program is not available.

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