OM in the News: The Capacity Dilemma at Apple Stores

“It’s only a 2-hour wait,” writes The Guardian (Oct.18, 2013).  “An ordinary Thursday afternoon at Apple’s flagship London store and a long line of customers snakes across the first floor.” The technology brand is used to queues for the launch of its latest must-have product, but these people have come carrying faulty iPhones and malfunctioning laptops, desperate for help from one of Apple’s increasingly hard to reach “Genius” experts.

When it opened in Virginia in 2001, the first Apple store was hailed as a retail revolution, allowing shoppers to play with expensive technology without any sales pressure. The emphasis on service, with blue shirted Geniuses on hand to answer queries and fix broken products, has become almost as important to the Apple brand as the aesthetic appeal of its products. But the whole experience is under pressure as a relatively small number of shops struggle to cope with rapidly growing customer numbers. Apple stores–there are only 415 worldwide–have a turnover of $19 billion and the highest sales per square foot of any retail chain.

The Regent Street outlet, for example, employs 120 Geniuses. Each sees up to 30 customers a day but it is impossible to book an appointment less than a week in advance. If the problem is urgent you can turn up and queue, but it could be a very long wait. The problem is not limited to London. In Apple’s Paris flagship store, there were no appointments available for 10 days. There are even reports of scalpers selling Genius Bar reservations in China. Some argue that Apple needs to take itself further upmarket, so it can serve fewer customers more effectively. Or, to cope with growing demand, should Apple open more shops and come up with clever ways of tackling overcrowding?

Classroom discussion questions:

1. What OM options does Apple have to deal with the capacity constraints?

2. To what extent should Apple handle walk-ins?