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Apple hires Burberry CEO as SVP of Retail

Techcrunch:

Today the company announced that it is appointing Angela Ahrendts, currently the CEO of Burberry, as its SVP of retail and online stores. This is a new position at the company that will report directly to Tim Cook, and it takes effect in the Spring of 2014. At the UK-based fashion house, she is getting succeeded by designer Christopher Bailey.

Apple says Ahrendts will be in charge of “the strategic direction, expansion and operation” of both Apple retail and online stores…“I am profoundly honored to join Apple in this newly created position next year, and very much look forward to working with the global teams to further enrich the consumer experience on and offline,” said Ahrendts in a statement. “I have always admired the innovation and impact Apple products and services have on people’s lives and hope in some small way I can help contribute to the company’s continued success and leadership in changing the world.”

“World” is the operative word here: the company has been pushing hard into new markets like China with a huge retail presence there, as well as breaking ground in other emerging countries like Russia. (Coincidentally, both are hits with Burberry; Ahrendts knows how to sell high-end product there.)

In some respects, I kind of feel like I called this one in a very oblique way; in my summary of the iPhone announcement, I focused on the fact Apple started the event with a video of the iTunes Festival:

That’s why they started with a concert; the iPhone is a brand, an experience, an aspirational lifestyle. Who wouldn’t want to pay just a bit more to be a part of that?

Hiring the head of Burberry to manage retail certainly fits with the idea of Apple doubling down on the iPhone’s higher order differentiation. Which, as the Techcrunch article noted, plays very well in China. From my piece:

This solidifies Apple’s hold on the Mercedes-Benz/BMW portion of the Asian market. Is it out-of-reach for the vast majority of consumers? Yep. But it will be aspirational, something you put on the table to show others you can afford it. And, to be clear, there are a lot of people that can afford it. Saying stupid things like “the iPhone 5C is equivalent to the average monthly salary in China” belies a fundamental misunderstanding of China, its inequality, and its sheer size specifically, and all of Asia broadly. Moreover, when you consider a Mercedes is tens of thousands of dollars more than a Toyota (and on down the line in luxury goods, for whom Asia is the largest market by far), $300 more isn’t that much.

It’s difficult to overstate how large the China market is for luxury goods, never-mind general use ones. In fact, Two Percent of China’s public consumes one-third of the world’s luxury goods:

According to China’s official population clock, there are an estimated 1,359,025,970 people in China as of Sept. 26, with just 2% of that number — some 27,180,519 people — consuming one third of the world’s luxury items. The 2% are the backbone of the global luxury goods sales and the target of hundreds of international brand names, the Chinese-language Money Week magazine reports.

Although the huge majority of China’s population is unable to purchase luxury items, as the country’s economy grows so will its market, the magazine said. Research institutions have predicted that in the next three to five years, the role of the Asia-Pacific region in the global luxury markets will become even more transparent, especially in China.

One of the many bear arguments against Apple is that the basis of consumption in smartphones is changing from the user experience to price. While I’ve argued design and user-experience are sustainable differentiators, Apple seems to be driving the basis of consumption of their products to that of a lifestyle and statement of luxury, which companies like Burberry have done quite well and quite profitably.

Regardless, we’ve clearly never seen a tech company like this before. Perhaps it’s time to stop using tired PC tech company metaphors to predict their future.

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