Retail, shopping & leisure
Too busy to shop
In the film Moscow on the Hudson, Robin Williams plays a Russian defector living with a family in New York City. As a goodwill gesture, he volunteers to do the shopping - but passes out alongside the coffee aisle because the choice is too overwhelming. The average supermarket in the US now sells 30,000 items. Typically this will include 26 types of Colgate toothpaste (the company had just 2 in 1970) and 724 types of fruit and vegetables (including 93 organic items). But why is this happening? To some extent the reason is that retailers are responding to customer demand. However, whilst choice can be liberating, it can also induce paralysis. For example, in a study, people entering a supermarket were offered 6 jams to taste. On another occasion people were offered 24. Both groups were given a $1 off coupon to spend on the jam. 30% of those tasting 6 jams bought a jar, but only 3% of those tasting 24 did - apparently the decision making process was just too difficult. Similarly, when people were asked to react to a discounted Sony product in a shop window, they reacted with enthusiasm. But when a second, discounted product, was put alongside the enthusiasm waned. If this endless segmentation of choice continues, perhaps we will see more people outsourcing choice to various editors, curators, sifters and filters.
Ref: Various, including BBC (UK), 14 July 2005. 'Time to switch off and slow down', K.Anderson. www.bbc.co.uk, Reasononline (US), 28 January 2004 , Multitudes in the valley of decision', R.Bailey, Metropolismag.com
(US) 1 February 2005, The toothpaste Aisle, K.Jacobs, Stanford University (US) 'Too much choice can hurt brand performance' (February 2004).
Links: The currated consumption trend.
The price of loyalty
Tesco, the UK supermarket, knows more about every citizen in the UK than the British Government does. There are approximately 12 million Tesco Clubcards in circulation in the UK, which, if every customer buys 20 products a week, generates around 12 billion items of data. The database, known internally as Crucible, is probably one of the largest in the world and contains information across a wide range of demographic, socio-economic and lifestyle factors. In return for using the card, customers receive a personalised letter four times each year containing coupons worth 1% of what they spent. They also receive vouchers for products the store thinks they might like based on their previous purchasing habits and lifestyle classification. However, the database doesn't stop with Tesco shoppers. It contains information on every household in Britain, whether they shop at Tesco or not, which enables the company to analyse competitors and stock the shelves of individual stores based on the profile of the local area. So what's the problem? One issue is what's known in privacy circles as 'function creep'. This is when information or monitoring systems that have been created for one reason are used for another. So, for example, information about your reading habits might be passed on to intelligence agencies or your health insurance company might be alerted to how much alcohol you buy. Add to this trend technologies like RFID and digital money and privacy really does start to look like an old fashioned concept.
Ref: Various including The Economist (UK), 6 August 2005, This sceptered aisle, www.economist.com/europe ,
The Guardian (UK) Tesco stocks up on inside knowledge of shoppers' lives, H.Tomlinson & R.Evans. www.guardian.co.uk/supermarkets
How exactly does a Spanish clothing retailer using local design and production become an international success story when the rest of the textile industry seems to be licking its wounds from cheap Chinese imports? Inditex is the Spanish holding company that owns eight brands including Zara, which is one of the fastest growing retail brands in the world. The answer is a clever mix of vertical integration and just-in-time design, production and delivery. Keeping close to the customer also helps and Zara has taken this cliché to a new level by literally observing what people are wearing when they come into a store and sending daily reports (and orders) back to the design team at head office. Production is carried out in small batches, which avoid costly mistakes, but it also makes popular items scarce - which in turn makes them more desirable and drives customers into stores (because you never quite know what's in stock or when popular lines will run out). The result is a design to delivery cycle of five weeks for new lines and just two weeks for revisions to existing garments. In an average year Zara launches 11,000 new products, versus 2,000-4,000 from rivals like Hennes & Mauritz and Gap. Add to this the fact that Zara only spends 0.3% of sales on ads and only hires 'unknown' designers and its no wonder that profits are looking healthy. However, whilst Zara has pioneered fast, affordable fashion in Europe, this may be a harder to act to follow elsewhere in the world where local tastes may get lost in translation.
Ref: The Economist (UK) 18 June 2005, ' The Future of Fast Fashion. www.economist.com See also Nikkei Weekly (Japan) 22 August 2005, 'Yanai talks Uniqlo breakthrough plan', K.Takahashi. www.nni.nikkei.co.jp
The end of masstige?
According to Tyler Brule, the luxury products bubble is about to burst "any minute". An odd prediction you might think given that everyone else is saying quite the opposite. To illustrate his point, Brule singles out the US luxury goods company Coach which has recently moved its manufacturing base to Asia and launched a number of less expensive, fashion-orientated products. As a result, according to Brule, the brand is looking a bit less luxury and a bit more hollow. This makes sense when you consider the power of trends like authenticity and provenance. Moreover, once customers realise that lower priced luxury goods also mean loss of local jobs and loss of national pride some of them will vote with their feet. What's more, the historical experience of the Piere Cardin brand surely demonstrates that accessible luxury is something of an oxymoron. If everyone owns a luxury watch, what's the point in owning a luxury watch? Or as one of the characters in the film The Incredibles so eloquently puts it, "If everyone is a superhero, then nobody is a superhero".
Ref: Sydney Morning Herald (Aus) 22 July 2005 'Luxury-lite is yesterdays trick says style guru', J. Lee www.smh.com.au