Shopping and bucking (the market)

by Stephen Tall on August 14, 2006

An editorial in today’s Financial Times analyses the state of shopping in the UK today:

People are not deserting the malls or the high streets but they are using them in a different way. The internet makes it cheap and easy to buy goods. That means consumers can devote more time to choosing what to buy – these days a leisure activity in itself – and they do so by browsing in the mall. Consumers want service and they are willing to pay for it. That explains the resurgence of department stores. It is also one reason for the strength of retail property: a good shop feels spacious, so outlets are growing in size. People now buy more services than goods anyway. The internet is a wonder but it cannot (yet) cut your hair.

Very similar points were made in the current issue of Intelligent Living magazine, the Economist’s consumer lifestyle spin-off, which envisioned the shopping experience of the future in a recent article, ‘Are you being served?’:

As the trickle of web-based transactions turns into a flood for certain categories of goods, high-street stores are striving to weather the transition. For household appliances and consumer electrics, for example, people nowadays prefer to visit the store only to brows, compare and seek expertise. They then return home to deliberate, order the goods online, and wait for delivery. The trend has taken a toll on store staffing, something that was traditionally tied to shop floor-takings.

Fortunately, retail stores are changing. While understaffed stores lose appeal and drive visitors elsewhere, stores that provide plenty of product information and compelling experiences, and are staffed by product experts and sales personnel, will attract both regular customers and the speculative online shoppers. …

… more and more retail spaces are becoming ‘experiential destinations’ – offering food, fun and pampering, as well as things to take home. Their purpose is as much about converting visitors into customers over time as it is about moving the merchandise on a day-to-day basis.

Though it’s easy to mock the terminology used – ‘experiential destination’, my arse – what both articles have to tell us about the future for the producer-consumer relationship is powerful stuff.

Generations of consumers have been limited to shopping close to where they live, the degree of restriction depending on the extent of the individual’s mobility. This made it easy, for both consumers and producers. Consumers didn’t have to worry about being confused by choice (often they had none); while shops had a captive market, with limited (or no) competition. Though there were occasional nibbles into their market share – from the ‘Avon lady’ to mail-order catalogues – the high street ruled supreme.

This situation has gradually eroded in recent years, with the high street’s dominance being threatened by out-of-town shopping centres and the expansion of Tesco and WalMart hyper-markets. As living standards rose, so consumers were more willing to regard shopping as an affordable leisure activity, and to travel further to indulge their hobby.

Now the situation is reversed: the best deals can often be found by sitting in your house (or, ahem, office), surfing the web, and clicking ‘Submit’. But what Internet shopping lacks is the sensory delight and instant gratification of a retail outlet. Which is why even the pile-’em-high clothing stores, like Primark and H&M, are self-consciously light and airy, spacious and trendy. Their customers are quite happy to shop in ‘bargain hunt’ malls; that doesn’t mean they want to be treated any differently from those living it up at John Lewis or Selfridges.

Moreover, ‘real-time’ shopping provides us with the reassurance that – though we are all individuals, with unique preferences – our choice of shop and product has been affirmed by popular acclaim.

Some put it more bluntly – that we consumers are a mass freakin’ mess of refracted distortions and distorted refractions. Again, from Intelligent Living:

In their book, ‘Trading Up: The New American Luxury’, Michael Silverstein and Neil Fiske characterize consumers as creatures saturated with choice and bursting with contradictions. As shoppers, we apparently expect consistent quality, but demand unique and personal products. We want to participate and fit in, but we guard our individual tastes scrupulously. We are immersed in global culture, but long for home comforts.

Can any shops hope to cater for such capaciously capricious whims? The FT’s leader thinks so, and sums it up neatly:

Traditional retailers face the greatest challenge. They must design stores to attract people rather than process their sales: something bookshops do through coffee and comfortable seats. They must educate, support and advise their customers. They will need more skilful staff, to form relationships, remember names, and sell customers service as much as goods.

Retail in the future will be hard work but it will not just be big-box warehouses and faceless websites, although their share of retail volumes will rise. Instead, a lively world of innovation and service is in prospect. The shop-­aholics should have a lot of fun.

Size will not be the sole determinant of success in such a retail environment. Producers which nurture and develop their relationships with customers will thrive, whether they are Tesco or your local corner shop. Those which take us for granted, who fail to respond to change, who assume we will always want in the future what we have wanted in the past, will fail. Simple, really.