Commerce in the New “Nonshopping” Digital Age: Marketplaces, Subscriptions and Curation Sales
For baby boomers and early Gen Xers, long gone are the days of leisurely strolling through suburban shopping malls, browsing in and out of specialty and department stores, and stopping at a food court to take a break before perusing the shops again. Customers would drive 20-45 minutes to get to a regional supercenter with 100+ stores (usually the same as the next supercenter another 15-30 minutes away). If time was tight, they would go to a local strip center or outdoor center anchored by a Caldor or Kohl’s. Shoppers have long enjoyed the experience of shopping–the physical thrill of hunting and finding, and the social interaction with shop girls and sales men. Shopping meant a day out, Muzak systems and seasonal décor in a makeshift fantasy commercial. Stores that used to be downtown moved into the suburbs, where moms in khaki pushed babies in strollers and senior citizens walked daily laps for exercise.
The Emergence of Ecommerce
The history of the store parallels the development of transportation and population growth. General stores near farms and town centers by communities evolved into clusters of specialty shops along avenues and department stores on city streets. Mass transportation and the assembly line production of personal cars allowed people to move further outside of traditional center limits, leading to the emergence of shopping malls (a city outside of the city). Now, with the age of the information superhighway, a new store has surfaced—the virtual shop—or as Gen Y and Z would say, electronic commerce.
Websites are a fad/trend, some veteran shopkeepers said. They would never replace the experience of the store and could never mirror the role of a real salesperson. Luxury brands, for sure, would never gain traction in an online environment. And what about trying clothes on, returning items, or shipping costs? They questioned how this could ever work. But after five or so years of getting it right, websites started to gain ground in sales volumes—ranking as the number one door in the chain and serving upwards to 40-70% of overall sales depending on the category and time of year. People liked shopping 24/7. They liked not getting in their cars and dedicating a full weekend day to running errands. They liked not running out of toiletries and fighting over the hottest toys for Christmas. They liked shopping at work.
So retailers began to “figure out” the new medium. They created an omnichannel approach to serving their customers, offering three outlets to address their every need—brick and mortar, direct (catalog/mail/telephone) and websites. Customers could get a promotion in the mail or via email, go to a store to try things on, or sample and reorder them online at their convenience. Returns were easy or even accepted at the local stores to avoid any additional costs. And when the mobile phone gained usage over the desktop/tablet, retailers just adjusted from email to text and created more responsive websites that operated better on small devices. Another problem solved.
New Shopping Models Gain Ground
But those pesky innovators would not stop—and along comes a guy named Jeff Bezos and an online bookstore called Amazon. Sure, books would be easy to dominate—no sizing, virtual inventory with publisher-direct shipments, no returns, and relatively small shipping boxes with low-cost transportation. Perhaps Borders Books and Barnes & Nobel followed the trend first, but soon iTunes and record stores, Angie’s List (sorry, Yellow Pages), and a slew of other ecommerce businesses found a way to replace traditional marketing, stores and services. The marketplace model surfaced as a legitimate channel of retail led by eBay, Amazon and international Alibaba, enabling consumers to find whatever they wanted at the lowest price or highest bid for immediate delivery from anywhere at any time. And, just when brands and retailers decided that it was far better to join them than beat them, a new era in shopping stormed the marketplace—subscription services. Reminiscent of the “Book of the Month” club, subscription services became opt-out programs that based regularly shipped items on their selections and criteria, virtually separating consumers from competitive products and stores. Bark Box, Dollar Shave Club, Birch Box, and Blue Apron all became the new paradigm for retail, offering surprises and delights or replenishment items at regular intervals to save the customer time, money and the stress of selection. This trend was soon followed by curation services like Stitch Fix and Trunk Club, which offer customers the benefits of a personal shopper based on their tastes and current trends. Who knows what you want better than an electronic merchandiser? Jenny and J.Crew missed the business boat on this one.
The Future of Retailing
So, what’s next? With the development of augmented reality, sensory-triggered technology, home 3D printing, and personal drone services, shoppers may soon enter a real sci-fi world of retail. Imagine activating a hologram store that you can virtually shop, filled with items curated to your tastes, where you scan items for fit based on your dimensions and have them dropped at your doorstep that day or printed in moments within your own home. Even the Jetsons did not see this coming! But it could happen — it is happening. The real mystery will be how marketers adjust their strategies to accommodate the forever-changing demands of consumers while differentiating themselves along the way. In a world of instant gratification, will shoppers agree to be put on a luxury waiting list for the “it” bag of the season? Will they wait for runway fashions to hit stores before buying copycat look-alikes that are faster to market? Why go to a grocery store when you can get Omaha Steaks, gourmet Hello Fresh meals, and paired wine selections delivered to your doorstep? Now, even toiletries and commodities are monitored for use and replenished by your appliances–LG and P&G pioneering the way–so you will never run out of milk, toilet paper, diapers, or dishwasher detergent again.
Indeed, if we think about it, we are on the cusp of having most of our activities replaced. We have cars that drive us (Tesla), smart homes that manage us (Nest), and even electronically broadcasted fitness trainers that let us spin (Peloton) and practice yoga at home. We don’t even have to go out to see a current movie anymore (Netflix). So why would anyone drive 30 minutes to a 500,000-sq.-foot mall anymore? The answer is that they would not. At least not to the degree that they once did. But all is not lost for retailers. People are still people. They like to socialize, to touch and feel, to be the first to know, and to discover things they did not even know existed, like the shade of lipstick that looks amazing but that they never would have thought to try, or the shoe that looks sexier on than in the picture. The key to the retail future is how to blend technology, convenience and service with experience and emotion. There may be far fewer ladies who lunch, but a girl’s still got to eat.14