Shopping – A Tale of Two Retails

Walmart recently started making robot bees. An obvious question here is, Why? But in reality does it matter “why”? The real question is, what happened to Walmart? What is going on in the retail industry as a whole? Brick and mortar stores are seeing a decline in foot traffic and ecommerce seems destined to take over the world… if you have a narrow enough view of the stage. We seem to be at the start, or at least beginning of a major shift in how we go about trading money for goods, and services. What is going on? What might be done to make it better. Let’s ideate.

What is the history of shopping? What’s the current state of retail, and what is it’s future?

Sneakers, Fluffernutters, and Grocery Stores

Did you know that sneakers, fluffernutters, and our modern way of shopping in physical stores were all invented in 1917? While sneakers and fluffernutters will never go out of style, the way we shop in person at stores is feeling the pains of old age.

Before our modern incarnation of shopping, endless rows of products, loading our carts, waiting in line like animals in line to be slaughtered, you would go into a General store with limited selection of products all behind the counter. The entire store seemed to simply be a man behind a counter. You would tell him what you wanted and he would grab the items behind the counter for you and ring you up.

Clarence Saunders Invents the Piggly Wiggly

But then someone, Clarence Saunders, had the idea that this established way of doing things was archaic. Clarence must have thought “If we make each customer the clerk we could get way more people in and out of this store, way faster. Faster sales means more sales, which means more money in my pockets!” Clarence even patented this idea in the form of patent no. US1242872A. The man was an artist, just look at these drawings he filed for the patent:

 “The object of my said invention is to provide a store equipment by which the customer will be enabled to serve himself and, in so doing, will be required to review the entire assortment of goods carried in stock, conveniently and attractively displayed, and after selecting the list of goods desired, will be required to pass a checking and paying station at which the goods selected may be billed, packed, and settled for before retiring from the store, thus relieving the store of a large proportion of the usual incidental expenses or overhead charges

Really his idea revolved around convenience. This convenience for the customer over the years has become really about convenience for the store, so much so that stores have self checkout now where, let’s be honest we all feel our dumbest, and in the words of comedian Rodman “I came in as a shopper, I want to leave as a shopper.”

Still we are drawn to these self checkout machines because we think that it will be more convenient, especially if the line where there is a human teller is long. This makes clear the real goal of shopping. We shop because we don’t want to make cook or create the thing we are buying. We trade our money for a finished product because money is time and we save time by buying things instead of making them ourselves.

The Convenience Threshold Formula

TIMEINVESTED < (VALUE / (PRICE OF ITEMS * COST))

Really in the end, perceived value has to be greater than the effort we exert. Stores need to do what they can to go back to the mantra that Clarence was striving towards; convenience. Brick and mortar stores need to lay out their stores logically. They need to make checkout simpler by accepting whatever payment we, as customers, want to use. Ecommerce needs to do what they can to remove all friction, and not make us do things that are superfluous, like enter city and state when a zip code provides that information. Remember shopping is all about convenience so make it convenient.

The need for convenience will never go away.

Evolution

The convenience provided by the modern version of the grocery store was great for a time. But then brands realized that they needed to take up more shelf space. So commodities that used to be sold at general stores simply as what they were, toothpaste for instance, became a race to who could have the best packaging. Who ever had the best packaging would win your dollars. Then the race came to have the most selection of branded commodities, which has led to a variety of products that all have slightly better features. Think about toothpaste, some kinds, from the same brand, are marketed as preventing cavities, while others whiten your teeth.  Why not make one that does both? Shelf space. If one brand has 5 rows of types of a product while another only has one; what will you buy? You are not likely to buy the one with less space if you don’t even see it.

This idea of selection over the years has come to be misconstrued to make us think that choice equates to freedom. And after WWII there was a boom into a new age of consumerism known as the “Consumer Golden Age” During this time things got a bit crazy. People made all kinds of weird stuff, and people bought it! Neck brushes, 2 man smoking pipes, snail pacers, etc. etc. 

To hold all this new stuff there was a need for larger stores. These larger stores became known as department stores, Sears, Macy’s, JC Penney’s etc. etc. Then someone had the idea to put a bunch of department stores under the same roof; enter indoor malls, the first of which was in Minneapolis.

After that there was the idea of a large store with a lot of selection and low prices; big box stores like Walmart, Target, and Home Depot. This is where things start to get crazy, next comes the “super” Big Box stores like Walmart Supercenters and Super Targets. Then they started just giving people the keys to the warehouse with Costcos and Sams clubs. Finally we get to today and the latest attempt at ultimate selection and low price, Amazon, whos warehouse spans what seems like the entire world with the help of the internet.

This race to the bottom has not been sustainable though, in the last year some 20 retailers filed for bankruptcy. Once mainstay names like Toys r us, Radio Shack, and Payless shoes all filed for bankruptcy last year.  The common narrative as to why these companies have failed is because of ecommerce. The idea is simple, people prefer to buy things online so these companies are failing because they do not have the web presence needed to survive in this new retail landscape. Is that true?

The Surprising move to Brick and Mortar

Surprisingly some brands that started only as ecommerce are moving to having a brick and mortar presence. Brands like Allbirds, Away, ModCloth, Glossier, Madison Reed and Warby Parker all started web or mobile only but all have recently opened physical stores. If brick and mortar is failing though why would these brands do such a thing.

The narrative that brick and mortar is the reason these older brands are failing is bunk. In reality the failing brands are simply doing it wrong. Brick and mortar retail is not dead, some 85-90% of all sales happen there. There are some things that an online store can never replace. You can’t feel or touch online. Things look different in real life then they do on the internet or a phone. People are going into stores to do these things and these companies that started online are adjusting to this. They realize the need to engage with their customers in real life. Their stores are not focused on selection or cutting prices. In some of these cases you can’t even purchase products in these stores. They are providing something besides selection.

Lack of Selection as a Feature

In the west we believe that choice is equal to freedom. Barry swartz breaks this down in his Ted talk. The gist though is a huge amount of options don’t lead to happiness but rather to one of two scenarios:

  1. You don’t decide because of an overwhelming amount of options
  2. You do decide but are unhappy with your selection because you are not sure if the thing that you chose was the best of all the options

Enter omakase. Omakase is a japanese term that literally means “give up” the right to choose. If you order sushi in a  restaurant omakase, you are essentially telling the chef that you trust he knows best. Doesn’t he? He has trained as a sushi chef for years. He knows the freshest of ingredients that he has. He has the ability to give you something you have never tried. He has the ability to surprise you and to delight you.

These new school retailers are onto something. By becoming the tastemaker and the experts in their specific fields they are giving their customers a lack of choice and allowing them the opportunity to be surprised and delighted.

Symbiosis

There is hope then for these 2 types of retail, ecommerce and brick and mortar, to live together. How? Learn something from nature. Not all of nature is a predator prey relationship. There are many examples of 2 different forms of life living in harmony. These relationships are referred to as symbiotic relationships. One form of symbiosis is known as mutualism. Mutualism is a relationship where 2 life forms have each a weakness and each has a strength. Clownfish and anemones are a good example of this. Clownfish protect anemone from butterflyfish and the anemone protects the clownfish from its own predators. The problem with thinking that one will always beat the other is that we lose the benefits one and perhaps take on other failures. With retail this is true of e commerce replacing fully brick and mortar there is a problem that may not immediately come to mind.

Some 40% of purchases made online in the US every year are returned. Thats a 260 billion dollar problem every year. In contrast items purchased at a physical store have a much lower return rate, ~6 percent. So why this huge difference. Well because people don’t always get what they think they are ordering. The size perhaps is too big or small. The color isn’t quite right. So how can we bridge this gap. This is where this symbiotic relationship comes in to play.

If retail stores are used for what they are truly good for, the interaction with the store and the ability to feel, touch and see in person they could provide an experience that could lead to more sales. If they can get people familiar with their products and experiencing them they are likely to products whether in store or online. They are also less likely to return items purchased for unfamiliarity. They must though both learn their place. It’s not about one thing being better than the other. It’s about them living in harmony providing value to one another to provide an experience to the consumer.

Providing a Better Experience

When we go into a retail store and are met with confusion about selection or availability, our inclination is to ask a person. Regardless of the employees knowledge or motives they are not often well equipped to provide us with a good experience. One of the things that we have come to expect from shopping online is a frictionless experience. If we want to know what options a product has, boom. If we want to know what of that selection is available, boom  This is why when we reach out to a person to help us when we are at a physical store and they cant help us to quickly get the answers about availability and selection of a product, we are frustrated by their inability to do so.

Lessons Learned

  1. Shopping is really about convenience. If you purposefully make it less so, it will result in a poor user experience.
  2. Learn from omakase, highly focused, curated content is more valuable than overwhelming selection.
  3. Let both brick and mortar and e-commerce live together in harmony both benefiting from each others strengths.

By far the sharpest dresser of the group, Rob is the closest thing we have to a teenager, but thats not saying much (He is 30). When he’s not designing apps, he's playing his guitar at the local coffee shop. He speaks a little French and Spanish and lives in New York but is from Cajun country.

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