A Case for Inefficiency: Dissecting the Brick and Mortar Retail Experience for the Covid-19 Era
The knowledge era is upon us (not to mention the Covid-19 era) and brick and mortar retail must change accordingly!
The craft era was driven by scarcity. The goal on the part of consumers was merely to acquire things, given general obstacles to access (i.e. no roads!). It made sense for retailers to provide high touch service as a means of facilitating acquisition and improving the rare shopping adventure to those that were able to gain access.
The industrial era was all about scale and optimization. Service becomes too costly and a suboptimal scalable solution. So how do you facilitate scale? Through a model like that which was hatched by the Hartford Brothers at A&P — warehouse-like self-service retail, in which return on capital becomes the primary metric of success.
And now we are in the midst of the transformation from the industrial era to the knowledge era, which is no longer about scale and optimization, but about choice, networks and connection. Management models have to shift from what Peter Drucker would call “command-and-control” / departments and divisions to comparatively flat organizations of knowledge specialists.
Ikujiro Nonaka writes in the famous HBS article “The Knowledge Creating Company” that in the industrial age, an organization was a machine for information processing. In the Knowledge Era, instead, an organization should not be built to “process information” but, instead, to harness tacit knowledge of employees, make the knowledge explicit, socialize it and standardize it.
How do you build that type of organization in general? By throttling abstraction and reality. The top sets the vision (the abstraction). The bottom drives the practice (the reality). And in the middle, there’s the principle to which both sides are striving, the space in which vision is reconciled against reality and vice versa.
Drucker uses an orchestra model as an example in his piece, “The Coming of the New Organization.” The conductor is the vision, the orchestra (made of several specialists) constitutes the practice and in the middle, the principle, is the score.
This is why the knowledge era is sometimes thought to be the experience era. Because experience, as I’ve written in earlier articles, is agon — the wrestling match between two competing forces in the name of progressing towards a core truth. In customer “experience” in general, the wrestling match is between brand and consumer to progress towards co-creating meaningful value.
So, in the retail world, if service correlates to the craft era, and self-service correlates to industrial era, what, then, best serves the knowledge era?
Is “the middle” the throttling of the big head and the long tail to best serve the customer? Is it reconciling qualitative insights against massive quantitative data to facilitate optimal customer journeys that drive conversion and retention via e-commerce? Both would certainly help to explain the sudden push for customer-centricity across the industry!
Herb Sorenson writes in “Inside the Mind of the Shopper” that a brand’s “creative value is an important part of accelerating the upward growth of society. Think of that creative value as aspirational, something in the soul that longs for improvement and betterment.” Perhaps the creative value about which he writes is that abstraction / vision at the top…and the goal of retailers is to reconcile the composite creative value derived from its own brands and those of its brand partners against the “practice” in store and on e-commerce to drive societal progress. How to progress society, then, through retail? What’s the mission, the principle, and how is it expressed across a retailer’s stores — offline and online? I posit that:
Retailers would do well in the knowledge era, instead of focusing completely on driving efficiencies in their practice, to focus on how it is that they can drive both the vision and the practice to deliver on THEIR unique principle.
And if they don’t have a unique principle — a singular mission statement — then to find one really quick!
Because Amazon’s principle is clear: “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online…[at] the lowest possible price.” And I love a David and Goliath story just as much as the next guy…but I’m not sure that I see any retailer having the chops to compete against Jeff Bezos’ customer- vision and scaling e-commerce practice to drive towards customer centricity.
So what are retailers left with to compete?
Offline environments, perhaps. Amazon’s mission is not bricks-focused. Around luxury, premium goods, that do not need to be competitively priced to move? I think, most critically, in alternative customer-centricity…in which the value created for the customer is very different than those efficiencies being created by Amazon.
Here’s an idea for an alternative principle that I think is lacking in brick and mortar retail, for example…and one around which Amazon would have vast difficulty / no interest competing:
“To be Earth’s most pleasurable brick and mortar shopping experience, where customers can find and buy surprise and delight around every corner.”
Viable in the Covid-19 era? Probably not. Viable for the long-term, as we transition into the Knowledge Era? Possibly.
Which brings me to the grand finale here — the extraordinarily surprising and delightful Campbell’s soup example offered at the end of Sorenson’s book.
The section is called: “The Power of Inefficiency.” Sorenson describes how Campbell’s recalibrated their merchandising strategy to eliminate angst and drive efficiencies by re-sorting soup cans in a rational order, by type (cream of mushroom in one pile, chicken noodle in another, etc.), instead of in one big assortment with various types of soup intermingled with one another. Campbell’s found that although customers were more efficient once the rational merchandising was implemented, they also bought less soup, “presumably because they missed buying impulse varieties they just happened to come across while looking for their target varieties. In this case, making the experience a bit more inefficient proved to be a wise move.”
Perhaps the surprising, delightful future of brick and mortal retail lives somewhere pleasurable, inefficient and irrational amid those red and white stacked cans.