There‘s been much talk recently about the ’long-tail theory‘ but, a bit like the malaise that has surrounded the issue of global warming, not enough of us are bracing ourselves for its full impact.
In short, the long-tail theory quantifies the commercial opportunities that have arisen from the retail market that the web has created. Now that everyone with access to the internet is a potential customer, we all have a global catchment area.
The resultant demand curve is a long tail, the value of which can be substantial. For those of you whose first inclination is to surmise that this is proof that some people will buy any old rubbish, think again. The paradigm shift that has occurred as a result is all about customer expectation and their increasingly voracious appetite for more choice and greater personalisation.
The best example of how this has manifested itself is in the entertainment industry. Customers want more novelty – whether it‘s new products or new experiences – and are eager to befriend, trust and, ultimately, buy from those that share similar tastes or values.
It‘s also very clear what customers don‘t want: the same-old, same-old that they get on too many of our high streets. The chances are that your local high street will have a selection of the main stores you‘ll find everywhere else. Except that they‘ll stock, say, 50% less of the products they sell in their flagship store in central London and 75% less than they offer online.
The lines they‘ll stock in their small local store will be the best-selling products from across the chain but it‘s this lowest common denominator approach that customers are no longer prepared to put up with. It‘s why too many perfumes smell the same and why supermarket curries just aren‘t hot enough. The difference now though is that whereas before the London flagship was too far away, the company website isn‘t.
Imagine if your favourite fashion retailer was brave enough to transform each of its small regional stores into ones specialising in key categories. Then imagine if your local town became famous for having a selection of shops that catered for these customers, for example, children‘s clothes shops, shoes or jewellery (it‘s what has kept the Lanes in Brighton so popular over the years).
Outside of the large centres, a solution lies in basic economics and in a plan to find a comparative advantage. It‘s critical that town planners, landlords and retailers agree on what they want to be famous for. A good example is Petworth in Sussex. It has a plethora of antique shops making an otherwise insignificant small town a top retail destination.
Businesses in which logistics and merchandising have too dominant a role will be the ones that will suffer most. Their outlook tends to be determined by the physical limitations of their world, which can in turn cramp the more customer-focused teams in buying, product development and marketing.
We must ensure that instead the creative talent – the visionaries and mavericks in our businesses – are not constrained by today‘s logistical issues but are instead given support to better serve the needs of our customers.
The outlook for traditional bricks-and-mortar retailers is more than a passing storm: the retail climate is about to tip. Customers will desert the shopping malls and city centres that don‘t break from the norm.