By Carrie Barclay, President Asset Strategies Group, LLC
Retail is as homogenized as milk. Seriously, if you think about it, they’re pretty similar. Milk is a commodity that you can buy at any convenience store, gas station, or chain grocery store – it’s the same size, shape, color, and price. While some brands have differentiated on the color of the milk jug, the shape remains. I liken this to retail.
Homogenizing Works for Milk, Not Retail
In 1994, Federated acquired Macy’s, and by 1995, Macy’s started acquiring brand department stores (Broadway, Emporium, Weinstock’s, I. Magnin, Jordan Marsh, Stern’s , Liberty House, Shillito’s, Burdine’s, Bon Marché, Goldsmith, Lazarus, Rich’s, Foley’s, Sanger-Harris, Boston Store, Bullock’s, and Goldway). By 2003, Federated rebranded them all as Macy’s, despite backlash from consumers about the homogenization of “their” shopping. This was the first phase of the widespread standardization of the department store shopping experience. Oblivious to the customers’ cries, Macy’s pushed on, and department store names became less distinct as a result, along with the standardization of merchandise.
In 2005, Federated acquired May Department Stores which included branded department stores Famous-Barr, Filene’s, Foley’s, Kaufmann’s, Hecht’s, The Jones Store, L. S. Ayres, Marshall Field’s, Meier & Frank, Robinsons-May, and Strawbridge’s. Almost all ceased to exist as Federated replaced most of them with Macy’s. The merged department stores allowed them to cut costs and achieve efficiencies in marketing, but at what greater cost? Isn’t this just like a gallon of good, old-fashioned, homogenized milk? Same container, same contents, same messaging, and, unfortunately, same delivery.
While I used this example of the department store, you can say the same for numerous retailers – a one-size-fits-all strategy. This sameness, or homogenization, that we have created and offered as retail, has brought about incredible efficiencies in process and profits, but has created a commoditized product – not a sustainable brand strategy.
Localization and Variety Keeps Customers Interested
I hate to keep using the milk example, but it works. If you change the contents (localization), packaging (customer experience), and messaging (Omnicentric), you begin to appeal beyond the shelf. The true value of the stores that Federated acquired resided within the very powers they homogenized. The localization of the product and messaging was at the regional level – meaning you could not buy what was offered in Chicago if you were in San Francisco. This made shopping beyond interesting, maybe entertaining. The localized flavor in the merchandise, presentation, and shopping experience is what appealed to the human nature of the shopper at the core.
If you want to offer a commodity, such as milk, be prepared to be the “low cost” leader. Now, if you want to offer “fresh, pesticide-free, hormone-free, chemical-free, natural” milk straight from the cow to the consumer, this becomes more than a commodity. Are we not at this point where we decide: commodity or not? Why do you think TJX Companies has grown over the last 4 years to over 3,600 stores with continual new store and comp sales growth double that of any other retailer? Could it be localization and variety in the product mix, beyond just price, that continues to drive the expansion of TJX? Primark drives its success in part by empowering store managers to select merchandise. Homage has had early success by operating at the local level and connecting emotionally with the local sports and leadership icons.
Localization Is About More than Just Marketing
There is so much talk about “store experience” today and what that looks like for retailers. I hope this is an all-inclusive term because it has to be more than what I experience – it has to be what you offer (contents) – and please don’t make it the same as the 35 other clothing boxes in the mall, which most often are the same. Even if you design in-house and then ship overseas for manufacturing, your designs will be corrupt from the day they hit the production house. You end up with a slightly modified shirt (collar or buttons) but one that is essentially the same. I digress; that is a conversation for a different article. Back to milk.
The importance of localization goes beyond just marketing, which, by the way, is the direct opposite of a regular, “low-priced” gallon of milk. I’m talking full-on organic almond milk. Bringing localization back to key merchants who can edit, present, and sell products to the consumers at a very regional level. Customers want and crave variety, diversity, and choice. You can still maintain a national footprint, but effectively leveraging localization and personalization and bringing these strategies to scale across channels will be a differentiator for those retailers who want to thrive, not just survive.
About the Author:
Carrie Barclay – President, Asset Strategies Group, LLC
ASG, a retail consulting group is revolutionizing the way retailers think about real estate – from location to valuation to strategic positioning, helping retailers merge traditional methods of reaching customers with new technologies to capture more customers and sales. At ASG, Carrie leads the strategy group, ASGedge development and product roll-out team and also works with clients in ASG’s real estate representation practice.She received an M.B.A with distinction from Franklin University and a B.S. in Business from Central Missouri State University. Carrie’s wide range of real estate experience includes lease administration, systems development, real estate development, and real estate strategy. She served as Director of Corporate Research and Planning for Limited Brands where she directed divisional real estate strategy for such brands as Victoria’s Secret, Bath & Body Works, The Limited, and Express.