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Force Majeure

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Untouched Fundamentals: From Bartering to eShops & Back

The industrial revolution was the first time consumers were introduced to the powerful option of choice. It wasn’t until production boomed that the supply of goods grew beyond the demand. This marked the beginnings of commerce. From pre-commerce to eCommerce, the essence of retail remains the same.

The Milkman already delivered, the Butcher knew your parents, and the Baker made your favourite bread every morning. Today, we have new instruments to replicate the same processes, only faster. Tomorrow, the process will be eliminated.

There was a pleasurable experience in early marketplaces that was lost over time, one that turned chores into delights. The future of the store’s success is highly dependent on bringing that back. It is essential to understand then, where and how did the shift to routine tasks happen in the past seven centuries.

Physical Retail: From PreCommerce to Commerce

Humans - early and modern alike - had to find their own food for over a million years. The pre-economic survival model revolved around gathering plants and hunting. 164,000 years ago, modern humans learned how to cook shellfish. It took over 70,000 years to advance from gathering to actively catching food. The findings were either caught or shared with the clan. This was pre-commerce. It lasted until around 10,000 BC - where Homosapiens (our species) discovered the ability to control the growth and breeding of plants and animals. This marked a new era which brought agriculture to the picture: the Neolithic Revolution. With farming and herding came the transformation of the earth’s natural landscape - first locally then globally. Civilisation grew as the demand of crops was met, and in turn, the global population rocketed. The reliable food supply attracted permanent settlements which turned villages to towns and towns to cities. The expertise, settlement and reliability resulted in specialisation. Where one focuses on wheat, the other on chicken - the surplus would be exchanged. This bartering marked the beginning of trade and continued for almost 9,000 years.

SIMPLIFYING COMMERCE

In the year 1,000 BC, the limitations of bartering exceeded the benefits, and a more efficient means of trade was developed: money. The profitability was guaranteed for both parties, which dramatically freed up the gates of commerce. The variety of goods and services produced started growing (and kept growing up to this day). Money was varied by towns and cities until about 700 BC, where the metal coin was introduced - the stepping stone to globalisation.

It was only natural to fabricate a place to host the establishments. Archaeological evidence points to the first Bazaars, or marketplaces, to date back to 6,000 BC in modern day Turkey. Today, we witness Bazaars serving touristic as well as trade purposes across several cities. Where Turkey hosts the largest and oldest (still existing) Bazaar globally, Morocco’s market places host its’ authenticity and original intentions.

If you’ve been shopping in the old streets of Morocco, you would have likely been overwhelmed with the intensity of the experience. Though exciting (in a bucket-list kind of way), extremely inconvenient as a daily method to run errands. 

The search for information one lacks and the protection of information one has is the name of the game.

is how American anthropologist Clifford Geertz refers to the situation. In a complicated, poorly articulated and extremely noisy communication network, information is a mastered art we can capitalise on today. This comes from two important search ‘engines’, clnentelisation and bargaining. Clienentelisation is the likeliness of repetitive purchasers to establish continuing relationships with particular sellers. Search is accumulative; once you find someone you like, you continue going there. This allows information to flow seamlessly between two parties through organic communication. The second point is bargaining, which is multidimensional and intensive. The talented sellers are able to develop mutual satisfaction, which then enhances the idea of clientelisation. By adapting to immediate realities, the seller/buyer relationship is unpredictable which is the true nature of this type of market transaction. This results in effortlessly unique experiences - all the more authentic. These moments are especially important to the digital reality today, but more on that later.

THE DEVELOPMENT OF SHOPPING

After a couple of centuries, those medieval markets started to get more specific in their purpose like the Galeries Du Bois created in 1770s, for example. This was a shopping arcade located in the heart of Paris around the royal palace, and served a purpose beyond mere commerce. It was the artistic, social and political centre of Paris at the time, consisting of a collection of stores, galleries, bookshops, cafés and restaurants. It attracted aristocrats, intellectuals, students and business-people and was an escape from the chaos of central Paris.

In the nineteenth century, the concepts of department stores came into play: first in Europe then in the U.S.. Le Bon Marche, in 1850 Paris, was one of the earlier department stores to bring together the idea of shopping beyond necessity. Boucicaut developed the space with the intention of a sensorial overload, offering “[a] spectacle of extraordinary proportions, so that going to the store became an event, an adventure.” He called it the Cathedral of Commerce”. This started a ripple effect of department stores adjusting the spaces to cater to experiences beyond the distribution of goods, where some of the earliest omni-channel retail experiments began.

FORESHADOWING ECOMMERCE

In the 19th century, there were three major ‘innovations’ to the retail market: the telegraph, railroads and catalogue printing. 

When you combine the three, the possibility of ordering a product and receiving it after a few days was introduced. Your physical presence at the store was no longer a necessity. Catalogues kept growing until they were hit by a newer, ‘more entertaining’ technology in the second half of the twentieth century: the television. This introduced a new avenue for shopping, and reached its apex in the 1980s.

THE SHOPPING MALL INTENTION

Retail took a sharp turn with the introduction of the shopping mall - which if traced back to one person, would be Austrian architect Victor Gruen (1903 - 1980). Gruen addressed cultural and social and economic challenges with his architecture. After the democratic uprisings in 1848, Gruen’s hometown planned an entire urban re-development that inspired his work in Minnesota - a prominent shopping centre. 

  • The walls that separated the élite of Vienna from the unwashed in the suburbs were torn down
  • A ring road was built around the city, with wide sidewalks and expansive urban views
  • Viennese of all backgrounds could mingle freely on their Sunday afternoon stroll.
  • To the Viennese reformers of the time, the quality of civic life was a function of the quality of the built environment.

Gruen thought that principle applied just as clearly to the American suburbs, pushing him to develop a mall that translates the old downtown shopping areas to a modern version that would be more optimised from a business perspective, more weather-friendly in a cold climate, and more controlled in terms of the layout. 

There was a challenge with creating adjacencies to maximise sales: like having a jewellery store next to a luxury dress store to stimulate additional sales by attracting the same customer. The layout was rather divided for competition more that complementation (which is still valid today - especially with advertising.) To Gruen, designing and then building this mall would resolve all the issues while positively integrating and impacting the surrounding community. 

That didn’t happen.
David Clark | Unsplash

The investment took a direct path to short- term profitability. Retail was no longer a craft, and it moved into the world of occupation. Availability was more important than quality and price was more important than art. The mall was commissioned in the suburbs, where land was cheap, as a replication of enclosed spaces seen widespread. Worse yet, because shoppers had to drive to get there, malls were surrounded by acres of unattractive parking lots instead of being integrated into a larger holistic community. Nothing could have been farther from what Gruen envisioned when he designed that first indoor mall.

Shopping malls were attractive - and attractions can shift traffic. The suburban enclosed malls were able to disrupt even major cities that had their own family-owned department stores. They attracted business and vitality from main streets to the developing suburbs, where the parents of the Baby Boomer generation wanted to live. During the 1980s and ‘90s, Big Box stores mirrored that reaction and attracted traffic from both, the suburbs and the main streets. With their power, these stores eventually controlled the market.

Walmart, the Amazon of its’ time, was discounting products that were available in smaller stores to attract new customers. In an era where price was a priority, this strategy worked quite well. Soon enough, the retail industry shifted from open market places, family-owned businesses and small convenient stores to ‘Big Boxes’ running the landscape.

Commercial developers identified growth potential zones and built the stores there. This attracted new retail opportunities, and thus, real estate sky-rocketed. people started spending money they didn’t have and crediting the houses they didn’t own. 25 years later, the US economy grew by 100%.

That was the end of the Big Box era - the ‘American Dream’ starter. Eventually, like all dreams, the world woke up. As consumers couldn’t afford the mortgages (in the first place), payments were deferred and stocks started to decline. This meant that the higher demand there was on an area, the more affected it was by the decline in value. The market was crushed.

AMAZON CHANGED THE RULES

With all of its successes and failures (think of the dot- com boom and bust), the internet has now fully come into force as the primary medium of information exchange, socialisation and commerce for the grandchildren of those early mall shoppers from the 1950s. While the internet was growing in popularity, Jeff Bezos, a bright Wall Street banker who had been analysing the growth potential of e-commerce, was quick to understand the potential of this new channel. In 1994, he drove across the country to begin selling books out of a rented house in Seattle.

The Age of Amazon had begun...

Digital Retail: From Commerce to eCommerce

Disruption, reinvention and the overturning of established retail models and businesses are nothing new. It’s a story that plays out time and again throughout history. Human invention and the technologies we have developed have constantly demanded re-imagining commerce and retail. This has resulted in a seemingly never-ending stream of changes, from the discovery of agriculture and the development of cities, to seafaring ships resulting in trade, to the development of materials and larger buildings to house commerce. The constantly expanding range of merchandise that trade and then science have made possible made consumer shopping the constantly evolving phenomenon that it is today. But the scale and speed of change we are experiencing is the shock.

Speed has never killed anyone. Suddenly becoming stationary, that’s what gets you.

- Jeremy Clarkson, Top Gear 

Every facet of how things are produced, brought to the market, merchandised and ultimately sold to consumers is being challenged, tested and eradicated. Our entire concept of what a store is is being challenged.’ Doug Stephens, a retail futurist sums it up saying “this is, all at once, the most exhilarating, electrifying and terrifying time in the history of consumerism!”

The Start of Commerce

Alan Kay once said:

“It’s easier to invent the future than to predict it.”
Jeff Bezos took that to heart.

If we want to understand the start of eCommerce, there is no better way than to understand the genius behind it... Amazon.

The Amazon Growth Model works by looping customer experience, traffic, sellers and selections. With alterations to assure the most efficient cost structures, Amazon can offer the lowest prices to competitors, which improves the experience and again, continues the loop of allowing growth. 

Amazon Growth Model

Being The Everything store means there is infinite choice for infinite consumers. But this will not be sufficient tomorrow - not for the purpose of delivering sensorial experiences. Amazon understood the importance of that, and exploited the potential of different distribution channels to close the gap between the two. Starting with the back-end solutions and landing with brick-and-mortar stores.

China eventually followed the US in 1999 with Alibaba. Jack Ma, the founder of this marketplace, saw the potential of the internet in retail. Around that time, very few retailers saw the potential of the internet, and dismissed it as a ‘one way street of information’. 

There was approximately 4 million users at that time. 20 years later, the metrics are staggering:
  • As of 2019, there are 4.4 billion users worldwide
  • eCommerce sales went up from $1.3T to $3.5T worldwide
  • A casual search for books on Amazon suggests 44 million items

The internet made accessibility a given: to products, searches, networks, people, brands... everything was there - a click away. Mark Zuckerberg, the CEO of Facebook, has a law that is perhaps the most accurate GPS of eCommerce: 

Every year, people share twice as much.

As digital commerce continues to grow, our dependency on brick-and-mortar retail, as a form of distribution, will steadily decline. We simply won’t need stores in order to access the things. When same-day deliveries are available, the convenient goods become redundant in physical stores. For stores to remain relevant, they must either focus on completely automated or animated experiences - the success comes from those who do both.

Connecting the Dots

We pushed retail to a world where humans started behaving more like machines, and machines began acting more like humans. The bigger problem with this is that neither of them knew how to do their job.

[We] longed to return to a time when we could actually like the places we shop and feel good about spending our money there.

- John Gerzema, 2011.

John Gerzema, a social theorist points to a hopeful horizon where the consumers take back the control from the pre-big box era. He wishes to see a time where the consumer goes back to being more mindful, considered and anchored the purchasing decision to different values than what we have gotten used to. He found that the more traditionally sought-after brand attributes of convenience, selection and price had begin to give way to new deeper qualities like kindness, empathy and lasting quality.

Only they weren’t ‘new’, were they? This was actually the only normal. What eCommerce did, thus, was reform consumerism back to how it was intended to be: thoughtful, responsible and value based. The very concept of retail is shifting back from the desire from more to better. This is an opportunity for us to revive our values as consumers, our businesses as brands, and a complete rethink of how the two harmonise in an entirely new era of consumerism.

Shopping shifted from being a social, cultural, physiological activity to a means of acquiring goods in the most convenient way possible. The concept was new, it was admired, looked for even by most. It came at a time were the hassle of fulfilment was higher than the satisfaction of discovery. But today, the abundance of goods makes the concept in itself abundant. Consumers are looking for discovery as fulfilment is taken for granted. 

Today, the world of retail goes all the way back to the era of a non-monetary exchange. With the information at the tip of our fingers, the supply higher than ever, the product production at minimal costs and the exposure at its’ peak, retailers are struggling in the once-guaranteed price war. Retailers have to go beyond what has been established over the past few centuries while using the learnings to recreate the store of tomorrow.

Every facet of how things are produced, brought to the market, merchandised and ultimately sold to consumers is being challenged, tested and eradicated. Our entire concept of what a store is is being challenged. Doug Stephens, a retail futurist sums it up “this is, all at once, the most exhilarating, electrifying and terrifying time in the history of consumerism!”

...Do you feel like you read this before - ? That’s because you did.

This was the case when retail shifted from pre-commerce to commerce, from commerce to eCommerce, and now, it’s still the case as eCommerce moves to xCommerce. The rooted drivers to shopping are constant, the tools we have to get there, the spaces we use to reach them and the interaction we gain on the way - those are variables. 

AYLAB | Food for Thought

Our world is undeniably influenced by technology, and a big part of this world is the retail industry. The impact this has redefined where, when, how and even why we shop. Today, generation Z notices eCommerce by its’ absence more than its’ presence; a concept that is not even a quarter of a century old. In the near future, this ideology will be spread amongst all generations. Online experiences are shaping our offline expectations, and we keep getting disappointed. It is up to the retailer to either widen or eliminate this gap. 

When we live in a world designed by previous generations to endlessly produce, grow faster and be bigger, we are discovering the value of time, authenticity and individuality. We search for scarcity. And with the rate of technology growth, we expect to find it. As Amazon opened Pandora’s box, our priorities shifted from the brand familiarity to the brand experience. We were connected in more ways than we ever were, with access to more information than we ever had. We didn’t care for brands - so long as we had authorised purchase reviews. We weren’t limited to quality, quantity nor price - we moved to an era were decisions were not understood, but felt. 

We are moving to a segment group of 1. If brands want to keep the profit through products, there will be more than even Amazon could handle. The nature of experiences is organic, unplanned, inexpensive and engaging. Essentially, it’s a win-win. The question shouldn’t be about how to generate experiences - the question is rather how to generate exponential experiences that will outrun the growth rate of retail? Stephens suggests to “imagine a future state in which the product(s) you sell will be free or sold to customers at cost. In that future, how could your business survive? How could you generate revenue? What value could you offer customers over and above the product [or service] itself?” This may actually be the case in the future, and we move back to the essence of retail - where bartering was the only form of trade. Who’s to say the future of retail will not be a trade of ratings, stars, or comments. Assuming a product is free eliminates all the boundaries that are in the way of creativity or innovation. 

The possibility to connect the digital and physical worlds is a huge opportunity to elevate the brand experience in retail stores. We are entering unfamiliar retail territory where decisions are impulsive, behaviours are unpredictable, stores are unnecessary, and products are consumers.

It feels like we are finally stepping into the future. Technologies are falling into place as they seamlessly integrate the two worlds to paint hybrid experiences.

by

Ayla Hourani

On

Sep 30, 2021

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