Wednesday, August 3, 2011

Strategies Of Value: Consumers and Community

Henry Ford once said: “Any customer can have a car painted any color that he wants, so long as it is black.”

In 1923 GM redesigned its manufacturing line with the flexibility to produce a multitude of models and colors without compromising the inherent economies-of-scale of Ford’s assembly line innovation.

In the 1970's we had Burger King and the concept of "Have it your way...." and now today we have something called, "consumer centric" which entails not only how a company relates to consumers but also revolutionizes the organization; just as the assembly line changed our society in the early 20th century the concept, consumer centric, will do the same for the 21st century.

Of course it might require that companies quit off shoring customer service!  Or if you are going to call a consumer on the weekend and leave a call back number then please ensure that all the features work on weekends!  

Then that brings up the concept of ‘customization’ which is another buzz word being bantered around today by various apparel start up companies.

Its easy to champion a concept such as customization when one is selling pants for hundreds of dollars a pair, like Bonobos, or dresses for hundreds of dollars like Mod Cloth, or even polo shirts for 80 dollars or more, but the reality is your "community" is very small; you community is limited by income.

The whole purpose of mass production is to produce goods in mass quantities at prices the masses can afford.  If you take screen printed tees for example, at one time department stores were willing to pay $7.50 for a four color process back print with left chest logo which they would then retail for $26.99.  Now they will pay on average $5.00 for a screen printed tee which they retail for $17.99 and thus you find that the days for full color process are over and has been replaced with spot color of no more than three colors.

All of the sudden, anyone and their brother could sell screen printed tees via the internet and ship out of their garage:  With the cost of the shirt, art, and screen printing you have about $6.00 in a shirt that you are retailing  direct to the consumer for $15 to $20!  So we see the birth of consumer centric business models and the advent of the concept of customization!

The reality is the shirts are blanks and purchased from a distributor on an as needed basis and thus their are no inventory carrying costs.  The reality is the basic product, the tee shirt, is not customized, but rather it is embellished to a customers wishes.

The 'value' is that tees are novelties, they allow for self expression, whim, and impulse buying and thus communities can develop and grow, such as Threadless, Cafe Press, and Zazzle to name a few.  You can add the individualization that is offered by companies such as Custom Ink and Blue Cotton to the list also.

To take the concept of customization to other apparel classes beyond tee shirts then the term that should be used is "individually tailored."  The market for individually tailored goods is limited to individuals who are either young and or higher income.  To the vast majority, lets say 90% of Americans and an even higher percentage of the rest of the world, the idea of having apparel tailored for fit is not financially viable.

Yes, even the trade magazine, Internet Retailer has jumped on the customization bandwagon, imploring the like of The Gap, Macy's, Nordstrom, and American Eagle Outfitters to get started with 'personalization.'  That would be for an interesting board or management meeting; brick and mortar retailers discussing how they change their whole supply chain and retail structure to adapt to this new innovation. 

The idea of a consumer centric business is one that imparts a value added proposition to existing business activity.  The concept of personalization or customization is one that completely changes existing business activity; its a niche market at best.  It will never achieve the acceptance of jeans and or tee shirts as basic apparel choices for a vast majority of consumers.

Mass production led to the extinction of the artisan, and the craftsman.  The consumer saw no value to individualization.  I remember in the early 90's when the concept of a tee shirt with a double ringer around the neck was considered innovative and this in turn led to allowing the retailer to pick the color of their second ringer which we would then attach after screen printing.  That was a great idea but a bad reality because of costs of maintaining inventory of the second ringer and returns; one persons design creation is another ones idea of trash.

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