A couple days ago, I wandered down to the local Barnes and Noble to get out of the house, see if I could prove I still exist, and to add to the pile of research for the next story I’m writing.
Let’s see. Marketing. S for Safko. The Social Media Bible, 3rd Edition. Chapter 21, Interpersonal Tools. Yep, I’m in there, technical editor; the words I wrote look familiar, the screenshots I took look nice, even spelled my name right. I like it when a plan comes together. (Disclaimer: didn’t get paid to write it, don’t get paid on sales of the book, but I’m thankful for the opportunity to have it in my portfolio of work. Call it perfectly unkept hope.)
Then I went looking for a couple favorite new titles from my Pinterest page of business books. No luck on the shelves.
Time for human interaction. I stood at the information desk playing the may-I-help-you riff a couple times. It doesn’t work as well as it used to. Someone finally showed up from the back to assist me, and typed in the titles I was looking for.
Ahhhhhh. Those are print-on-demand. We can order them and have them delivered here for pickup, or you can order them online.
At that moment, the only thing I could think was: this is a tough, tough world right now. The entire value chain is wildly disrupted, and it’s getting harder, not easier, to find and purchase goods in the physical world. Demand is being driven online. That, paradoxically, has put a lid on economic recovery.
Showrooming – where a consumer visits a product in a physical store, then shops around and buys it online, often cheaper – is on the rise. It’s creating a much more difficult environment for retailers. Borders and Circuit City disappeared beneath the waves. Best Buy is noticeably listing to starboard. Target dropped Kindle just to try to make a point to Amazon.
We saw a lot of this coming, and it’s not about just books and computers and music. All the talk during Web 1.0 was disenfranchisement, where the middle people would disappear from transactions as more and more things went online. This was supposed to reach into the way people and businesses bought goods. It was very interesting to see one of these new-marketplace companies from Web 1.0, Ariba, acquired this week by SAP.
Long term, the online shift has brought structural changes that we didn’t see coming, and the middle people who are being eliminated aren’t the ones we thought. While FedEx and UPS are in good shape supporting all those online shipments, the US Postal Service is doomed. Swathes of commercial real estate sit vacant, jettisoned by retailers struggling to adapt, and there’s more on the horizon as Sears and JC Penney continue to struggle. Unemployment has swelled as many people find themselves in the middle, including 27,000 HP associates announced this week.
Many would attribute these struggles to bad management, and poor strategy, and globalization. While all that can be found, and in many cases has made the situation worse for companies, one fact remains: economies are powered by consumer spending, and that behavior has changed in search of savings. The traditional models don’t work as well as they used to, which wouldn’t be a problem except the people who used to be employed in the traditional models can’t stay there. When displaced they, in turn, can’t support the businesses in their community, who struggle further and displace more people. The “growth” in jobs is in lower paying jobs.
That sums up to local and state governments unable to pay for services, and education is suffering as a result. In more and more states, online retailers are being asked to cough up local sales taxes, which offsets some but not all of the damage being done. We haven’t imagined the impact of that yet.
Where is the economic recovery? It has to be local, and the only hope is in customer service and social saavy. The companies that will win will find a way to combine an immersive experience online and locally that defeats the urge to save a couple of bucks by shopping online.
One of the better examples of this is the show Fashion Star. (Not that I’m a fashionista or anything, I’m happiest in grey t-shirts with various team and school logos. And I’ve never been successful buying anything to wear but a t-shirt online.) The production values and personalities might be a turnoff for some, but the concept is brilliant. Aspiring designers subject their creativity to scrutiny from judges and high-end retail buyers. Images of the designs from the show go online and are pinned and posted to Pinterest and Facebook sites. Local stores are briefed as to what’s hot from that social activity, because buyers are immediately looking for these designs in stores. Associates can say “yes, wasn’t that stunning? we have it online, you can order it and pick it up here …”, and the store is credited for the purchase. It’s an end-to-end, real-time social experience that stimulates innovation, creates demand, and lowers risk in a very creative approach.
I also heard a great example last week at the Mayo Clinic in Scottsdale. The organizational change team said it twice: we’re about relationships and trust, before we ever get to provide care. They told an interesting story of how people with difficult conditions come in wheeling suitcases full of various research pulled from online sources: typically 1/3 “total crap”, 1/3 not applicable, and 1/3 potentially useful. It’s up to the provider team to help sort that out, provide a more realistic picture of diagnosis, and set a course of treatment, all using a “knee-to-knee” approach developing trust. Talk about a change in healthcare, driven by a showrooming effect where local providers have fallen short and online healthcare sources are a mixed bag.
If we’re going to recover, we as consumers need to rethink the value of a local source of availability and the service they provide, and we as companies need to be much more sensitive to the overall customer experience locally and online. If we buy “where” we receive the best service, not just hunt around for the best price, the long term effect will be those companies will be there when we need them in the future, and our local communities can start growing and thriving again.