Lessons From The Romantic Age Of Retail
For a good chunk of the 20th Century American families purchased quality-of-life things for the very first time: A refrigerator, a car, an automatic washing machine, a clothes dryer, and a window air conditioner, just to name a few. Some of us can remember when the first family in the neighborhood got a television. I was in college before I saw my first color TV.I call this period The Romantic Age Of Retail, and I mark it from around 1900 to 1975. There was just something special about the way Americans became consumers; the way they felt about acquiring and owning products we consider to be entitlements today, but in those days were closer to extravagances. And most of those items were purchased from retail establishments.
There was a charming innocence about the way families planned and saved for the acquisition of a radio in the early days of this age, and a second car in the latter days. The Ricardos, the Cleavers, and the Nelsons were more than TV families - they were replicas of real life.
In The Romantic Age Of Retail, branding came of age. The only commodities were things like raw food and fiber, and there was almost no such thing as a consumer buying wholesale. One more thing: Consumers also had a special relationship with their retailers, both the local shops and national chains.
There is a company, for now I will call it Company #2, that not only operated during the entire Romantic Age Of Retail, but as much as any other, it helped create this age. I want to tell you part of this company's story because what happened to it over the last quarter of the 20th century provides valuable information and perspectives for entrepreneurs in the 21st century.
Company #2
"I have to decide whether to have a Santa Claus this Christmas season or a part-time clerk on the floor." Those were the sad. almost tearful words of a store manager of one of the greatest retail empires in history. The reason for his dilemma was not due to some local economic downturn. This problem was actually nationwide: A recession which, it turns out, was followed by several years of what one U.S President referred to as a period of "malaise." There were also changes emerging in the retail landscape.
Unlike the subject of the previous article in this series, the problem for Company #2 wasn't corporate ego. Quite the contrary. For over 85 years Company #2 had given millions of families exactly what they wanted, when they wanted it, and how they wanted it. Customers of Company #2 could get virtually everything they needed, other than food and automobiles, from Company #2, plus service within an inch of their lives. They liked all of the attention that came with this relationship, and expected it as minimum performance, thank you very much.
One component of service customers came to expect from Company #2 was a clerk on almost every aisle who could not only deliver assistance, but who might even know your name and perhaps your preferences. And these clerks weren't minimum wage warm bodies. In the Romantic Age Of Retail, sales clerks were often career professionals - experts.
In those days it was possible for a retail professional to work an entire career in one department, raise a family on that single income, and retire comfortably after a long retail career. Company #2 was the leader in providing experts for their customers, and employees at Company #2 were the Alpha professionals of The Romantic Age Of Retail. They were also key components in the relationship between customer and retailer.
Back To "The Decision"
The store manager decided to forego the Santa and use those payroll dollars on a part-time clerk on the floor. I know because I was in that meeting.
Have you figured it out yet? Company #2 is Sears Roebuck and Company. I worked there from '69 to '75. The day I heard my manager admit his payroll dilemma I knew The Romantic Age Of Retail was over and left 6 months later.
I mark 1974 as the beginning of the end of The Romantic Age Of Retail, and the advent of what I call The Crass Age Of Commoditization. Big box discounters were emerging, consumers were getting a taste of wholesale, and they liked it.
But for Sears, this new age was perverse: Their customers demanded discount prices but they still expected the same premium service they had grown up with. When Sears had to cut expenses (read "service") to compete on price, their customers left and went to competitors who didn't deliver any better service than Sears - perhaps less - and maybe not even better prices.
Why the rude treatment? The other retailers hadn't changed. Sears had changed - no Santa, for example - and it hurt customers' feelings. And for that, Sears was punished by its customers. The romance was over, and I believe Sears never recovered from that break-up. In a way, you could say that Sears was a casualty of the collision of The Romantic Age Of Retail and The Crass Age Of Commoditization.
The company that helped create The Romantic Age of Retail was introduced to a previously untested natural law: You cannot sell at deep discounts AND deliver "within and inch of your life" service. The laws of economics will not allow it.
For the past 25 years Sears hasn't been very successful in adapting it's business model to the dynamics of the new age and has been on a slow decline. The Sears Tower in Chicago, which was for a time the tallest building in the world, is today neither owned nor occupied by Sears. In 1999, this one-time Dow Jones blue chip was ignominiously taken off of that prestigious index. And 2001 dawned on an announcement that several Sears brands and stores were being eliminated.
Perhaps my old employer will survive. Unlike in last week's story, the Sears CEO hasn't announced that its business model is unsustainable. But at the same time Sears was announcing the cutbacks mentioned above, its older brother in The Romantic Age of Retail and Chicago neighbor, Montgomery Ward, took itself off of life support and died. These two companies guaranteed customer satisfaction, but the marketplace doesn't guarantee them anything but the rude and abiding forces of natural selection.
The Lesson For Small Business
In The Crass Age Of Commoditization, new technology, cultural changes, and globalization have shifted paradigms and turned many industries upside-down. Almost everything your customers want or need can be purchased wholesale within a short drive, or delivered to their door. Consumers have become so jaded and cynical (which is the opposite of being romantically inclined) that they are rarely impressed with anything new.
Remember that natural law: You cannot sell at deep discounts AND deliver "within and inch of your life service". Don't try to compete on price with the Big Boxes. YOU WILL LOSE!!!!! Focus on quality, convenience, and technical expertise. Small businesses have the almost singular opportunity to resurrect one of the most valuable aspects of The Romantic Age Of Retail, the expert. Focus on your expertise.
Consumers still wish for price AND service, and small businesses can use that desire as leverage. But the only way you can get customers to pay for both is to do something I learned at Xerox: Help the customer recognize that in any transaction there is a direct and an indirect cost. That lesson requires that you establish a value on time - the customers' time - and help the customer appreciate the REAL total cost of acquisition.
In the beginning there was time. Time might seem like the original commodity since, like a soybean, it's the same for everyone. But it fails the commodity test when you do the math. A true commodity must be available in virtually limitless quantities. Time is finite. Finite things have more value than commodities.
In The Crass Age Of Commoditization, time is more than valuable, it's precious. Small businesses must deliver quality, convenience, and technical expertise, and the price charged must include a value factor for saving customers' time. But that price will only be accepted if the customer agrees with your valuation.
As I have said before, the key to success for most small businesses in the future will be found in your customers' answers to the following questions:
• What do you want?
• When do you want it?
• Where do you want it?
• What kind of help do you need getting it?
• How much help do you need using it?
• How much maintenance/follow-up service will you need?
• How much are you willing to pay for service and follow-up?
• When will, and what will, make any of the above change?
Write this on a rock... Consumers in The Crass Age Of Commoditization still want to be romanced, but they are no longer charming or innocent. The closest you can get to romance with your customers is to convince them that your expertise and their time is more valuable than the margin between their direct cost from you and that of the Big Boxes.
