As a business designer, technologist and entrepreneur (who also happens to be the co-founder of a luxury brand of fine jewelry), I was asked by Smartwork Media's InDesign Magazine, one of the premier jewelry retail publications, to write about what I would do if I owned a jewelry store. In the aftermath of the Great Recession, the retail sector was hit hard and needed to question its fundamental tenets. Jewelry stores in particular were challenged and it was an opportunity to rethink the traditional retail paradigms.
Below is the full text and a link to the article as it appeared in the March/April 2013 issue.
I am an architect and I love well-designed products. I am also a professor of information systems and I am fascinated by technology’s potential to create new opportunities. I often wonder why these worlds, physical and virtual, are often in opposition. Retail is one of the fiercest battlegrounds, and jewelry stores are no exception.
Standard retail models developed for a physical world are less viable in today’s crowded, competitive, digital landscape. Similarly, as online shopping matures, websites with shopping carts are no longer enough to compete. Future success requires breaking down barriers to create integrated customer experiences. If I owned a jewelry store, I would seek a new paradigm for selling goods. Consider this less of a prescription and more of a provocation. I want to make you think.
The 3 typical physical world models are a store, shop and gallery. Exploring their origins reveals their shortcomings. Merriam-Webster defines a store as “a business establishment where usually diversified goods are kept for retail sale”. Its origins are in accumulating large quantities of goods for future use. It is built around the security of knowing a wide array of items will be available when needed. The problem here for smaller independents is they cannot compete with large internet retailers. A simple search for earrings on Amazon yields 834,201 results. Even if only 1/1000th of these is relevant, you still have 834 earrings from which to choose – a quantity beyond most store inventories.
The shop also presents limitations. Defined as “a handicraft establishment” and “a small retail establishment or a department … offering a specified line of goods or services,” its roots are in making and providing more focused offerings. So far, so good. However, shops spawned the shopper, a challenging consumer. Shopping, “to hunt through a market in search of the best buy,” introduces competition and emphasizes price. The shopper wants value and online shopping dramatically shifted power to this consumer and placed immense pressure on retailers to conform. The internet is the great pricing equalizer. Can you compete with the volume pricing and transparency of Blue Nile? Are you prepared to justify your pricing structure against all pricing available online? Furthermore, online shopping raised the shopper’s expectations by providing a 24/7 marketplace where your competitors are no longer measured in distance but clicks.
The gallery confronts us with another set of limitations. Originally “a promenade, a long and narrow passage, or corridor,” artwork provided interest or entertainment as one traversed this space. But art display emphasizes appreciation and seeing over buying. Unfortunately, many brick-and-mortar stores today have been reduced to galleries for viewing products. Welcome to “showrooming”. They bear the costs of space, staff and inventory only to have the shopper buy the merchandise online.
First, shift your business model away from being product-centric and start selling a customer experience. Products alone reduce transactions to how many, how much, and how fast – arenas in which most cannot compete. An experience is about the intangibles you cannot quantify but your customer needs and wants. These are more participatory interactions that build relationships and involve emotional investment. Cire Trudon, France’s oldest candlemaker, understands experience. Their executive director stated in the Wall Street Journal, “Cire Trudon is about storytelling…” With most of their candles hovering around $100 and prices of $450 not unusual, stories command a price far greater than a candle. Begin by defining what you actually sell; then construct your experience around it.
Next, design your experience to be relevant to your customer. My daughters send emails or text messages to me even when we are in the same room. They do not distinguish between real time and online communication - they simply communicate. They choose the channel best suited to the task. Stop thinking in terms of brick-and-mortar OR online models and create a new hybrid model of real AND virtual touchpoints. Engage your customer through multiple channels. The world is seamlessly integrating technology and your jewelry store should too. True hybrid models build on the strengths of both worlds. Now think about what you can do to make that happen.