In December 2013, Amazon CEO Jeff Bezos was being interviewed by CBS’s Charlie Rose on the popular news program 60 Minutes. Rose stated “a lot of small book publishers and other smaller companies worry that the power of Amazon gives them no chance.” Then he went on to ask, “is Amazon ruthless in their pursuit of market share?” Bezos replied, “…Amazon is not happening to book selling, the future is happening to book selling.”
The future is happening to book selling.
Let that sink in. Read it again if you need to. The future is happening. It is undeniable if you are in the business of selling a physical product, your business is changing. Especially if you sell your product in a physical store. The places people buy things are being radically disrupted by digital models for commerce.
While online sales only makes up 6% of total retail sales in the United States (according to the US Department of Commerce), that percentage is rising and the trajectory doesn't look to be slowing down anytime soon. As a design firm, we find the impact of digital commerce on physical retail very interesting. Actually, we find the impact of all things digital on all things physical interesting, whether it be commerce, entertainment, education, transportation, healthcare, civics, work, or home. We have found there are some profound similarities between these sectors and the way they are each affected by technology.
EXPERIENCE & PURPOSE ECONOMIES
The rise of intangible value and the experience economy may have the greatest impact on how and what we buy. James Gilmore outlined this idea in his 1999 book aptly titled The Experience Economy. The gist is that what were once products have become services experienced over time. Coffee is a prime example; it could be argued that Starbucks was the first to reframe a simple product from a commodity item into an experience as they designed their stores to be “third places.” They knew their product was really an experience of a product that existed in the context of a specifically designed place. But the creation of experience is giving way to the creation of purpose as a means of personal fulfillment. (See Aaron Hurst’s book The Purpose Economy for tangible evidence to back this assertion.) Meaningful experiences are a necessity for the next generation of consumers, and brands who will most intimately resonate with this next generation will be those who redefine their business strategy - shifting from creating financial wealth for shareholders to creating emotional, intellectual, physical, social, and creative wealth for customers. This is a wealth our GDP does not measure (I credit this idea to Umair Haque, he outlines a redefinition of wealth brilliantly in his essay Betterness: Economics For Humans), but it is this wealth businesses of the future must create to remain viable.
INFORMATION ASYMMETRY
With the rise of the digital age and the internet has come a proliferation of resources to educate ourselves about the world around us and the things we want to buy. In his book To Sell is Human, Daniel Pink calls this information asymmetry. What he means is that for years those doing the selling had more knowledge about the product and service being sold than the consumer. Thirty years ago, car dealers would lock their factory invoices in a safe; today customers arrive at the dealership already knowing who is offering the best price on the car they want. The archetypical salesperson as a despised persona is a result of this, but today those doing the selling act more like altruistic filters and sounding boards than they do pushy information specialists. Their role has shifted from an imperial source of knowledge to shapers of perception. Patients arrive at their doctor’s office with a self diagnoses, and stay-at-home moms armed with a laptop have unprecedented access to the airfares, hotel rates, and reviews that were proprietary to professional travel agents only two decades ago. This idea means many things, but for retailers and architects alike it means that commerce is no longer contained to place, transactions do not happen at the source of knowledge. There is a nuanced difference between products and services that people are sold, and products and services that people buy; the difference is about knowledge, and who has it. The sales funnel has been dismantled and rebuilt with a digital component, one that is equally and unequivocally important to the experience of buying. Brick and mortar just isn’t what it used to be.
DIGITAL TECHNOLOGY IS TRANSFORMING CONSUMER BEHAVIOR
While the shopping experience does not exclude physical place, it now transcends physical place. As I mentioned, 6% of gross retail sales occurs online and while that’s a small percentage, the approximately 900 billion dollars it represents has been felt. Blockbuster Video, Borders Books, and Circuit City are all well known examples of this. Many now know that an online store presence, digital purchasing incentives, social media, and other digital brand touchpoints are core to a strong sales strategy. Most everyone knows your customer experiences must be considered in both digital and physical contexts. But not many business are integrating the digital into the actual physical environment in an augmented sense, and those who are integrating technology are doing so in ways that degrades trust and pollutes the ever-thickening air of the distracting and annoying cloud of corporate messaging. Adding iBeacons to a storefront so passers by get popup ads and targeted sales promotions is not a long term strategy for consumer loyalty and a strong brand. “But we have touch screens” you say. So does most everyone who comes into your store — it’s in their pocket. Even prolific and inspirational companies like Tesla mean well but get this wrong. I recently visited a Tesla showroom to sit in the the Model S and was impressed by the extending door handles (the way the car greets you as you approach, quite the human touch) and the built in intelligence (the fact that your car learns how you drive and responds accordingly along with an operating system that updates itself to create a car that performs better over time, essentially self-upgrading). But the pinnacle of the showroom? I was disappointed to find a touch screen that allows you to pick out your trim package. With such an amazing product you would think the environment in which the product is sold would be up to par. It may be much more interesting to highlight facets of the car that really differentiate it in the marketplace — the software, the battery technology, the human interface.
Here are some hypothetical examples of how some well known retailers could potentially leverage the technology that is already familiar with consumers. Perhaps Radio Shack becomes the first retail chain to 3D print its products in store and picks up the flag of the maker movement. Starbucks becomes the first coffee chain to let a customer order from her computer and receive her coffee delivered to her seat so her workflow remains uninterrupted. H&M becomes the first major clothing retailer to use digital mirrors so customers can see themselves wearing their clothes with simple scan of a tag. Maybe Whole Foods becomes the first grocer to implement shopping carts that suggest recipes based on what you put in them.
These examples contrast the milieu of retail and industry talk about technology. What we’re not talking about is leveraging big data, inventory and supply chain technology, providing wifi, apps, indoor GPS, iPads at the checkout, or same day delivery — these are table stakes. While my examples aren’t prolific, and are sure to be bested by others, they speak to the potential of using technology to elevate the experience of retail in a nuanced manner that adds real value to the consumer, enabling them to make smarter buying decisions that are conducive to their well-being and not just your shareholder coffers.
A FEW TIPS FOR RECONSIDERING TECHNOLOGY’S ROLE IN YOUR RETAIL SPACE
Space travel, social networking, real-time language translation, drone delivery, self driving cars, the internet of everything, augmented reality, digital currencies, fog computing, the sharing economy — these are a handful of realities that are continuing to snowball and implicate what we know about how humans behave at home, at the office, at school, and at the mall. The proliferation of social, cultural, and technological developments now ought to require businesses to consider strategies with multiple perspectives and use a transdisciplinary team of designers, anthropologists, strategists, marketers, scientists, technologists, and managers. This team is essential to creating rich consumer experiences that have depth and add value to the consumer themselves. But what does a rich consumer experience consist of? We in Studio 07 at NBBJ believe it consists of three things.
First, inspiration. The uninspired experiences of our lives are often bland, irrelevant, meaningless, and depleted. Rich experiences in and of themselves don’t require inspiration, they are inspiring. Inspiration moves us, inspiration is the magic that resonates with humans at a heart level. Inspiration is what happens when another person can articulate a passion for something we care about in the words that we have spent so long looking for. Inspiration is found in beauty, in serendipity, in the unexpected. But to design an inspiring experience, inspiration must be brought to the table. Empathy, understanding, humility, and a keen eye for insight are important here, but vision is what differentiates good from great. Inspiration won’t be found in market benchmarks, emulating the competition, or sales goals.
Second, authenticity. Inauthentic experiences always lead to distrust, disappointment, and a misguided understanding of experiential meaning. With today’s knowledgable consumer and peer referral network, any attempt to be something you are not will be called out and broadcasted. Authenticity requires you know who you are, and you know what you value. The ubiquitous yet truest example of this in retail is Apple; they designed stores with the same source of drive tapped to design their products. Their truest truth shapes everything they do, thus the bond between Apple’s products, physical retail presence, and brand has been stronger than competitors could have dreamed. Authenticity is the result of activating a brand at its core and allowing it to become the connective tissue for every experience, every touchpoint, you're constituency comes across.
Third, harmony. Chaos shapes much of who we are, and in fact much of our entertainment consists of it. But chaos can also leave us confused, disoriented, and fatigued. It’s often the result of clunky interfaces, noise pollution, and nonintuitive direction. Harmony is the imperative to reduce friction in a way that elevates human experience. Harmony is not merely removing distractions for the sake of seamlessness, but approaching the design of place and technology with the intent to introduce users to more options of interaction, not fewer, freeing potential, not limiting it. By hiding the seams of physical and digital realities, we need to be conscience of the new reality we are creating and understand its impact on the wellbeing, imagination, and thought of those who we design for.
CHALLENGE YOUR MOTIVES, YOU CAN ONLY CREATE THE FUTURE ONCE
It’s an exciting time to work at the intersection of design, business, and technology. With the shifting paradigms of place, the evolution of technology, and the reconsiderations of post-industrial economies, there are countless opportunities to invent new places and new experiences that generally improve life. But improve life for whom? And who gets to decide whose life needs improving? These important questions are intelligently discussed in an article by H. James Wilson in the Harvard Business Review. He highlights some important assumptions that we need to take to heart before setting out to design places for the modern consumer. Namely, are we assuming the technology that augments our physical places are opt-out rather than opt-in? Is technology our path to self improvement? Is our natural perception of the world insufficient? Will technology become a precondition of human flourishing? Will humans simply become “nodes in the internet of things?”
It is my hope that by understanding the importance of human experience, how access to information is changing consumer behavior, and technology’s role in our experience as consumers, we can design places that improve human well-being and enrich our lives.