15,99 €
Mehr erfahren.
- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
The Road Map for a New Era in Retail The Retail Revival documents the rise of an incredible new era of consumerism leading to a complete redefinition of what retail is. The book provides perspective on how massive demographic and economic shifts, as well as historic levels of technological and media disruption, are turning this once predictable industry into a sea of turbulent change, leaving consumer behavior permanently altered. It examines the key seismic shifts in the market that have even companies like Walmart and Procter & Gamble scrambling to cope, and explores the current and future technologies that will completely change the way we shop. From internationally-renowned consumer futurist Doug Stephens, The Retail Revival provides no-nonsense clarity on the realities of a completely new retail marketplace, pointing to a dynamic and exhilarating revival of the industry. It offers hope and guidance for any businesses eager to capitalize on these historic shifts, providing a concise overview of what really matters and how to profit from it. * Offers an expert view of the near future of the retail marketplace for retailers, manufacturers, and marketers alike * Written by the founder of Retail Prophet, a consumer trends advisory whose clients include such brands such as Walmart, Citibank, WestJet, Razorfish, Air Miles and Ace Hardware * Features actionable guidance for retailers, agencies and consumer goods manufacturers The Retail Revival is an entertaining and enlightening wake-up call that all retail professionals will need in order to profit from the coming chaos.
Sie lesen das E-Book in den Legimi-Apps auf:
Seitenzahl: 368
Veröffentlichungsjahr: 2013
Ähnliche
Contents
Cover
Title Page
Copyright
Dedication
Acknowledgments
Introduction: Revolutions and Revivals
Part I: The End
Chapter 1: It's Not a “Recession”!
Where Were You in '62?
More! And More! And More!
Chocolate or Vanilla?
The Industrial Devolution
Scorched Earth
The Revival
Chapter 2: The Disappearing Middle
Life in Middle-Earth
The Beginning of the End of the Middle
Show Me the Money!
The Imperfect Storm
Stuck in the Middle with You
Chapter 3: Rest in Peace, Joe Average
“Stinchcombed”
Aspiring to Be Average
The End of the C+ World
Chapter 4: The Broken Funnel
The Era of the Brand
The Era of the Retailer
Enter the Internet
Enter the Network
The End
Part II: The Beginning
Chapter 5: The New Law of Average
The Road to Remarkable
Where Does Your Brand Live?
Getting Out of the Middle
Customer Experience is a Result, Not a Competency
So, What is a Brand?
Every Little Thing You Do is Magic
Chapter 6: Who Owns Your Brand?
Collective Branding
Honesty
Illumination
Immediacy
Bringing It All Home
Chapter 7: Rehumanizing Retail
The Dehumanizing of Retail
Fully Automated versus Fully Animated Experiences
The Rehumanization of Retail
Believers, Super-Users and Co-creators
A Truly Human Resource
Chapter 8: The Third Shelf
The Arrival of the Third Shelf
The Store is Everywhere
Where's Your Third Shelf?
Buying Eats Engaging for Breakfast
Chapter 9: The Destination is You
What's the Big Deal about Big Data?
Serendipitous Shopping
The End of Marketing as We Know It
Chapter 10: Break It, Build It and Make It Beautiful
Break It
Build It
Make It Beautiful
About the Author
Endnotes
Index
Copyright © 2013 Doug Stephens
Published by John Wiley & Sons Canada, Ltd.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright license, visit www.accesscopyright.ca or call toll free 1–800–893–5777. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd., 6045 Freemont Boulevard, Mississauga, Ontario, L5R 4J3, or online at www.wiley.com/go/permissions.
While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom.
For general information about our other products and services, please contact our Customer Care Department within Canada at 1–800–567–4797, outside Canada at (416) 236–4433 or fax (416) 236–8743.
Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.
Library and Archives Canada Cataloguing in Publication
Stephens, Doug
The retail revival : reimagining business in the new age of consumerism / Doug Stephens.
Includes index.
Issued also in electronic format.
ISBN 978-1-118-48967-3
1. Consumer behavior. 2. Consumption (Economics). 3. Retail trade. I. Title.
HF5415.32.S74 2013 658.8'342 C2013-900341-X
ISBN 978-1-118-48979-6 (ebk); 978-1-118-48978-9 (ebk); 978-1-118-48980-2 (ebk)
Production Credits
Managing Editor: Alison Maclean
Executive Editor: Don Loney
Production Editor: Pauline Ricablanca
Cover Design: Adrian So
Cover Photography: © Adriana Berned/iStockphoto; © pictafolio/iStockphoto
Composition: Thomson Digital
For Meredith, Connor and Reilly
Acknowledgments
The Following People were invaluable in supporting the creation of this work:
Andy Bruce for the coffee and collaboration. Mike Wittenstein for his time and expertise. Eric Garland for his intellectual generosity and humor.
And above all, my dad, for encouraging me to think big.
Introduction: Revolutions and Revivals
If You Earn Your Living in the retail industry—and you may not want to hear this—the possibility that the business you're in will still exist in two, five or ten years is very slim. Sorry for the buzzkill, but it's true. In fact, this book may have been more appropriately titled Surviving in the new age of consumerism.
If all this sounds overly dramatic, consider some of the brands that (even as I write this) are under deathwatch. By the time you read this, some of these may be gone:
The Mayan calendar aside, the notion that many of these brands could be facing their end, as I write this in 2012, would have seemed beyond credibility only a short time ago. While they're all very differently positioned brands that sell across a range of categories, they also have one thing in common: they each missed or ignored at least one universe-shaping shift in their market, and never quite recovered from it. For some, the decline has been slow, painful and drawn out. American Airlines, for example, has taken losses of more than $10 billion in the last decade. For others, the descent has been swift. Research In Motion, which was being heralded by Forbes in 2009 as the “fastest growing company in the world,” has seen its stock in free fall.
What's also worth noting is that the changes these brands failed to adapt to were most often neither subtle nor sudden. They didn't strike like lightning from a clear blue sky. In fact, most were more like slow-motion train wrecks. Avon, for example, missed multiple long-term societal shifts, each of which should have prompted a comprehensive reevaluation of its business model. And Avon wasn't alone. The Sears decline continues to be protracted and painful to watch. Trend after trend sails past, leaving the company in their wake, but, for whatever reason, Sears has failed to take action—or at least the right action to adapt and to survive. It's as if somehow it became stuck in a web of inertia, unable to free itself.
To be fair to both Avon and Sears, it's easy to lose sight of just how rapidly things change, and to suddenly find yourself years, even decades behind. Think about it. As I write this I'm 48 years old, and in my lifetime it was perfectly acceptable for doctors to endorse cigarette brands. One cigar brand—Cigares de Joy—actually promoted itself as medicinal and claimed to provide relief from ailments like sore throat! Small-appliance manufacturer Kenwood advertised that its blender, the Kenwood Chef, “did everything but cook,” but hastened to remind us “that's what wives are for.” And plus-size fashion retailer Lane Bryant not so long ago produced advertising that referred to their target customers as “Chubbies”! Can you imagine trying to get away with that today? Yet these examples were regarded as perfectly permissible advertising only several short decades ago.
An example of early tobacco advertising claiming the medicinal benefits of smoking.
When I share these examples with audiences, there's almost unanimous agreement on just how completely things have changed in a relatively short period of time, and no one has a problem acknowledging that exponential change has occurred. The funny thing is, when I shift the conversation to the future of retail and consumer behavior, and begin to describe some of the significant changes I see on the horizon—even over a short five to ten years hence—I almost always encounter naysayers who are reluctant to buy into the idea that radical change might be around the corner. They find it difficult to imagine that things they do today might become as out of place as doctors hawking cigarettes.
It seems we humans are far more reluctant to accept change when it lies ahead of us than when it's safely in the rearview mirror. And while a healthy dose of skepticism helps us avoid being suckered and taken advantage of, taken to an extreme, habitual skepticism can be lethal. It can interfere with judgment, cause paralysis and ultimately lead an organization to ruin. There is no shortage of examples. Industries filled with brilliant executives have crumbled because of a failure to properly acknowledge the magnitude of the impact that specific changes would have on companies. From the music industry to the video store channel, the business landscape is littered with headstones that read, “We doubted it!”
And this phenomenon is not exclusive to us mere intellectual mortals. Indeed some of the world's most respected minds have similarly underestimated the volume and velocity of change in their markets. In 1933, Boeing predicted that there would never be a plane built that was larger than its 10-seater. Lord William Thomson Kelvin, president of the Royal Society in the late 1800s believed that radio technology would go nowhere and that X-rays would prove to be nothing more than a hoax. And even Bill Gates once said “640K (kilobytes) ought to be enough for anyone.”
So, why do even incredibly smart people miss what often seem like obvious and devastating changes and trends? It's impossible to know for sure but in my experience working with a diverse mix of private and public organizations, here's what I've observed. It reads a little like the seven deadly sins—except in this case there are 10.
Perhaps the worst risk in kidding yourself about the future is that you will invariably begin trying to kid your customers into thinking the same way. In 2011, the United States Postal Service (USPS) set about developing media messages that were intended to convince the public to request paper billing statements from their utility companies and other businesses they deal with, as opposed to digital statements. After all, with consumers moving most of their banking and other payments online, the market for mail delivery was taking it on the chin. From a business standpoint, the urgency to recoup this lost revenue made perfect sense. But here's where things went wrong—rather than trying to invent a new and transformative model for bill payment that USPS could own a stake in and that customers would love, it decided instead to treat the public like complete idiots.
This culminated in a strategy (if I can call it that) involving a TV commercial portraying delighted customers opening mailed paper statements and proudly sticking them to their fridge or office corkboard. The accompanying narrative cheerfully proclaimed, “A refrigerator has never been hacked. An online virus has never attacked a corkboard. Give your customers the added feeling of security a printed statement or receipt provides, with mail. It's good for business and even better for your customers.”
Click here to watch the USPS commercial. (If you need a smartphone app that scans QR codes, go to getscanlife.com on your mobile device.)The commercial went viral, but unfortunately for the USPS, it did so for all the wrong reasons. It got passed around the Internet as a farcical example of an organization that had its head in the sand and was trying to bury its customers' heads there with it. One couldn't help wondering if the USPS might not also be considering a follow-up campaign to resurrect the pony express!
Regrettably, the Postal Service isn't the only organization wasting time with such inane tactics. The bookstore channel has gone to great lengths in its attempt to convince us that deep down we all still love the smell and feel of paper books, when every available statistic suggests that we actually prefer the smell and feel of tablets and e-readers. The music industry has invested millions to make us believe that the world will fly off its axis if we share songs with friends, while even recording artists themselves are moving on and developing new, imaginative ways—beyond record sales—to create revenue and happy fans. Cable providers continue to screw customers into buying packaged programming at ridiculous costs, while increasing numbers of viewers cut their cable cords and move to streamed online alternatives.
In the end, what all these defensive countermeasures amount to is a colossal waste of time. Time that companies could have and should have spent creating new platforms, new concepts and new models for their category—which they (and not Apple, Amazon or Google) could own!
So the first and perhaps the most important step is actually accepting that radical change is indeed real and happening, and that it will, at some point, touch your business, if it hasn't already. Disruption is inevitable.
Once you've come to terms with the magnitude of the changes taking place in the retail industry, it's important to understand the speed at which these things are unfolding. Business innovation is moving exponentially faster today than at any other time in history. To put an exclamation mark on this, I've been asking audiences that I speak to how many had heard of the photo app Instagram—before hearing that Facebook purchased the company for a billion dollars. Most people had not heard of the company before that point, and, in fact, some had never heard of Instagram at all, even after Facebook bought it. To fully comprehend the significance of the Instagram example, consider that at one point in my career I worked for a company that required 123 years to achieve a billion dollars in annual revenue, and required well over a thousand employees, multiple manufacturing sites and operations in two countries to do it. Instagram achieved a market value of a billion dollars (at least on paper) in two years and with a dozen staff. In fact, within 10 days of the acquisition by Facebook, Instagram added an additional 10 million users! That's how quickly things are moving today.
This really screws up the fast-follow strategy that so many companies have slyly prided themselves on executing for so long. (Let someone else take the risk, the expense and the misfires, and only come on board once the concept is proven.) This simply won't work anymore—things are moving too fast and that means you have to go first in your category if you plan to go at all. You have to live way out on the edge of what's happening and experiment constantly with new things well before they're proven. Your company—not someone else's—has to accept the risk and uncertainty.
So make no mistake: everything you're seeing today is new—you've never been here before. It's all unfamiliar ground. Sure, you can infer some things here and there based on experience, but you can't assume that the approach you used yesterday will be effective today. Doing so is a recipe for disaster.
To put it simply, there has been no other point in history when so many aspects of disruptive change have collided and conspired to wreak havoc on the retail and consumer packaged goods industries. Every facet of how things are produced, brought to market, merchandised and ultimately sold to consumers is being challenged, tested and eradicated. Who the customer is, what customers want and how to give it to them are completely up for grabs. Our entire concept of what a store is is being entirely transformed.
This is, all at once, the most exhilarating, electrifying and terrifying time in the history of consumerism!
And, as transfixed as we've all become by the global economy, I think you'll see that this is hardly all about economics. Not by a long shot! If anything, the economic volatility of the last five or six years has been a distraction from other deeper, broader and more permanent shifts in our society. What the retail industry is experiencing now (and going forward) is not merely an economic speed bump—it's a head-on, no-airbag crash into the end of multiple eras, some stretching back as far as 2,000 years! So if you're still waiting for the “bounce-back,” take a seat—it's not going to happen. In fact, the elephant in the room is that there is no “recovery,” contrary to what many of us would like to think. This is permanent. It's the end of one era and the beginning of a new one. My hope is that this book will help you not only understand it, but thrive in it.
I should also tell you now that this book is not intended to be a highly academic treatise on retail and consumer behavior. This exciting industry doesn't need another dreadful book that makes the industry seem boring. It's also not intended to be a data-dump of statistics and facts meant to overwhelm or scare you. If anything, that's the problem with most of the information that's thrown at us on a day-to-day basis. It's sensational, loosely researched, lacks context and frightens the hell out of us. What it doesn't do is help us get on with it—to do what we do better, and to create better consumer experiences.
Unfortunately, most retail-industry trade associations aren't helping much either. To my continual amazement, most associations seem to shy away from the really tough conversations—the stuff their members may not want to hear but need to know.
So, my humble aim here is to shine a bright light on all the scary things you hear moving under your company's bed: the really big, ugly megatrends that go bump in the night. Above all, I want to share the unprecedented opportunities that lie ahead to create better, more fulfilling retail experiences for consumers, retailers and brands.
If we're being honest with ourselves, retail has sucked for the last few decades. In fact, I'm confident that history will regard the last 30 years as retail's dark ages, a time when the joy of shopping was kicked aside by mindless, credit-crazed consumption. A time when the success of a retailer was more often measured by its scale of operations and share value than by its product quality, shopping experience or positive impact on society. This was a time when the term customer service became so overused and trite that it lost all value and meaning. We treated people and machines as though they were interchangeable and, in the process, we made both largely ineffective and indifferent to customers. We built enormous, soulless concrete boxes, filled them with junk and called the result “power retail” to legitimize it and make it sound somehow noble. Meanwhile, working in retail became something people did only until they found a real job. Retail workers were given more drudgery, static pay rates and less mobility. To use the phrase made famous by Walmart founder Sam Walton, we “stacked it high and watched it fly” and, in doing so, lost much of the social value and benefit that retail can have in a society.
Here's a test. The next time you're at a shopping mall, take a look at the directory and ask yourself how many of the retailers on the list you'd actually miss if they disappeared tomorrow. As you drive to work, count the stores along the way that you feel an emotional attachment to. Open your fridge and add up the products inside that you feel are simply irreplaceable. If you need to count them on more than one hand, I'd be amazed. The unfortunate truth is that many of the retailers and brands hanging on today have managed to do so because we consumers were spending unprecedented piles of borrowed money. We would have bought sand at the beach! Well, that period is over now, the credit well is dry and it's time once again to actually earn a place in consumers' hearts and minds by giving them something remarkable and worthy of their attention.
All of this amounts to what I see as a fantastic revival. A revival for manufacturers, retailers and consumers alike—a rebirth of sorts, and a return to what makes retailing wonderful. I'm convinced that all this tumult will ultimately create a better retail marketplace, where deserving companies can shine and consumers can enjoy infinitely better experiences; a place where talented people can once again earn a gainful living and perform meaningful, exciting work. After all, when it's done right, shopping is social, personal and fun. How we shop is a direct reflection of societal values—an integral part of who we are. We have lost sight of that over the last 30 years.
This is very good news for those companies that have the courage, inspiration and conviction to succeed in the new era of consumerism. It's also a wonderful new age for marketers who aspire to create remarkable, memorable experiences that make a difference in people's lives. Most of all, it's tremendous news for consumers who, after decades of covetous consumption, long to rediscover the true magic of shopping.
Make no mistake about it: the golden age of retail lies stretched out before us. How we shop will change more in the next 20 years than it did in the previous 1,000.
Vive la revival!
Part I
The End
1
It's Not a “Recession”!
In the Spring of 2006, I was asked to lunch by the president of a major North American paint manufacturing company. The company had done outstandingly well over the last three decades or so, selling its products through independent retail outlets across the United States and Canada. So well, in fact, that many of the dealers had become unimaginably wealthy in the process. You might be dubious that one could get rich selling house paint, but that's exactly what had happened and was still happening with a fair degree of regularity. The owners of these paint stores were buying vacation properties in exclusive 'hoods such as Palm Beach, Florida, Salt Spring Island, B.C., and Scottsdale, Arizona. It seemed that they were all making money faster than they could spend it.
It wasn't unusual for this paint manufacturer to wine and dine its dealers at some of the most exclusive resorts in North America. Dealers were offered five-star meals, Cuban cigars and the finest single-malt Scotches. It was all strangely surreal. On this particular day, the company president had selected a very nice restaurant on New York's Upper East Side. Being a Manhattanite himself, he frequented many of the best restaurants in the city. Over lunch we came to talk about one dealer in particular—a family-owned operation based in Manhattan and Long Island that had done astonishingly well. The dealer, founded in the 1800s, had a long history. What, for most of its existence, had been a grimy little New York paint operation, became a well-oiled money machine by the early 2000s. Indeed, by 2005, with only a handful of often tiny, nondescript stores, the business was closing in on $100 million in sales. Its performance was nothing short of amazing.
The paint company's president was making the point to me that this particular dealer had been especially skillful in developing its business. He pointed to several innovations that he felt had largely fueled the dealer's success: modifications to its stores, new displays and new methods of selling, etcetera. The dealer was, in the president's estimation, a retail genius. At this point I (perhaps wrongly) interjected, countering that in addition to all the sensible and well-executed steps the dealer and his staff had taken with their business, they'd also gotten extremely lucky. I offered that given the unprecedented social and economic conditions of the late twentieth century, it would, in fact, have been very difficult for the dealer not to succeed. Being located in New York, I added, only helped to amplify the dealer's gains. All this was not to say that the dealer couldn't have failed along the way—some of its competitors certainly had. However, all other things being equal, the deck was so tremendously stacked in the paint dealer's favor that, short of doing something really stupid, it couldn't lose. Its success, I maintained, was ultimately as much a product of fortunate circumstance as it was prescience or extraordinary skill.
In that instant, it was as if all the air in the room had been suddenly sucked out. The president was very obviously disturbed that I would suggest that dumb luck and not superior business savvy could be at the heart of his top retailer's outstanding success. “How could you suggest such a thing?” he asked, with a look in his eyes that said, “I hope you choke on your salad!” Clearly he took my comments as an insinuation that the last few decades in business had been some sort of cake-walk! It was as though he believed I was demeaning the business and financial achievements of an entire generation—my own included!
And he was absolutely right.
Fast-forward . . .
In September 2010, the U.S. National Bureau of Economic Research stated that the “recession,” which this august body declared officially over in June of that year, was indeed the longest on record since World War II. Although history books will record its official duration as two years, it has really been almost six years since the show began, and it's clearly not over yet. Let's put that into perspective. If you had a child who was 12 when the shit hit the fan, he or she is now just about old enough to vote. Barack Obama was an Illinois senator when Wall Street crumbled. He's now (as I write this) preparing to begin his second term as president—and still struggling to right the economic situation. Since 2009, the retail industry in particular has been on what has become a week-to-week roller-coaster ride of global economic upset, from anemic domestic consumer demand to the black hole that is the European debt crisis to clear signs that the once-unstoppable economic force of China is now indeed weakening (albeit to what are still enviable levels of growth). Every week it seems that there's a new economic, technological or social headwind pushing retail off course. The consumer economy we knew in North America has become like a patient on life support, with analysts, retailers and brands all gathered at its bedside searching for any sign of life—the blink of an eye, the twitch of a finger, anything! Monthly industry results have become as ominous as an EKG, showing a faint and erratic heartbeat, fluctuating between signs of hope and despair.
Perhaps most troubling is that many in the retail industry still appear to be holding out for a clean recovery—a point at which they can simply dust themselves off and get back to business as usual. In fact, I often hear executives commenting on their business in terms of whether it appears to be “coming back” or “not coming back.” But the question that most seem unable to answer is: Coming back to what? What are we hoping to return to? Far from projecting the future of their businesses, many of the corporate leadership teams that I speak to have yet to even fully come to an agreement on what exactly caused this disaster in the first place. It's as though they were flying along the highway enjoying the scenery, when all of a sudden they crashed into something! The problem is that they had no idea what they hit or how much damage was done; they just knew that now something was terribly wrong. And their real troubles started when, instead of pulling over to properly assess the wreckage, they just carried on, trying to get back up to speed. The trouble being, of course, that they couldn't.
The unsettling truth is that the comeback, which many are hoping for, will never happen. Just as the Spanish explorer Hernán Cortés scuttled his ships upon arriving in Mexico, we too are stuck in this strange, foreign consumer landscape. There's no going back and we'd better start learning how to deal with it. The economic, social and technological change we're experiencing now is not a mere recession but rather the beginning of something entirely new and uncharted. Call it the new normal, call it, as author Brian Solis put it, “the end of business as usual,” call it whatever you want, but know that it is not going to go away. In fact, the current economic event has only been the catalyst for other, deeper changes in consumer behavior, many of which likely would have occurred anyway, but were hastened along and significantly compounded by the economic downturn. This goes much deeper than being a recession—this is indeed, as General Electric's (GE's) Jeff Immelt said, a complete “emotional, social, economic reset.”1 It is a reset of our entire consumer economy. Perhaps the only way to fully understand this is by trying to answer a few simple questions. They are:
How, in less than 34 years, did a local Atlanta lumber store, called the Home Depot become a global chain of over 3,000 locations with an average store size of 100,000 square feet (in total, 300 million square feet of hardware)?How did Best Buy, a Minnesota electronics retailer go from selling one million dollars' worth of goods in 1970 to over a billion in 1992, and then experience a sharp rise in sales to $16.55 billion in 2010?How, in 50 short years, did Sam Walton's five-and-dime store grow to become larger than the economy of Sweden and employ more people than the entire population of Paris?How was it exactly that these retailers and countless others experienced such unimaginable growth in such a short period of time? How did they grow so exponentially when the overall rate of economic growth in the United States since 1946 has been between 3 percent and 3.5 percent? Perhaps if we understand precisely why that happened in the first place, it will give us some insight into why it's coming to an abrupt end and why it simply can't happen again.
But first, humor me. Take a moment, close your eyes and think about your own business, regardless of what business you're in. What if I told you that I could grant you two things? For starters, I could deliver to you a steady and ever-growing stream of customers, all of whom have better earning potential than your current customers. Secondly, I could promise you that the needs and preferences of these customers would be narrow enough in breadth that you could satisfy them with a fairly tight assortment of goods and services. How would that be? Lots of new customers, all of whom want basically the same narrow selection? Of course, there isn't a business on earth that wouldn't kill for those sorts of optimal conditions. But that's the thing: if you were in retail in the 1960s, you didn't have to kill anyone. You had these exact circumstances delivered to you—by the stork!
Where Were You in '62?
In early 2012, I got a call from Advertising Age magazine. The editors were doing a special edition of the magazine commemorating the 50th anniversary of Kmart, Walmart, Kohl's and Target. It seems that each of these brands began life in 1962, and the editor wanted to know if I could contribute a piece projecting what the next 50 years might hold for them and for the big-box retail format in general.
I couldn't help being struck by the fact that four of America's most formidable discount department stores all happened to share a 1962 birth date. Was this just mere coincidence? I wondered. Of course, it was no mystery that the baby boom was a driving force behind retail growth. If these brands had had their respective starts at various points throughout the decade, it wouldn't have been a surprise at all. But they all came about in exactly the sameyear! I wondered what was so special about that particular year that it spawned these four behemoth retailers—one of whom (Walmart) became the world's largest. What was it exactly about 1962 that was so damn good?
To satisfy my curiosity, I began exploring the date of origin for other brands from the same era. Here's where it gets interesting. My research proceeded like the plot of a detective novel. The more I investigated, the more suspects steadily began surfacing—brands that were also tied to the same 1962 date of origin. The year, it seemed, was significant not only to department stores, but to merchants of all categories and formats. And when I expanded the search to include the period from 1961 to 1969, the list became a veritable who's who of consumer brands and chains across just about every category of goods and services imaginable, and included names from around the world! Here are only some of the more notable brands I found:
Arthur Treacher's Fish and Chips (1969)B&Q (UK) (1969)Bank of America Home Loans (1969)Best Buy (1966)Calvin Klein (1968)Crate and Barrel (1962)Frito-Lay (1961)Gap (1969)Home Hardware (1964)Hyundai (1967)JanSport (1967)K-Swiss (1966)K-tel (1968)Lands' End (1963)Limited Brands (1963)Little Tikes (1969)Long John Silver's (1969)Mac's Convenience Stores (1962)Mary Kay (1963)MasterCard (1966)Norwegian Cruise Line (1966)Peet's Coffee & Tea (1966)PepsiCo (1965)Petco (1965)Pier 1 Imports (1962)Princess Cruises (1965)Rite Aid (1962)Roy Rogers Restaurants (1968)Safeway (UK) (1962)Sesame Street (1969)Six Flags Over Texas (1961)The Children's Place (1969)The North Face (1966)Toll Brothers (1967)TOPS Markets (1962)Topshop (1964)Vans (1966)Wendy's Old Fashioned Hamburgers (1969)Woolco (1962)Yves Saint Laurent (1962)I discovered that even businesses like McDonald's, founded in the late 1940s, experienced their most astonishing growth from 1962 onward. In fact, 1963 saw the chain's inception of clown mascot Ronald McDonald, an idea credited to McDonald's owner Ray Kroc, who had purchased the company one year earlier from the McDonald brothers. You might wonder, why incorporate a clown as your mascot? And why the early 1960s connection again? As I would find out, the answer is simple mathematics.
Click here to watch McDonald's first-ever TV commercial with Ronald McDonald here. Warning: It's a little weird!More! And More! And More!
David Foot and Daniel Stoffman's seminal 1996 book Boom, Bust & Echo put into crisp focus the impact that baby boomers had and would have on our economy. There isn't a business in North America that hasn't in some way been influenced by what was an absolutely unprecedented wave of population growth. Although the timeline is sometimes debated, most agree that the baby boom truly began in 1946 and lasted until 1964. To put the magnitude of the boom into perspective, in the years following World War II, mothers experienced fertility rates that were up to 30 percent higher than they were before the war began—a mind-boggling increase, and one that would ultimately fuel economic growth for many years to come. What fewer people might realize, however, is that the actual peak year for the live birth number in the United States was in fact 1957—11 years after the beginning of the boom. It was only after a strong surge in live birth numbers in 1947, and a subsequent drop until 1950, that the birth rate began steadily increasing in 1951, hitting an all-time high in 1957. From 1957 to 1961 the rate essentially plateaued and then began to decline again around 1962.
Source: Bureau of Labor Statistics, U.S. census data
No one could have known it at the time, but it was during these unusually strong birth years (1951 to 1957) that the foundation of seemingly boundless opportunity was being laid for retailers and brands. Wages were increasing, jobs were secure and American families were hungry for all the trappings of one of the nation's most embedded cultural paradigms: the middle-class life. In each of those seven years, the number of live births escalated well above the norm, and, as you'd expect, the impact on businesses in every category was profound! By 1962, the challenge for retail was simply keeping up with excess demand. This massive initial swell of baby boomers were now between 5 and 16 years old, and by virtue of their sheer numbers, needed more of everything: more shirts, shoes and bikes; more trips to Disneyland; more cheeseburgers; and more cartoons. More! More! More!
And more was precisely what they got. Malls and strip plazas popped up like weeds in towns across America. In fact, between 1960 and 1970 more than 8,000 malls were built! That is double the pace of development set through the 1950s. Then, with the advent of temperature-controlled malls and nighttime shopping, Americans could shop whenever they liked in complete comfort. Malls became increasingly larger, evolving to become two and three stories in an effort to meet the needs of an ever-expanding universe of merchants who were rushing to serve armies of consumers. The retail industry as a whole went into a maniacal state of overdrive to accommodate the boom in population and prosperity.2
The explosive pace of development continued for decades. And as this crescendo of the boom passed through the economy, the only things that changed from one decade to the next were the categories of products and services that were created to satiate the demands of the baby boomer children as they grew into young adults. You didn't have to be a marketing guru or operational genius to do well under these circumstances. With a reasonably convenient store location and a good supply of decent products, you could make money. If you added some business savvy and a strong work ethic into the mix, you could make a fortune—and many did! As Philip Kotler points out in his book The Principles of Marketing, as a result of the boom “Levi-Strauss & Co. and other jeans makers experienced heady 10–15 per cent annual sales growth [through the 1960s and 1970s], with little or no strategic or marketing planning effort. Selling jeans was easy—Levi concentrated on simply trying to make enough jeans to satisfy a seemingly insatiable market.”
There was no question that by 1962 a tipping point had been reached. The surf was up on what was the largest single wave of population growth in U.S. history, and brands like Walmart, Kmart, Kohl's and Target grabbed their boards!
Chocolate or Vanilla?
If the explosion in the consumer population wasn't cause enough for celebration, these new consumers also happened to share remarkably similar tastes and preferences. They basically liked the same stuff! Of course there may have been nuances here and there to meet circumstances of geography and income, but, broadly speaking, consumers were extremely similar in lifestyle, family composition and ethnic background. They were, on balance, white, middle-class children from two-parent, single-income homes.
