Commoditization, is it happening to you?

28 11 2007

“We are living in an era where there are too many retailers serving too few customers and where there is no longer any brand loyalty or retail loyalty” Kevin Burke, President/CEO. The American Apparel and Footwear Association.

From this comment by Mr. Burke I believe the apparel and footwear industries are in the midst of an important struggle, to move away from their current status of a commodity business.

The winners will be those with strong design, distinct brand, and smart developed distribution systems. The same can be said for almost any current industry.

Too many retailers and points of sale? I doubt it. What I interpret from this comment is that there is intense competition between retailers, and instead of seeking exclusivity or innovation to attract and maintain customers, they are using the oldest,simplest trick known….lowering product prices and with it, the quality of the shopping experience.

It is a classic example of commoditization.

Manufacturers are also to blame. The rush to sell their product to high volume buyers insures loss of control of the marketing and retail channels.

The rush to sell everywhere, to everyone, at the same time allows and promotes price competition and price wars between the various manufacturers and retailers.

Too few customers? The real problem is overproduction. Current manufacturing focuses on high volume production and this encourages the standardization of product. The desire to reduce fixed costs drives manufacturers to seek out cheap world labor, increase productivity through mechanization (which encourages product standardization) and the outcome is a mountain of finished products, created all over the world, that are indistinguishable from one another.

Commodities. Most apparel and footwear companies focus on low cost, high volume manufacturing, they sell to wholesalers or retailers that also focus on volume. So suddenly branded products can be found in department stores, boutiques, grocery stores, flea markets and the Internet. The product is everywhere, consumers have learned that one should just look for it where the price is lowest.

This also makes it easier to pirate and sell a product to a growing network of sales outlets focused on offering a brand name for less.

No brand or retail loyalty?
If there is no customer loyalty (read as no perceived advantage to shopping with you versus the competition), and loyalty is important for continued growth, profit and success, then it’s time for a serious reevaluation of how one is doing business.

How can one stand out from the crowd, do something different and unique, and create a sense of exclusivity and prestige for the consumer?

This is the future.

Related Links

The easy way

10 top reasons for poor customer service and their solutions

Give this away

Are you listening to what the customer needs?

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Can we allow ourselves to work and enjoy it?

5 06 2007

 I’d like to work with Tim Smit.

I determined that halfway through an article in the BBC News article by Peter Day entitled  Tim Smit’s Monkey Business

I think it would be quite an experience.

A supportive and demanding environment, requiring the daily application of personal and professional skills.

Optimal results would be demanded, incompetence not tolerated and everyone would be focused on achieving positive and focused results.

Creativity and innovation are sought out and rewarded.

It might even be fun.  In fact I’m sure it would be.

Fun and rewarding in the sense that the people working with Tim are doing what they want do to, have the skills to do it, they work with people they like, and are focused on achieving something, together.

That’s a great definition of my ideal workplace.

Take a look at some of his management “rules” for his current project, The Eden Project

  •  Wants to work with people he likes, interviewers must provide a 10 minute performance of something entertaining
  •  Seeks extroverts with opinions, not seeking “yes men”
  •  Job interviews take two days and include potential subordinates
  •  Don’t make important decisions at work, do it over dinner or a glass of wine when you are relaxed and more “human”
  • Take responsibility for your job and actions, don’t pass it on to others
  • Once a year make dinner for your co-workers, read a book you don’t want to read and report on it, forced activity in order to broaden your horizons

We focus too much on specific business skill sets and abilities in business and management as a “guarantee for success”.

We forget that we are human beings, and work and interact with other human beings.

Business is all about participating in a community.

If you, your product or your service is wanted and desired by the community, they purchase it, a profit is probably generated.

We are successful.

Is there anyone who comes to work and doesn’t think they have to have the skills to do their job, to interact with others as a team, and be productive?

Do we need to hammer this into our people any more?

A little fresh air, creativity and innovation is in order.

Time to create a community and social organization, with the goal of creating a product or service.

Creating an active, open environment where ideas can be developed, forcing ourselves to learn new skills, having a relationship with those around us,  great ideas.

Keep on eye on Mr. Smit, his project and his ideas.

Some sort of financial, social or commercial success for his project will turn his ideas loose upon us and maybe change the world.

I can hardly wait.

Related Links

Tim Smit’s Monkey Business 

The Eden Project 

BBC Four Profile – Tim Smit

Successful Managers should be breaking the rules

Weird ideas that work 

Are you on the right team?