A couple of months ago, I decided to give spinning a try. I’m a runner, not a biker, but wanted to see what it was like. When I realized I needed to buy a pair of spinning shoes for a spin class three days later, I went to Google to find articles on the latest and greatest styles, and then to Amazon to read reviews and make my purchase. Twenty minutes later, I placed my order and received a confirmation that my spinning shoes would arrive two days later, which they did.
I was traveling at the time, so that shopping experience worked really well for me. Had I been in town, I might have used Google to find a store near me in Boston that carried the brand I wanted so I could try before I bought.
But I had options: lots of choices for what to buy, places to find information about what to buy, a choice in how to buy it – and an easy way to access those options and choose before my class.
FYI: Spinning is fine, but I’ll stick with running.
I tell this story not to give you a peek into my fitness likes and dislikes, but to make a point about the lawmakers’ attacks last week on Big Tech. They grilled execs from Google, Amazon and Facebook over claims of their size and power, which is said to be driving smaller companies out of business, reducing opportunities for new innovators to emerge and tilting the competitive playing field too far in their direction.
Unfortunately, caught up in the “Big Tech is bad” frenzy, they seem to be ignoring the innovations those platforms have created – all of them – which democratize the retail field of play to be more inclusive of small merchants in ways that were never before possible.
And have given consumers a lot more choices than they ever had.
Of “All-Devouring Monsters” and “Slimy Octopi”
We’ve seen this movie before.
The current complaints about Big Tech are pretty much the same as complaints that go back hundreds of years (based on the paper trail), or perhaps longer.
Claims that “all-devouring monsters” (large format grocery stores) were “destroying the little man” was the topic of a chapter in a book entitled “Fame,” published by ad executive and author Artemas Ward in 1897.
Main Street merchants banded together in the early 1890s to complain to lawmakers about the impact of department stores on their own businesses. William Leach, in his 1994 book, “Land of Desire: Merchants, Power and The Rise of a New American Culture,” cites town hall meetings in 1893 organized by groups of small merchants, who claimed that large retailers “foster tyranny across the country” to shift the balance of money and power and control their way.
Leach writes in his book that the organizers leading that charge were the specialty retailers — liquor stores, butchers, florists, jewelers, furniture stores, shoemakers — all demanding that their state legislatures levy taxes on the “octopus which has stretched out its tentacles in every direction, grasping in its slimy folds, the specialist or one-line man.”
The “octopi” were the department stores that had emerged, challenging the lock on trade and consumer choice that these “one-line men” had in their verticals in their cities and towns. Their mission was to inflict legislative pain on the big guys in an effort to artificially protect their flanks with the consumer.
In those days, Main Street USA was quite literally the butcher, the baker and the candlestick maker. Consumers’ choices were limited to what they carried, which was directly related to what they could afford to buy, and what they had room to display in their shops. If a consumer needed green and all the store owner had was yellow, it was yellow or nothing at all.
For those merchants, life and business was good. Competition in other cities and towns was too far away to be practical, so consumers didn’t complain — they took yellow instead of green and shopped at their stores.
Until they didn’t.
The department stores that emerged in the later part of the 19th century changed the playing field in more ways than one. They gave consumers choice — millions of square feet of products, prices and a constantly changing selection. Consumers liked what they saw — and wanted even more.
By the turn of the century, department stores had become the cornerstones of entirely new ecosystems that drove consumer consumption to record levels that, in turn, created new manufacturing, wholesale and supply chain opportunities for producers eager to capitalize on that demand.
Margaret Mead’s mother, Emily Fogg Mead, wrote in 1901 that department stores and the consumer’s thirst for consumption drove the invention of entirely new products. She called out “pickle and olive forks, berry and mustard spoons, sugar spoons” as examples of product innovations that spanned every category of consumer spend, from food to home goods to clothing – innovations that would only expand, because the consumer wanted more.
Ad agencies emerged and flourished to help department stores promote their products – and the value of those products. Artists were employed to create posters for store windows and train stations. Little known fact: Leach writes in his book that Georgia O’Keefe made a tidy sum in 1927 by painting posters that graced department store walls and windows.
Newspaper circulation increased because of the ad revenue created by stores that wanted to get their messages in front of those eyeballs, which drove feet into those stores and boosted purchases by consumers. Transportation options expanded and flourished over the years, making it easier for consumers to get to those stores. Home delivery gave consumers the option to buy and arrange delivery for the same day.
In addition to a vast array of new products, department stores eventually offered something else of value to the consumer: a climate-controlled shopping environment.
Even 119 years ago, merchants were laser-focused on expanding the number of days and hours for consumers to shop by eliminating frictions that got in the way. Making stores warmer in the winter and cooler in the summer created a more comfortable environment for consumers to visit and shop. Without air conditioning at home, stores not only became a place for consumers to buy things, but also a comfortable place for shoppers to hang out on hot summer days.
Department stores as places to shop, for producers to show their wares and for small businesses to grow their presence, became so popular with consumers that the legislative measures targeting their very existence gradually eased. Taxes and other measures put in place years earlier were even rolled back.
It seems that no lawmaker wanted to go home to the lady of the house to explain why his actions were the ones that blew up the shopping experience that she found both desirable and efficient.
After all, hell hath no fury like a women’s scorn – particularly when it gets in the way of how she shops and what she buys.
Even 100 years later.
Stranger Things and Retail
The setting for season three of the Netflix blockbuster Stranger Things is the Starcourt Mall. The season takes place in the year 1985 – 10 years before eCommerce and Amazon, and seven years before today’s 27-year-old millennials were born.
For many of the more than 40 million people who have watched the show so far, it also serves as a bit of a history lesson in the evolution of modern-day shopping.
Starcourt Mall was probably a blast from the past for some, evoking fond remembrances of having Mom or Dad drop them off at the local mall to hang out on evenings and weekends. That’s what teenagers did 34 years ago for fun.
It was also a look, maybe for the first time for some, at what was then a real innovation in shopping. Malls weren’t invented in the 1980s, but it was certainly when they hit their stride.
The 1980s were regarded as the glory days of the shopping mall – the department store concept on steroids with a suburban twist, as consumers moved out of cities and into the ‘burbs. Consumers could make one trip, park for free near the mall entrance and shop at dozens of stores. Department stores became mall anchors – and the mall became the one place to find lots of stores and product options.
In addition to providing choice, malls also eliminated the friction in accessing that choice. Before malls and lots of stores available for the searching, there was the Yellow Pages.
Instead of having to find and then call stores from the Yellow Pages, hoping that someone would pick up the phone and that the person on the other end could confirm whether a product was available, it was far more efficient to hop in the car and drive to the mall. Odds were the consumer would find something to buy.
Between 1956 and 2005, 1,500 malls were built in the U.S. The New York Times reported that by 1992, there were 48 malls within a 90-minute drive of Times Square.
Malls also became the magnet for Main Street merchants to, again, protest the competitive hit to their business that their presence created.
In season three of Stranger Things, there is one scene where angry mobs of merchants are protesting in front of City Hall because Main Street businesses in Hawkins, Indiana are being shuttered due to this new shopping innovation. One store in particular – which employs one of the show’s main characters, Winona Rider – is on life support because of the mall … the same mall where she takes her kids to hang out and shop (and who ultimately save it from the Mind Flayer).
For still others, like me, Starcourt Mall was a reminder of how much less friction-filled today’s shopping experience is, and how much more choice consumers have about what to buy and from whom – and when those purchases can be made. (Of course, there are some serious issues with the Starcourt Mall specifically, but I don’t want to spoil the season for those who haven’t yet binged.)
And there are the opportunities for participants in the commerce ecosystem that Big Tech innovations have created.
The Real Retail Competition Threat
Consumers can, like I did for my spinning shoes, shop anywhere – even at 37,000 feet – and have products waiting for them when they get back home.
Consumers can search on Google for products “near me” and find the store address, hours and websites to buy from.
Small businesses can target their advertising messages on Google and Facebook down to a level of detail that increases the odds that someone with an interest in their product or service will click.
Ordering from Amazon now introduces consumers to products from third-party sellers they’d otherwise never find – 58 percent of Amazon’s sales are now from these sellers.
Marketplaces of all types aggregate merchants around interests, improving the odds they will be found. Brands today don’t even need stores – they can now go directly to the consumer, on channels like Instagram. Delivery aggregators give local restaurants a place and a chance to be discovered, with the added convenience of delivery to the place where the consumer wants to eat their food.
Hosted shopping carts and commerce providers democratize the shopping and payments experience for small sellers, letting them look and play big and giving them the best-of-all-worlds experience: the ability to sell in their own storefronts and on their own websites, and to integrate with relevant marketplaces like Amazon with a single POS experience. That means small merchants now have three times as many chances to reach consumers in whatever context they may be looking to buy – with an added dose of operational efficiency.
Consumers have a choice in what they use to pay for those purchases, and suppliers have new payments and credit innovations to accelerate receivables and cash flow.
In my mind, that should make the competition – and therefore the conversation – not about Big Tech or small merchants, but about a commitment on the part of every merchant to deliver consumer choice.
Changing The Conversation
Looking back, every inflection point in retail has stemmed from the new guard doing more to deliver consumer choice than to protect a retail environment that can’t.
Card networks gave consumers a better way to pay at all of the merchants where they wanted to shop. Department stores offered more choice than shopping up and down Main Street. Malls and superstores in the ‘burbs, like Walmart, gave consumers more options about what to buy in a more convenient location.
And now Big Tech is doing the same thing: creating robust commerce ecosystems that help merchants of all sizes and types move past the status quo to where and how consumers want to shop.
Because that’s what consumers want to do.
Sometimes that means consumers will go to the physical store, sometimes that means transacting entirely online – and, increasingly, it means a blend of the two.
But it’s always influenced by the consumer’s love of apps, their 24/7/365 use of connected devices and the expectation of real-time access to the products, merchants and payment methods made possible by those Big Tech platforms.
It’s hard for anyone – even for lots of lawmakers, I would imagine – to conclude that Big Tech is so bad and has stifled so much competition, considering that we all seem to have a lot more choices, hence more competition, for our daily spending. Many more businesses can compete for my spending as a result of these global marketplaces and advertising platforms, which can use targeted data to serve up ads for things that I am more likely to buy.
And it isn’t just my spinning shoes.
For much of what I buy now, I seem to have more choices, and more competitors chasing my dollar than I ever did. I’m not tied to local physical merchants who didn’t give me that choice, and required an investment of time that I don’t always have to shop in their stores.
Besides, what lawmakers want to admit to their constituents – much less the most important constituents at home – that they were the ones who threw sands in the wheels of their shopping experience?
Especially since the consumer seems to be pretty good about doing that all on their own when something they like better comes along.