Local & Bespoke: Emerging Themes in Retail Series #1/4

Yours, Mine, and Ours

“Show me the money” for today’s retailers begins with “show me the micro,” a trend that embraces products and services that are made and delivered in the community they serve.  We see it in the proliferation of microbreweries (and micro-distilleries), microfinance, microgreens, and in the premium consumers willingly pay for all things locally-sourced, artisanal, small-batch, and handcrafted.

Micro-production goes hand-in-hand with the trend of personalization, which is commonly assigned to the influence of Millennials, a generation that wants things their way. Not only do Millennials want what they want, surveys tell us, they want it served-up with a social conscience, and they want to build community around the issues and products they care about. They want it to reflect their community, and they want it made-to-order: Local & Bespoke.

It’d be a mistake, however, to think of these behaviors as simply the infusion of ‘kids today’ trends.  Rather, they reflect a structural shift in the economy, pushed by new capacities of sensors, Big Data, 3D-printing, open-source design, and every-surface-a-digital-interface technologies. Businesses in every sector take note: it’s not about youth preferences, it’s about a reinvention of the business model.

The retail merchant-to-consumer model doesn’t play well in this new environment. People don’t passively consume anymore, they curate, create, and belong. Where old-economy merchants are struggling (weakening sales for department and big-box stores tell that story), retailers who have embraced a Local & Bespoke model are making huge gains.

Start-ups have the advantage of crafting a business model for the times, many of which have focused on the Bespoke function, in which the customer customizes his selection. Warby Parker (who has also adopted the TOMS buy-one-give one model of social good) is a now-famous example of this model, as are the literal made-to-measure clothes from Indochino, Bonobos, and MeUndies.  Design software makes collection of preferences easy and fun for customers, while small-batch production technologies such as 3D printing allow manufacturers to customize the finishes on any order. These design and manufacturing technologies are becoming standard practice for businesses.

The “My” version of products extends to stores too. People want ‘my’ Starbucks and Whole Foods, where the brand and quality are consistent, yet the store is also a celebration of a community’s heritage and tastes. After the high-end coffee craze of the late 90s saturated city corners around the world with coffee shops, Starbucks lost its mojo. To get it back, the company returned to the idea it’d embraced from the start: the role of being a not-home-not-work “third place” for people to relax, work, and socialize. In re-animating its core purpose around its core product, Starbucks began to create cafes for and of the communities in which they’re built.

How Starbucks achieves Local & Bespoke stores is fascinating. To design locally-relevant stores, Starbucks establishes a studio where a new store will be built, then sends designers into the community to collect all things local: stories, artifacts and materials and, critically, observations of local preferences for coffee and congregation. While the commitment to making ‘my Starbucks’ is capital-intensive, it’s also come with great rewards:  “Worldwide customer traffic at Starbucks has grown every quarter from the second quarter of 2012 to the second quarter of 2014, along with average ticket.” (The Street, 07/24/14)

Starbucks design studios are located around the globe so that our designers can fully understand the communities they serve. The mission of each designer is to create a spectacular Starbucks café experience that is steeped in the local culture and designed to reflect the unique characteristics of each neighborhood. Together, we are fully committed to our goal of creating sustainably designed, locally relevant stores that inspire and nurture the human spirit one person, one cup, and one neighborhood at a time.

Starbucks is an inspiring example of a retailer that began by (over-) installing the same store in every community then, when performance slipped, corrected course with a design strategy that invests in and expresses the distinctive character of people and place.

In conjunction with the high-level of customization and convenience—a la Warby Parker—that is expected in today’s audiences, the Local & Bespoke model is perfectly tuned to the extreme-personalization that the Internet of Things (and its sibling, Big Data) and 3D printing that is reorganizing the economy. At its core is an important distinction: Local & Bespoke doesn’t scale an innovation, rather it scales the innovation process itself.

The critical need for all organizations is to have a model that is inherently adaptive. A model that preserves a business’ purpose and assets while, at the same time, matches the dynamism in the environment with built-in agility. A model that anticipates the future while responding to right-now opportunities. (See how General Mills scaled the innovation process in Part III of Think Like a Futurist.)

http://www.starbucks.com/coffeehouse/store-design    

 

- Also posted on Capsule Design