In 1960, Theodore Levitt wrote “Marketing Myopia” for the Harvard Business Review. In it, he dissected the decline of the railroad industry, placing the blame fully on the industry itself, for not having the vision to see the customer problem they were truly solving: people want to move themselves or products from one place to another cheaply and fast and as safely as possible.
Railroads weren’t in the railroad business. They were in the transportation business. And because they didn’t define themselves that way, they completely missed the rise of trucking, and have pretty much never recovered from that.
Retail is the modern-day equivalent of the 1960’s railroad industry. The industry has defined itself in the business of “selling stuff”. You buy low, you sell high, and you deliver the goods as efficiently as possible in between. I’ve heard retailers define themselves this way, and I’ve defined it that way myself. But that is too narrow of a definition, and in fact, the digital transformation of retail is rapidly sucking any differentiation out of “selling stuff” and turning the whole process into a commodity. It is this disruption that is causing such angst for stores. The only way out of it is not for retailers to embrace digital – that’s going to be ante. The only way out is to change the game – redefine their market.
I could spend the whole rest of this article talking about the commoditization of “selling stuff.” We could talk about the decline of the homemaker and rise of two-income families, which changed the role of one major household player from “the acquirer of stuff” to someone who now has a two-hour commute every day and no time to waste trolling a grocery store. Even modern-day homemakers don’t have time to waste on shopping – they’re too busy shuttling their kids from one enrichment activity to another.
We could talk about the declining importance of the store as the place to “find stuff”. That decline has come from two sides. On one side, digital has supplanted the store as a resource for information about the things people want to buy. Where the value equation once was one where retailers enticed consumers to their stores (usually with the proposition “I have the best stuff”), and then had their maximum opportunity to convince consumers to buy the products they have on the shelf, that process is now mostly obsolete. Consumers research online, decide what products they want, and then decide where to buy them from. Even the grocery basket, once immune to this process, is feeling the impact.
On the other side, it increasingly does not matter where the product is physically located. The most important physical location is where the consumer wants the product to be. That has always been the case, but when consumers had the time – when it was their job, basically – to find the products they needed and figure out the best way to get them to their homes, they owned the responsibility…