The following is adapted from Localmotion by Alex Barseghian.
The consumer marketplace has undergone a massive shift since the banking crisis in 2008. Maybe you’ve noticed it or even experienced it in your own life. Leery of large corporations, consumers have moved away from big box stores and started shopping locally more often.
What they’ve discovered in their own backyard is a whole new world of craftsmanship, style, flavor, and quality. Thanks to smartphones, “local” isn’t even limited by proximity.
In the broadest sense, “locally sourced” products can include coffee grown by hilltop farmers in Ecuador and handcrafted pottery made in New Mexico. Whether buyer or seller, the local, economic landscape puts the individual front and center.
There’s nothing new about handmade goods. Artisanship has been the way of the world for centuries. It’s only relatively recently that society shifted from local, individualized crafts to an industrialized, factory system of production and distribution.
But now, technology has turned the old paradigm on its head. Mass production has reached its limits because individuals want something different, and technology is making it possible.
In this article, we’ll look at the progression of this “localmotion” trend and how businesses can adapt to changing consumer preferences while still making a profit.
Three phases of personalization
The change toward local didn’t happen overnight. Instead, it unfolded in three phases:
- In the first phase, companies are still embracing the old ways of doing things with products that are mass produced and mass marketed.
- The second phase is about personalization and the creation of a brand experience.
- The third phase is “deep local.” It’s the Cheers model, kind of like the old corner bar. The consumer is known by name, as are his or her preferences. Companies emphasize both the personal and local artisanship in their products and services.
Let’s look at an example. Gillette, which for decades operated as a first phase consumer brand, has lost significant market share in recent years to online competitors like Dollar Shave Club and Harry’s, which are second phase brands. Both have individualized shaving by selling blades at varying subscription levels. You’re not paying for mass market ads and sponsorships; you’re just paying for replacement blades, delivered to your door on a schedule you choose.
Dollar Shave Club and Harry’s brings shaving closer to home with personalized orders, but is there an even closer, more personal shave available from a phase three brand?
A more up-close shave takes us back to our roots in the old-time barbershop. It’s where “local” started in Main Street storefronts with barber poles spinning outside.
Ted Baker Grooming is a British fashion brand that’s bringing the shaving experience full circle. They are contemporary, slightly upscale, and at the forefront of personalization.
Ted Baker’s shops exude a very cool atmosphere with highly trained, edgy barbers. The company’s marketing concept is taken from the Turkish tradition of heated towels and close shaves, further adapted to individual needs and hair types. They know every beard is different and deliver an authentic, personal experience for every customer.
Ted Baker Grooming exemplifies phase three brands bring to the table.
How businesses can personalize the customer experience
The move toward local shopping places increased pressure on businesses to offer deeper personalization of goods and services. Company decision making, product development, and marketing must shift to emphasize local and regional needs and tastes. To better meet personal needs, retailers should position their stores as local hubs catering to individual preferences.
This is the exact strategy Ted Baker Grooming used to stand out from its competitors.
Whole Foods is currently going through the transition from a phase two a phrase three company. As a health food chain, Whole Foods learned early on to embrace locally sourced products. They tapped a niche market and helped bring what is healthy and important back to the food industry by calling attention to their hormone-free dairy and meat products; their organic fruits, vegetables, and grains; and their specialty goat cheese from the Netherlands.
Now owned by Amazon, Whole Foods is making a push to increasingly shift their identity to more local and regional products. To bring it home, they’ll be introducing in-store kiosks where local vendors will sell goods and services.
At Whole Foods, you’ll meet local farmers selling greenhouse tomatoes, winter greens, and field corn. You’ll find mini spas and tattoo kiosks, a local mom who makes artisanal soap in her kitchen. Whole Foods will not only be a destination for groceries but also a place for interacting with local artisans.
Technology can help businesses meet the individual needs of their customers. We saw how Dollar Shave Club and Harry’s used the internet to offer personalized blade prices.
Starbucks provides another great example. Instead of using a middleman to sell its gift cards, Starbucks sells its cards directly and applies them to its loyalty program. It wants to connect its customer to the brand and track those cards to gain a better understanding of their customers’ buying habits, their drink orders, and their likes and tastes. By better understanding the individual, the company can deepen and personalize the Starbucks experience.
Coca-Cola, a brand that could’ve ignored personalization altogether, increased sales by 2% with its #shareacoke promotion and the personalized Coke bottles it offered thirsty customers.
From these examples, we see a few lessons emerge for businesses to consider:
- Can you transform your business into a hotspot that caters to local customers?
- Can you leverage new technology to offer customers a better experience?
- Can you make a small change to your offerings to create something unique?
Customers like to shop local because it gives back to artisans and business owners in their own backyard, but also because being closer to the seller offers a higher level of personalization. But that doesn’t mean businesses have to make every product by hand to satisfy this need.
Opportunities exist for businesses to shift their focus or utilize technology in a way that makes small but meaningful personalization possible, further enhancing the customer experience.
For more advice on the new consumer model, you can find Localmotion on Amazon.
Alex Barseghian founded Samba Days, a technology platform connecting localized businesses to the mass markets, before joining Blackhawk-Americas as VP of Original Content, where he leads development of a new global technology platform and oversees $1B in revenue to integrate digital technology for systems such as Apple Pay and Samsung Pay.