Comment: Customisation is strangling retail
Life seemed a lot simpler when replacing a light-bulb involved choosing from six variations: 40w, 60w or 100w in either bayonet or screw cap.
Nowadays navigating the options can be quite a complicated affair with hundreds of choices. This seems reflective (pun intended) of life today when everything seems to come in myriad varieties.
Even the likes of Aldi and Lidl who have maintained very tight product ranges over the years – which has been fundamental to their competitive pricing – have been sucked in. They are engaged in proliferating ranges and increasing numbers of options, sizes and variants.
On top of increasing ranges we also have the growing phenomenon of customisation, which is making life arguably more complicated for consumers and also absolutely nightmarish for many retailers and hospitality companies who have the difficult task of managing inventories across a sprawling array of options on even the simplest of commodities.
Let’s consider Starbucks. It has continuously expanded its range of options to take in shots, foams, milk variations and weird toppings with the result that there are an incredible 383 billion different possibilities merely for a latte. Needless to say customers have been lapping it up and as many as 66% of all its drinks now sold are customised in some form or another. This is proving to be a nightmare for Starbucks as it has led to increased waiting times for customers as the baristas find the task of creating these bespoke drinks increasingly time consuming and also error prone, which further adds to wait times and waste levels.
One of the pioneers of the customisation trend is Subway that apparently boasts of the potential for 34 million (Starbucks would find that a relief!) sandwich combinations available in each of its stores when you consider the bread types, fillings, sauces and sandwich sizes etcetera. To address this ghoulish proliferation the company launched 12 chef-created sandwiches in the US during the summer that sought to reduce the reliance on its custom offer. In early tests it found that as many as 50% of diners ordered the new sandwich options, which took a load of pressure off the kitchen teams.
Despite such efforts it looks like the landscape is very much set for customisation to play an ever bigger role because younger generations have grown up with being offered a ‘menu’ they can tailor to their own unique preferences. Businesses including retailers had simply better get used to it. Millennials and Gen Zs assume it is normal to be able to customise literally everything – from food, media, music, work patterns, and even identities to suit their individual preferences. It seems that we have very much moved into a dynamic whereby whole lifestyles can be customised.
When you add in the expanded channels to market for food companies and retailers – from online, physical stores, apps, marketplaces, kiosks and vending machines – it is clear the management of inventory is becoming increasingly complicated. Customisation could be gradually strangling retail and other industries that are finding it tough to satisfy this new customers’ demands for a tailored, personalised experience.
Despite this increasingly tough backdrop there is some hope though. Consider the luxury goods industry, notably fashion, which knows how to play the game. It has largely maintained its stance of only offering incredibly tight edited ranges. The whole idea is that consumers are buying into the brand and the no-options curated stance is all part of the proposition. Not only do they manage to charge top-dollar prices but they make life significantly easier for themselves. There is much to learn from this for regular retailers who need to find the break for the runaway customisation train.