E G R O P O N T E Message: 60 Date: 07.1.98 From: <nicholas@media.mit.edu> To: <lr@wired.com> Subject:

The Future of Retail

You enter a store. You see something you like. You write down the product name and manufacturer. You go home and order it over the Internet. As a result, you didn't have to carry it, you probably got a better price, and you may have avoided sales tax.

The store in this scenario is merely a showroom. Have I just described the exception to tomorrow's retail, or the rule?

Beyond indoor advertising
Already today, going to a bookstore may be the worst method of buying a particular book. All the elements are against you: weather, time, energy, price, not to mention availability. Instead, by logging on to, say, Amazon.com (my favorite), you can order the book in less time than it would take to call and see if your local bookseller has it in stock.

Bookstores, of course, are no longer just for buying books. They are for browsing, meeting people, having coffee, and engaging in the serendipity of life - bumping into the unexpected. The real "product" is not mere paper and ink, but a place to conduct educational and social entertainment.

This logic clearly extends to many aspects of shopping for kitchenware, clothing, specialty foods - more or less anything for which there is a niche or mainstream channel for direct marketing or catalog sales. Retailers beware: You must offer all sorts of value beyond the literal merchandise. This goes for Wal-Mart as well - being big will not save you.

Rightfully chicken
For the most part, manufacturers of toys, cars, clothes, et cetera, seem less than eager to advocate that you disintermediate the middleman and instead buy directly from them. Though that would be more profitable for the producer and less expensive for the consumer, it would also alienate the single largest outlet for toys, cars, clothes, et cetera - the retailer.

Still, consumers will inevitably provide the pressure for change. They will band together to buy cars as a fleet and at fleet prices. They'll organize by church group to buy Barbies directly from Mattel. In the digital world, consumers hold almost all the power, which is a nice change. What consumers don't do, entrepreneurs will, with megastores, auctions, and swap meets - all in cyberspace. And they will do so without paying any rent to anybody.

Thought for food
The most challenging and challenged form of retail is the food supermarket (there are, of course, several well-known and successful cyber services in the US and UK; check out, for one, www.groceries-online.com/).

A number of things make grocery shopping so challenging. The next time you leave a supermarket, just take a look at your shopping cart and imagine those items coming to your home one by one. It would be both a traffic jam and a logistical nightmare, not to mention the clamor of the doorbell constantly ringing.

At the same time, home delivery of all sorts of things is far from a historical oddity. When I was young, my mother would call the grocery store and say what she wanted. It would be delivered in minutes. So what is new?

What has changed is that a great many of the staples you buy at the supermarket are now available elsewhere. And in the digital world, you may find considerable advantage in buying some of those staples directly from the manufacturer. This applies equally well to Pampers and Pabst Blue Ribbon.

Midnight express
The catch is, you're never home. More important, you are least likely to be home when packages are most likely to be delivered - that is, daytime.

Among other things, we need to rethink the concept of a mailbox, originally conceived for letters, themselves a dying breed (other than bills). The mailbox of tomorrow ought to be a cubic yard, with the potential for refrigeration. Various schemes might further protect goods from the errant courier and provide receipts as needed.

In terms of delivery, the empty streets of nighttime can be used to transport all the things that people buy over the Net. That is, after all, how your newspaper is delivered. And there is no reason for the morning news not to be accompanied by fresh bagels - media companies should note the opportunity to cook up a cobranded product called "The Daily Bread."

Global cottage industries
While retail is indeed at risk of being disintermediated, the products may start coming from places other than giant manufacturers or distributors. I expect most people to avoid home-brewed alternatives to brand-name laundry detergent, medical products like estrogen, or children's car seats.

On the other hand, most of us would probably prefer homemade jam, bread, and soup, not to mention family-made wines and olive oils. The concept of merchant and consumer will change. We'll see a lot more peer-to peer buying and selling.

Even the most earthbound occupations will be affected. Today, garden supply Web sites are selling direct to consumers with the help of express delivery (see, for instance, www.garden.com/). Of course, the ultimate form of green-thumb disintermediation may be for a cow to poop into a preaddressed FedEx bag. But that still may be pushing the envelope.

The shopping experience
What will finally save retail is the shopping experience itself. This will certainly include architecturally interesting settings with every salesperson a Cindy Crawford, a theater- or museum-like experience that makes you feel special. On the other hand, it might mean a bargain basement of sale items whose prices are hard to believe and even harder to find, a game of hunting and gathering, where buying is like catching a fish. Or it could just be a place people want to be, to see and be seen, to compensate for the virtual and OD on the real - to buy something, maybe, or maybe not.

Another kind of retail, however, is truly about to end - the type where you can't park, the checkout lines are interminable, the staff is disagreeable, and the product has always run out. Owners of such operations should be advised: The digerati don't need you any longer. And very soon everybody will be digital.

Next: Contraintuitive

[Copyright 1998, WIRED Ventures Ltd. All Rights Reserved. Issue 6.07, July 1998.]