Tagged : psychology

“We’ve lost our tolerance for complexity”

Because of the Internet and big-box stores, we get access to a lot of information, products and services, thus giving us more choice and freedom. While this sounds great, it isn’t always. Since we have more choice, choosing anything gets more difficult. A lot of complexity is added.

Last week Ron Johnson presented the new retail concept for JC Penney, a large department store. He said shoppers are done with wading through “an endless sea of racks,” which he believes is a larger industry trend. “In a world where the product we want is just a key-word search away, we’ve lost our tolerance for complexity,” Johnson said.

Yesterday I read something about Visa trying to popularize electronic payments (by smartphone). The report noted that “Visa’s hoping to make itself the go-to point for this solution, so ‘handset manufacturers don’t have to deal with 26.000 banks.'”

This is interesting. So just as JC Penney wants to get rid of an endless sea of racks, Visa wants to get rid of an endless sea of banks. In both cases, they’re trying to remove complexity for it’s consumers. In case of JC Penney, it’s us, the average shopper. In case of Visa, it’s businesses.

I’m curious which endless sea of … is next, and will have its complexity removed.

“A great department store… if it was 1995”

“They toured me through some of the ‘new’ JC Penney stores. I closed my eyes and realized this is a great department store… if it was 1995.” It’s a pretty bad thing to say about a store. And it’s not just anybody who said this. No, it’s JC Penney’s own CEO, Ron Johnson.

I guess things must be really bad when your CEO says these kinds of things about your own company. This leaves me with two questions. 1) Who is this guy and 2) what should a great department store look like?

1) Who is Ron Johnson?

He’s the guy who pioneered the concept of the Apple Store and the Genius Bar at Apple. Under Johnson’s direction, Apple’s retail stores achieved a record level of growth, exceeding a billion dollars in annual sales within two years of their debut. Last year, he left Apple to join JC Penney, a US department store, as its new CEO. He wants to achieve the same with JC Penney as he did with Apple.

I think it’s safe to assume this guy knows something about business and retail. And, more importantly, he knows what to do in order to turn JC Penney into a great modern department store. That leaves us with question two.

2. What does a great department store look like?

Huge assortments and one-stop shopping – Many ‘experts’ are confident the current retail model is broken. Physical stores will be replaced by online versions. Within years, all we do is shop online. Jonson disagrees. He quickly points out people thought the same when Apple launched the Apple Store. Which turned out not to be the case.

Physical stores are still the primary way people acquire merchandise, and he thinks that will be true 50 years from now. Ron Johnson sees no reason why department stores can’t flourish. They can be people’s favorite place to shop. They’ve got all these strategic advantages like the lowest cost of real estate, exceptional access to merchandise and scale to create enormous marketing power. Besides, people like stores with huge assortments and one-stop shopping. It’s just the way departments stores look, their lack of imagination and the way they engage customers.

Specialty stores – When people want a great product, they visit specialty stores like H&M, Nike or Zara. Shoppers are done with wading through “an endless sea of racks.” This is not just true for JC Penney. It’s a larger industry trend. Based on research about American’s shopping habits, it’s clear that specialty stores work. “In a world where the product we want is just a key-word search away, we’ve lost our tolerance for complexity,” Johnson said.

That’s why JC Penney’s plan includes creating 100 specialty stores within the department stores. The move expands on what Penney has already done, creating store-within-a-store areas where sales per square meter are three times higher than the average of the rest of Penney. Within four years, all department stores will be completely redone.

Main street and Town Square – The sea of outdated merchandising fixtures from the 1980’s will be replaced by a hundred specialty stores, essentially creating a small town. Just like any town, this means a street is needed. And that’s exactly what Ron Jonson created when he imagined the Main Street concept. Main Street will be the aisles that guide you around the store, passing all of these specialty stores. This Main Street showcases trend-right brands and so called experiences. The comparison with a local town doesn’t stop here. In the center of the store there will be a Town Square. What will this Town Square be? That’s still a secret. All we know is that Johnson said it contained “truly innovative thinking” and will be revealed in 2013.

Just like Apple

While analysts think these changes are a “revolutionary approach to retailing” and “it will have other retailers waking up,” I think you could have seen these changes coming months ago. Because this approach to retail is essentially the same as Ron Jonson did when he pioneered the Apple Stores a decade ago. And Johnson freely admits he’s ‘stealing’ Apple’s floor plans from its retail stores.

Apple stores are split in two, Johnson explained. The “Red Zone” is where customers discover new products and the “family room” is where returning customers come to learn something new or fix their products, like the Genius Bar. This obviously is very similar to the Main Street and Town Square concept he imagined for JC Penney.

“It seems like change takes place over night, but it really doesn’t,” Johnson said. “Something I learned while at Apple is ‘Every journey begins with just one step.'”

Did you know the staircases in Apple's flagship stores are made from glass just to encourage people to climb the stairs? Why?! Apple simply wants to increase traffic to the second floor, which is traditionally lower in retail stores than the ground floor.

— This is according to Ron Johnson. He pioneered the concept of the Apple Store in 2000. In 2011 he left Apple and became CEO at JC Penney.

Apple glass staircase

Nachtwacht Night Watch Rijksmuseum Amsterdam

A museum is all about size and the right atmosphere

I took this photo in the Rijksmuseum in Amsterdam. In my view, it depicts what a museum should be. So, what are the ingredients for a great 21st century museum?

Size of the museum

Size matters. Very small or very large museums will attract most visitors. Why? These museums simply stand out. And that’s important for today’s Facebook/Twitter generation.

Size of art

Size matters. Very small or very large paintings fascinates people most. Above you’ll see the Night Watch (Dutch: Nachtwacht) by Rembrandt van Rijn. It’s 3,6 x 4,3 meters (yep, that’s huge!). These kids love it. Why? Because it’s something you can’t see at home or in a textbook. I guess it’s the same reason why people continue to watch movies in cinemas. The size of the screen is simply bigger. It’s an experience your HD tv doesn’t offer, so you’re willing to pay for it.

Famous artists

Sadly this is true. In the Rijksmuseum, more people enjoyed the paintings of Rembrandt van Rijn and it’s famous Dutch colleagues compared to paintings of lesser known artists. But I guess the same is true for other art forms like movies, books, et cetera. A famous author, director or actor simply attracts viewers/buyers more easily.

Mysteriously famous paintings

Why do people want visit the Louvre in Paris just to see the Mona Lisa? Or why do people want to see the Night Watch (Nachtwacht) in the Rijksmuseum? Because these paintings are famous. Why are these paintings famous? Because an aura of mystery surrounds these paintings. And that’s something we like. Why is it something we like? Because it’s easy to blog/Twitter/Facebook about, since everyone knows what you’re talking about.

The right atmosphere

So, what’s the right atmosphere for a museum? It depends. It’s not about long corridors with paintings anymore. People want to sit down, relax and enjoy the atmosphere. As pictured above, the Rijksmuseum offers these two kids the opportunity to sit down and enjoy the Night Watch. A day at the museum is like a day at the beach. It’s about the opportunity to escape a fast-paced lifestyle. A break. It’s not just about paintings anymore.

It’s not about modern vs. old

Some people are convinced new generations aren’t interested in old paintings anymore. In order to attract younger visitors, museums should display modern art.

Wrong!

It’s not about modern versus old art. The photo (top) proves this. In this case, the museum offered these kids the right atmosphere and a very large and mysterious painting. These kids sat down for a pretty long time. In fact, most adults already moved on. These kids didn’t. That’s why this photo depicts what a museum should be like.

History, we know, is apt to repeat itself

Why does history continue to repeat itself? And, more importantly, why don’t we learn from the past to solve our current and future problems? It’s a question I ask myself regularly but find impossible to answer.

I wrote about putting the fun back into shopping and the end of the nightclub. In both cases history could solve a problem because it already happened in the past. Nonetheless, most people (in these cases retailers and nightclub owners) fail to learn from the past. They don’t see the solution, lack courage for big changes or hope their businesses won’t be affect by, let’s say, the rise of the Internet and/or economic crisis.

Even though I know (or believe) history repeats itself, I find it surprising to read articles which date back many years, but could be written today. Here’s an example. A couple of days ago I studied the phenomenon Niketown. At a certain moment, I came across an article describing the courage Nike had to open stores during a crisis. But the author wasn’t describing today’s economic crisis. He wrote the article twenty years ago. Nonetheless, the article remains so true, even today.

Because of the many similarities between their (Niketown) situation and the situation many retailers find themselves currently in, I want to share this 1992 article from CNN Money. It’s an interesting read. And pay attention to the last paragraph. Recently, a Dutch newspaper wrote about smaller Dutch cities having trouble attracting (a large number of) shoppers. Nike shows it’s possible to attract large numbers of shoppers despite being located in a ‘remote’ or ‘less-important’ city, in their case Portland.

Nike, it seems, is on to something. ”Today’s shoppers want to be entertained,” reports Madison Riley, a retail specialist for Atlanta-based management consultants Kurt Salmon Associates. ”Niketown is theater,” says Riley, ”and for retailers, that’s a key to the future.” Niketown is putting the fun back into shopping, and that, along with a commitment to first-rate service, is why it is our [CNN Money] Store of the Year.

Nike is bold in its timing and almost unique in its positioning: it has launched the store while the retail industry is faltering — U.S. retail sales have fallen from $186 a square foot in 1980 to $161 today — and showing no signs of rebounding. Most other retailers are offering consumers no-frills, find-it- yourself outlets or lookalike, cavernous concrete warehouse clubs. As with most fancy packages, though, this one carries a pretty price.

While athletic shoes and gear are widely discounted elsewhere, Niketown customers always pay full retail price. Nothing goes on sale — ever. Niketown is designed to dazzle you into paying $100 or so for athletic shoes, $120 for a nylon running jacket and $500 or more for a total ensemble that puts you in matching socks, pants, top and sweatband. ”Niketown combines the fun of Disneyland, the museum quality of the Smithsonian and the merchandising of Ralph Lauren,” announces Gordon Thompson, the store’s 31-year-old designer, who also worked on set ideas for the 1989 movie Back to the Future II.

There are signs that other retailers are following Nike’s lead. For example, outside Minneapolis, real estate developer Melvin Simon is building what will be the biggest shopping mall in the world — a combination entertainment and shopping center dubbed the Mall of America. Simon is betting that millions of shoppers every year will be pulled in by the pizazz.

Niketown’s popularity has been overwhelming, especially considering its location. ”Portland is not exactly the crossroads of the retail world,” quips Nike chairman and founder Philip Knight, 53. In the year since the store opened, an estimated 1 million people have shopped there.

You can read the entire article here.