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.
Tagged : technology
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.
The Netherlands, a country known for its windmills, cheese, wooden shoes, Delftware, dikes, tulips, bicycles and its giant two kilometer high mountain.
Huh? A mountain? I thought the Netherlands is the flattest country on earth.
Nope. Not any more. At least, not if a Dutch organization gets what it wants. This organization (Die berg Komt Er) proposes a two kilometer high mountain which will be erected somewhere in the Netherlands. Newspapers report ‘there’s probably enough space for such a mountain’. Also ‘there probably won’t be any negative side effects for the environment’. Yeah, right. Costs are expected to be around 70 billion euros (that’s over 90 billion Dollars). What the mountain will be used for? Agriculture, housing and skiing to name a few. Also the giant Dutch mountain will be used as a power plant. It should generate enough energy to power the entire city of Amsterdam with 100% renewable energy.
I thought the era of mega projects in the Western world was over. So kudos to the design team who had the guts of coming up with such a bold plan. Or is it just a publicity stunt? Are the architects of this Dutch mountain out of touch with the rest of the country? To be fair, the Dutch created 20% of their country themselves, by creating land from water. So there’s no doubt we’re technically capable (or find a way) of creating a two kilometer high mountain. But… let’s be honest, we (the Netherlands) don’t need such a mountain. Why not spend 60 billion euros to make the Netherlands the first carbon-neutral country on earth? Or why not build the Roadmap 2050 design of a carbon-neutral Europe, designed by Dutch architect Rem Koolhaas? There’s a saying, God created the world, but the Dutch created the Netherlands. It’s ever more true when the Dutch create their own two kilometer high mountain… which I hope will never be the case.
I read an interesting article the other day. Albert Heijn, the largest supermarket franchise of the Netherlands is busy developing a new strategy for selling groceries online. To date, online grocery delivery services are generally more expensive and aren’t viewed as an alternative to traditional supermarkets. With this move, everything could change. After all they’re by far the largest supermarket in the Netherlands.
So, what’s this new strategy? Instead of delivering groceries right to your home, they decided to… wait for it… not deliver groceries to your home. Huh?! Makes no sense? Well, actually it does. First of all, we’re talking about a 600 million dollar business for Albert Heijn (which operates in both the United States and Netherlands). Currently the online business doesn’t account for a profit. Within years, sales should be up to 2 billion dollars and they hope to make a profit. According to the company, selling groceries online is a profitable business. However, this profit evaporates during the last kilometer of the delivering process.
“Delivering groceries to peoples homes is expensive. Also, the customer needs to be at home to receive the groceries”, a spokesperson said. “It is more easy to order groceries by using your smartphone and provide us with a time and desired pick up location.”
That’s why the company is developing a system of thousands of supermarket pick-up points scattered throughout the country. To make this system profitable, they need to dramatically increase their sales. Since this supermarket is market leader, these developments could mean a breakthrough and offer possibilities for other (online) supermarkets as well. I think Albert Heijn just made the traditional supermarket obsolete.
Last week I wrote about the need of a new urban model. I briefly mentioned Albert Heijn (AH XL). I wrote:
Companies continue to scale up. […] Supermarkets like AH XL (large Dutch supermarket) and distribution centers only need a few strategic locations in order to serve the entire country.”
So let’s take a look in the future. First of all, supermarkets only needs a few distribution centers. Furthermore, thousands of supermarket pick-op points are created in the entire country (a supermarket pick-up point could even add value to certain properties, just as a nearby Starbucks store does). It will be possible to order your groceries via a dedicated supermarket app on your smartphone or tablet computer, provide the supermarket with a time and location, pick up the groceries and bring ‘em home.
The Google refrigerator
A short while ago, I read about Google developing a refrigerator that is intelligent to know when it’s running low on certain groceries and ordering them from online grocery delivery services. Back then I thought it’s a waste of research dollars. But if you connect the dots (online supermarket, an app, thousands of pick-up points), think about the possibilities. Imagine the refrigerator being connected to your online supermarket app. The moment you’re running low on certain groceries it adds the item to your app (it might even search for the lowest available price. After all, it’s Google we’re talking about!). You only need to approve buying the item, after which it will be delivered to your desired supermarket pick-up point. That’s life made easy…
NB. Albert Heijn is owned by Ahold. This Dutch company also owns AH XL, AH to go, Gall&Gall, Etos, Stop&Shop, Giant, Martin’s and Peapod. It operates in several countries, including the Netherlands, United States, Germany and Belgium.
Last week Dutch news agencies reported within ten years nightclubs will have disappeared. This might come as a shock to many, but it makes total sense. According to research, it’s the financial crisis and smoking ban to blame. Nightclubs themselves can’t be blamed. It’s not their fault teenagers have less money to spend.
The primary function of nightclubs is (1) provide entertainment, (2) a place to hang out with friends and (3) meet new people. During the past years the way we’re entertained and hang out with people changed (think Facebook, Twitter). That is why nightclubs, if they don’t change, will disappear within years. They continue to lose relevance in our ever changing digital world. Instead of putting blame on others (financial crisis, smoking ban), they should review and change their business model. Which in turn will change the function of a nightclub all together.
Luckily for nightclubs, their situation is not unique. We could compare their situation with the music business or major television networks which both face a decline. Instead, I choose to compare nightclubs with movie theaters. They compare well on three important topics;
1. Main product (movie > DJ / live band)
2. Venue (movie theater > nightclub)
3. Technology (3D, large screen > powerful audio system, light shows)
Several years ago movie theaters struggled to stay open. Why pay money to watch a movie elswhere while you can watch it at home? People were not interested in leaving their house for just a bigger screen, which was essentially the only difference between home and a movie theater. Movie theaters had to change their business model. Which is what they did and continue to do.
1. Main product (movie)
Every movie theater needs a great product, which is the movie. Audiences are less interested in movies starring expensive actors. Instead, they are more interested in unique stories and/or a movie utilizing the most awesome technologies (think Avatar, Harry Potter, Alice in Wonderland, Toy Story 3).
2. Venue (movie theater)
According to George Lucas’ book Blockbusting, the most frequented theatrical venues were megaplexes averaging sixteen screens. “These megaplexes were destination locations complete with food courts, video games and shopping.” Why megaplexes? People demand choices. A wide choice of movies (“sixteen screens”), a wide choice of restaurants (“food courts”), et cetera. They don’t visit a movie theater for ‘just a movie’. They want the full package – On a side note, I won’t be surprised if “video games”, described in the book Blockbusting, will be replaced by social networking lounges – In essence, a movie theater turns in an entertainment venue with movies as their killer-app.
3. Technology (3D, IMAX)
2D no longer suffices. Most new movies are made in 3D. And screens are getting larger. IMAX, movie theaters with the largest screens, went mainstream. About ten new IMAX venues open every month. A movie in 3D and/or IMAX is an experience instead of ‘just a movie’.
As a result of this changed business model, moviegoing showed an increase in both box office returns and attendance. What can nightclubs learn from this development? Well, first of all it is important to acknowledge the fact people continue to love music and hang out together. Just as with movies, they still love the product. But this is no longer enough to attract people to visit nightclubs.
1 Nightclubs need to focus on a product everyone wants to see. Could be a famous DJ or unique live band. Without a great product, people won’t be interested in nightclubs. No matter what they try.
2 The venue needs to offer a full range of entertainment. Several dance floors, multiple bars, a restaurant, several lounge areas and maybe other functions, like a gym. Also some quiet areas (without music) are needed. Those areas feature comfortable sofa’s, a bar, free wifi and big tv’s.
3 It’s all about technology. Nightclubs should give their customers the most unique experience possible. Imagine a club with the biggest and/or most spectacular light show of the country, a fully lit dance floor or maybe a movie theater like auditorium but instead of chairs, there’s a dance floor or a restaurant. Imagine watching a movie while dancing or having dinner. How cool would that be!
Without changing the function of the nightclub, people won’t be interested in going there anymore. For club owners, the solution involves the complete package, ranging from product to venue to technology. And remember; it’s not about the music, meeting other people or about the drinks. It’s about the experience!