What are you?

by Mark Jacobs

Over the past few decades, there has been a massive shift in power. Manufacturers like P&G and Coca-Cola used to dwarf retailers in terms of their size and financial prowess. But not anymore. Retailers have expanded across the country and world, consolidated into superpowers, and now collectively have the upper hand. This is a massive industrial power shift that is still happening and it has enormous consequences.

At the same time they’ve gotten bigger, retailers have gotten smarter about managing their brands. They are no longer just the seller of great brands. They strive to be great brands in their own right. Some have managed to accomplish this, often looking across the Atlantic at their European counterparts who have been way ahead of the curve. They are gaining more and more confidence about their ability to stock their own shelves with desirable products. This can be easily observed in looking at the evolution of private labels. Once just generic or copycat products, they are now breaking into the territory of aspirational brands.

What we are witnessing is essentially a massive collision. Two universes that used to be distinctly separate are redrawing their boundaries, and right now, retailers are winning. Catching manufacturers off guard after years of only worrying about other manufacturers, retailers are taking an increasingly larger piece of consumers’ wallets. But while this is the broader trend, there are many examples of forward-thinking manufacturers who have expanded into the retail space.

Burt’s Bees, for example, put on a sophisticated retailer hat when it invented its Bee Hive, the mini store-within-a-store that separates all of its products from others within the likes of CVS and Walgreens. Method is doing pop-up stores in NYC and getting much buzz about it. Apple, the ultimate visionary, took the full plunge and opened its own stores back in 2001 so that it could fully own the retail experience. There are many examples of manufacturers reframing themselves as retailers to different degrees.

Side note: To be fair, there are many manufacturers that have owned their retail experience for a long time. Think apparel (Victoria’s Secret, Nike), jewelry/watches (Tiffany, Swatch), electronics (Bose, Sony) cars. What’s made these categories different is how closely their products are tied to our identities and self-expression. But that’s changing. Our identities are changing. The things we want to express are evolving…becoming more subtle, more simple. We are awakening to the fact that everything is a form of self-expression. It’s just that only certain items are important enough right now (and offer a broad enough selection) to justify the economics of a retail operation. You probably won’t see stores dedicated to sponges, for example, anytime soon. Vacuums? Maybe. Dyson is on its way. They would probably call it a “Cleaning” store, or perhaps “Home care,” to tie it back to our lives in a more natural, emotional way. That’s where we’re headed.

But back to the manufacturer/retailer collision phenomenon…

What makes this collision even more interesting is that a new kind of player has only recently jumped into the game: the Internet company. 15 years ago, Amazon did not exist. Now, despite manufacturing nothing and owning no physical shops, it sells billions of dollars of goods. The same goes for eBay. Then there’s the even newer, smaller Internet companies that are breaking all the rules. Take Threadless. They created a unique way of selling t-shirts online and just last year opened up a storefront in Chicago. Or take Etsy. They have enabled a community of micro-manufacturers – primarily women in their homes who can now sell directly to others without having to open up a store. Will Etsy open up a store anytime soon? Who knows. But what we’re seeing, at the very edge of the shopping universe, is a blurring of the line between consumer and manufacturer/retailer. Practically anybody can open up their own shop and either sell their own handmade goods (Etsy), their own manufactured goods (CafePress), or sell their used goods (Amazon, eBay, Craigslist). Ultimately, this represents a massive power shift away from both traditional manufacturers and retailers toward the people. Those companies that facilitate this power shift win the hearts and minds of the people.

In a less direct way, big retailers have shifted power to the people—famous people. They’re all clamoring to have the next Martha Stewart, Isaac Mizrahi, or Jamie Oliver selling through their stores. In essence, this is what Nike has done so successfully over the years: recognizing that real people who are exceptional at what they do are the best people to partner with. Exceptional talent and personalities cannot be replicated.

So what does all of this mean?

It means be the very best at whatever you do. Which means innovating, learning, working hard, and all of the things you’d expect to hear. But first it means you really have to figure out what exactly you do. You don’t “manufacture,” “sell,” “design”—that’s all superficial. What you do is what you do for people…how you make them feel, how you make their lives better. It’s no different than when somebody asks you “What you are?” You might say “dad,” “banker,” “soccer player,” etc. We all do lots of things, but what is the “you” that unites all of that…the “you” at the center of you that makes you different from everybody else out there?

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Robi Ganguly

Well put. I think you’re really on to something here when you think about how our personal brands are now being linked to the brands of the companies that we do business with and vice versa. Navigating this interconnection is a huge opportunity, for the individual AND for the companies, isn’t it? Likewise, part of the thinking both parties should be doing here is around what we DON’T want to partner with as well. Companies need to be more thoughtful about who they really want as customers and individuals should be thinking more and more about what kind of companies should be getting their time, their brand association AND their money.

Mark Jacobs

What makes this so challenging (one of many things) is the size of so many organizations. Imagine you, me and a thousand other people getting together and agreeing that we want Joe Blow to be our good friend? Identity is a very personal thing. Smaller companies have it much easier (not that it’s ever easy). I think it comes down to true leaders, visionaries.