So What, Who Cares (vol 3, issue 1): Who's In The Mood for a Reboot?
Hello!
I have missed you all, I have missed writing this, and so it's time to reboot So What, Who Cares. Who doesn't love yet another TinyLetter in their inbox? And who doesn't enjoy feeling smug about being early on the "TinyLetters! They're what hip people read because the Web! Ugh! So many troll commenters online."
Anyway, you were on the TinyLetter bandwagon before it was cool and we can all regard this newsletter's revival as the email equivalent of your favorite obscure band climbing on stage at a club -- anonymously and without advance notice -- and playing a set to announce their re-emergence in the world.
(Let's all go with that, okay?)
You know what drew me back into the late nights writing this? Walmart. More precisely, what's going on with Walmart right now. It's a collision of consumer trends and tech trends and I am here for it. Let's unpack it ...
WALMART IS DOING SOME RESTRUCTURING. The retailer recently announced that it's slimming down its operations staffing (human resources, etc.) and re-organizing so executives from Jet.com play a more prominent role in its e-commerce strategy.
Part of the reorganization will help ease pressure on the company: fiscal year 2017 (which started in early 2016 -- just go with it) has had three quarters of sub-2% growth in same-store sales, and the flatness in Walmart's sales suggest that a broad cross-section of American consumers are slowing their spending in stores. (These numbers don't tell us why, they just tell us that it's happening.)
Retailers want organic growth, i.e. sales increases that can be pegged to shoppers spending more money. Shoppers are shifting more of their dollars to online retailers -- e-commerce is projected to grow from $385 billion in 2016 to $632 billion by 2020. So Walmart's shifting along with it; this is their latest effort to wrest consumers' online shopping default away from Amazon. (See vol 2, issue 93 for a recap of the Amazon-vs-Walmart rivalry thus far.)
And the shift to an online-first model is happening rapidly. This past holiday season was a nightmare for some types of stores -- electronics stores, "general merchandise stores," sporting goods and department stores all saw year-over-year sales drop, which means people are moving their holiday shopping someplace else.
That someplace else was online -- people shopping online via their computers spent $63.1 billion this past holiday season, a 12% rise over the 2015 holiday season. By contrast, overall holiday sales grew by 4%. The double-digit gain in holiday sales for e-commerce buys shows where the money is moving.
Another sign of changing customer behavior is comScore's estimate that mobile e-commerce will account for one in five e-commerce shoppers. (The final numbers on mobile e-commerce for holiday season 2016 are not out yet.)
SO WHAT? With Walmart visibly doubling down on its online strategy, we can expect price wars for certain product categories like food -- Walmart's aiming at Amazon Pantry, just as Amazon's aiming for a new customer segment in that space with a pilot program for SNAP recipients. And we can expect further technological incursions into the shopping experience. Walmart is planning on bringing together its retail and e-commerce teams, which suggests a less siloed approach to its sales and an increased emphasis on providing customers with the ability to move fluidly between website and in-store sales.
WHO CARES? Shoppers do -- they're about to take part in several experiments to see what the next big retail model will be, like the no-checkout-no-cashier model Amazon's toying with. And retailers care too. Not everyone has the ability to buy a Jet.com to bolster their operations, and finding a way to meet customer expectations in an age of one-click shopping from your phone is going to be a challenge for a lot of legacy brands.
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Your pop culture recommendation of the day: I love this great, year-plus-old article by Helen Rosner, a look at the world's longest outdoor yard sale, "Everything is for sale." She mixes woman-on-the-ground reportage with a cultural history of yard sales (unsurprisingly, they are tied to the rise of mass-produced merchandise in the 1950s) and throws in a great little look at behavioral economics:
When something is yours, you become wrong about it. This is an inevitable fact of human nature. It has a name: the endowment effect. We assign greater value to things that we consider our own, whether hometowns or toothbrushes. We think they're worth more than they are, and we're inclined to demand more from people when we ask them to buy from us.
[...]
But the endowment effect is a fallacy. Use value to a seller is meaningless to a buyer. If it's hard to admit that even the things we love have a price, it's even more difficult to learn that the price is actually far less than we imagined it to be.
The minute I read this, I flashed back to a story I read in late March 2015, "Stuff It: Millennials nix their parents' treasures," which was about how the young urban adults of today just can't appreciate the gift of a free giant leather sofa. In the 800+ reader comments, you see the fallacy of the endowment effect in full throttle.
(This yard sale piece is part of a long cultural conversation about the values one demonstrates while buying or shedding belongings. In vol 1, issue 17, I pointed out that decluttering is emotionally fraught for baby boomers, who were not prepared to have a lifetime's worth of consumer activity dismissed by their descendants; in vol 2, issue 45, we looked at the role of the endowment effect in KonMari.)
I thought about the endowment effect while I was reading James Wallman's Stuffocation: Why We've Had Enough of Stuff and need Experience More than Ever, because that book reframes how people buy and relate to their stuff.
It's a very forward-facing look at how we relate to the act of acquiring things, and I think everyone should read Stuffocation immediately before scrolling through their Instagram feed.
The book is refreshingly free of po-faced homilies on the virtues of minimalism. Instead, it walks you through the rise of modern consumerist culture, examines the side effects on personal and societal levels, and looks at the emerging shift in consumer spending toward a culture where status spending is concentrated on (Instagrammable) experiences rather than things.
Wallman draws a line from a Veblen-esque conspicuous consumption (being able to afford a resource that is beyond mass consumption, and making sure other people know you can afford it) straight through to social media as a driver of experience-based conspicuous consumption. It's a good read in this post-Kondo time of retail disruption.
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