Consumer – Resonation

Posted on http://www.csg.co.uk/blog on November 25th 2019

https://www.csg.co.uk/blog/owning-the-problem-of-more-consumption

The countdown is on to another Black Friday, which for many retailers and e-tailers, is still the most frantic, most lucrative day of the year. Throughout its relatively short existence in the UK, it’s a date that has brought about opportunity and controversy in equal measure. And yet, despite the countless headlines generated, only now is its greatest controversy truly coming into focus.

How did we get here?

If you’re unaware of its provenance, “Black Friday” was once just one of many terms used in America to describe the day after Thanksgiving (held on the fourth Thursday of November). The following day became regarded as the official ‘start line’ of the pre-Christmas shopping binge – the point when retailers often began to make a profit for the rest of the year. In accounting, negative figures are entered in red and positive ones in black, and the expectation of profit explains the relevance of the word ‘Black’.

Before long, the day became a chance for competing retailers to gain custom, increase revenue and gather sales momentum. By the 1980s, the practice had become well-established in the Eastern states but was relatively unobserved elsewhere. As recently as the end of last decade, you could see bargain-hunters setting up camp on Thanksgiving Day in the parking lots of most malls and stores across the US but still the term ‘Black Friday’ was all but unknown in the rest of the world.

By 2010, the effect of the internet, and the ‘credit crunch’ on consumers and retailers meant that ‘Black Friday’ had become a fixture in the British retail calendar. With the loss of Woolworths, MFI and Kwik Save, it was viewed by many retailers as the right idea at the right time.

untitled-design-13 — In less than a decade, we in the UK have gone from knowing almost nothing about Black Friday to having very specific expectations about what it represents.

Significant ‘one day only’ discounts very quickly led to unseemly scrambles and even scuffles around the UK, as shoppers surged to claim genuine bargains before Christmas. Suddenly, Black Friday was considered a necessary fixture in the shopping landscape, but it didn’t take long for a backlash to occur. Principally, most retailers would prefer not to give away discounts before Christmas at all, if possible. To some, there was even concern that such naked November salechasing hinted at desperation, even a lack of liquidity – a suspicion no business wants to bring about.

Others were concerned about the additional operational effort and cost, even the health and safety overhead that came with the need to provide crowd control. Notably, Amazon felt they could do better by holding such an event on their terms at a more fallow time of year – ‘Amazon Prime Day’ in July.

Very low down the list of reasons not to participate in Black Friday was the sense that the whole thing might be harming us all by fuelling overconsumption. With such significant change, there is almost always a ‘law of unintended consequences’ to consider. The whole thing started merely as a competitive device to win sales from others. Within a year or two, as it became clear that the buzz generated by Black Friday was too big to leave unexploited, leading to a ‘mission creep’ of more products, cheaper variants and more frivolity. The addition of the adjacent ‘Cyber Monday’ extended the principle further. Retailers found themselves able to predict a planned orgy of purchasing – a phenomenon that people in Sales and Marketing spend most of their careers trying to bring about.

The problems started to occur with what happened next – the effect on consumption. The Black Friday vehicle would lead to consumers being urged to replace or upgrade more ‘stuff’ with more abandon. Prices plummeted – and so, it seems, did shoppers’ inhibitions.

More Sales = More Consumption

Where extra purchases led to knock-on effects in waste, it started to become clear there would be an environmental price to pay for all this extra acquisition. Electronics had become a particularly favoured category for discounters and shoppers alike, but with e-waste already becoming the fastest-growing waste stream in the world, clearly, the compulsion to throw away old tech to allow for a Black Friday purchase has hardly helped to arrest that problem.

There was a similar effect in the area of clothing, already threatening unsustainably high carbon and water footprints to make the product. Black Friday added to the pressures, increasing the amount of clothing added to landfill sites to 350,000 tonnes each year. With consumption bolstered by cheap product, not expected to last, the problem of ‘fast fashion’ became even harder to combat.

The growing debate about the wisdom of Black Friday became further complicated because, naturally, cheaper products offer a greater incentive to less wealthy people. There’s a danger that any concerns can sound a lot like better-off people telling less well-off people that they’re spending their money on the wrong things. Unsurprisingly, where that suspicion takes root, the urge for consumers to act sympathetically is often strongly resisted.

Reversing the Effect

Just when it began to seem futile to expect people to act against their short-term interest, a growing counter-narrative finally began to take effect. The effect of the BBC’s Blue Planet II on attitudes to single-use plastic was particularly notable. More recent activism by Greta Thunberg’s School Strike for the Climate and globally co-ordinated action by Extinction Rebellion further elevated the issue and this year, the Glastonbury Festival took steps to discourage disposable tents and dispensed with disposable water bottles.

As we in the UK look towards the second decade of Black Friday, we now seem to do so with a far greater level of environmental concern. It may not stop us buying, but even if it doesn’t, we’re likely to experience a little more guilt about that purchase than ever before. Does this extra consideration mean we give more thought to the product it replaces, with donating or other forms of re-use being more fully explored?

Until now, our choice between a tempting offer and a responsible attitude to the planet has always seemed to be one-sided. With extra encouragement to think longer-term, how far away are we from reaching a tipping point? Have you had cause to reconsider your company’s position on Black Friday, based on its environmental impact? As a shopper, have you changed your views about participating? Or is it still a fair way for savvy Christmas shoppers to get more value for money? Perhaps the responsibility should lie elsewhere: why should the shopper bear all the guilt from a process that offer such companies great benefits with little additional responsibility? Ultimately, is this all a symptom of a global problem that prizes economic growth over sustainability?

Unfortunately, only time will tell….

This article appeared in the November 2017 issue of the Equestrian Trade News.
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The greatest misconception of evolution is that it adheres to a plan. We largely believe that opposable thumbs occurred because they were a good idea. It’s hogwash: it was actually via a series of accidents and mutations over countless generations that they ever existed. The fact they then proved to be advantageous kept them in the gene pool while countless other, less successful, thumb configurations were forgotten. Generally, because the timescales and variations involved are difficult to conceive, we prefer to employ the notion that evolution is a pre-ordained process as a kind of metaphor – and then forget it’s a metaphor and start using the term “designed”.

The same is true of anything that can be said to have evolved – and it’s largely the way a supply chain works. We may think we’ve designed it, rationally and earnestly but in reality, we’ve only really done more of the things that gave a good return and less of the things that threatened our existence.

“I’ll threaten your existence if you think all primitive life is ill-adapted” Photo: Paul Bentham

It always used to fascinate me how many pairs of hands a product went through from factory floor to the consumer’s door, each adding a layer of margin but reducing affordability and competitiveness along the way. Each (opposable) thumb in the pie claims to “add value” but is that always the case or is there a lot of money for old rope being paid? And, according to the ‘law of the jungle’, for how long will that remain to be the case?

Here’s my basic summary of the traditional supply chain:

Manufacturer: Owns factory, makes stuff. Production requires that volumes are huge. Often more obsessed with improving the product than finding a route to market for it. Historically tended to be the ‘brand owner’.
Wholesaler: Owns warehouse, professional ‘go-between’. Sees promising products and buys in bulk, to offer to a roster of retailers. Justifies ‘middleman’ cut by offering exclusivity and/or continuity of supply by investing in large quantities, stocking it “so the retailer doesn’t have to”.
Retailer: Owns shop, cultivates goodwill with local clientele. Needs broad range of competitively-priced items that local clientele demands/will tolerate. Accepts Wholesaler’s higher price for small-volume supply flexibility with implicit promise that no-one else uses their lower cost prices to engage directly with ‘their’ end user.

Yes, the landscape has become complicated over time, with the addition of Distributors, Agents, Buying Co-operatives, Marketplaces, Franchisees and Affiliates (did I forget anyone?) but still, you can’t make stuff economically without great depth of units and you can’t be the place to go shopping for very long without a great breadth of range. The Wholesaler always was – and usually still is – the solution to this Depth-to-Breadth conundrum, explaining why there are three or four lots of profit margin on the same item between creation and consumption.

Here comes the “but”: …but the supply chain as we recognise it today is not a product of immutable parameters. It merely evolved as an adaptation to limitations on communications and the logistical solution to production in great depth and re-selling in great breadth.

There have always been temptations to miss someone out and pocket their margin as well as your own. Retailers have been at it for years, doing supply deals with manufacturers when MOQs allow, much to the chagrin of Wholesalers. Then again, Wholesalers haven’t always played a straight bat, occasionally offering price reductions they wouldn’t tolerate of their stockists or (gasp) “going direct”. As in the evolution of life itself, much of the last epoch has seen one type of life-form or another attempting to assert its dominance over the whole ecosystem.

Evolutionary theory also warns us to expect, eventually, an extinction event, an inevitable occurrence that becomes a game-changer. It’s believed the Chicxulub asteroid wiped out the dinosaurs at the end of the Cretaceous period (thus creating opportunity for the dominance of mammals) and it’s worth considering what the next asteroid-scale event might look like. Having scanned the skies, I wonder if I might have found it. It’s a bit scary and Retailers in particular may wish to make sure they’re sitting down at this point.

Some American retail analysts now predict a quarter of all consumer ‘retail’ spend will take place online within six years (perhaps 30% in the UK) in an online space that will be 40% controlled by the combined might of Amazon, eBay and Alibaba. In addition to current trends, the growing ‘internet of things’ (if that’s a new phrase to you, Google it!) will offer a multitude of self-ordered replacement items with shoppers merely ‘signing off’ auto-suggested purchases rather than actively shopping.

Better, cheaper communications (social media, email, apps, digital ads) have strengthened direct engagement for all; the part of the equation that was traditionally the brands’ biggest weakness – plus the virtual nature of shopping means that breadth of offering isn’t as vital as it always was. With the gloves off and everyone approaching the punter, the brands can now circumvent the distribution network and communicate their message to the end user without the distortive prism of stockists and distributors. Brands may already fulfill orders directly to their “customer” so they’re increasingly less reliant on the old-fashioned retailer for shifting the units. There’s even a belief that surviving retail stores in future won’t be places to physically procure products any more but to simply ‘experience the brand’. 4.6 million people work in retail in the US and their long-term career advice is to find another sector before they’re replaced by Amazon-style automated stores.

If you’re frantically clutching your chest at this point, it may help to point out that we’re not in the most cutting-edge of industries – and that’s probably a good thing. Remember, sixty million years ago, while 75% of the planet’s fauna was being wiped out, only the most durable species, able to live on the most meagre of diets (notably, sharks and crocodiles) survived – and continue to thrive today. The ability of the equestrian industry to make a living in an environment most others would regard as infertile may yet see it outlive the real dinosaurs of mainstream retail.