historically have employed several principal strategies to use scarcity to their advantage. The first is how they manage their store expansion, seeking to strike a balance between reaching the maximum number of customers while making their physical location a must-visit destination. Private-label (or “house”) brands by definition are those that can only be accessed at a given retailer’s store. Similarly, many organizations have invested in private-label cards tied to their store loyalty programs, “forcing” the customer to use the retailer’s payment method to rack up loyalty points (which often could only be redeemed at their sponsoring retailer’s locations) and gain exclusive access to special events and limited-time offers.
But over time many of these scarcity advantages began to erode or become less effective, as consumer choices and alternative substitutes abounded and became more accessible. Market forces and more empowered consumers make it increasingly difficult for retailers to dictate their terms.
More and more, what was once scarce no longer is. This new abundance helps explain why so many in retail are struggling today. To understand the underlying forces driving disruption, it’s worth taking a quick look at how important aspects of scarcity have disappeared completely, have become much less powerful, or have fundamentally redefined the basis of competition.
Media Are No Longer Scarce
Older readers will remember the media landscape of our youth. We grew up with three national commercial broadcast networks, one public network, and a handful of local TV channels. Radio was either AM or FM, and essentially all of the stations were local. Many folks got a daily local newspaper delivered to their door and subscribed to a handful of magazines, most of which were published monthly. The most popular magazine for many years was TV Guide, a weekly magazine that listed which TV shows were on and when.
Today, this lack of selection and immediacy almost seems laughable. Media choices have exploded and fragmented exponentially. There are now many hundreds of TV stations and much of radio is delivered digitally. Many people get their news from social media platforms that scarcely existed a decade ago. And millions of blogs, vlogs, podcasts, and so on create the opportunity for virtually anybody to be their own publisher. Some of the most popular and influential media channels of yesteryear are either gone completely or in serious trouble. Not only are media choices far from scarce, much of the content is now available immediately on demand and on devices we have on our person, not just in our home or office.
Information Is No Longer Scarce
For a good chunk of my retail career, a customer who wanted to get product information had four basic options. First, they could run around to different stores to talk to salespeople (or do a firsthand inspection on their own). Second, they could glean information from various relevant brands’ advertising. Third, they could seek input from friends, families, or neighbors. Last, they could rely on a print publication like Consumer Reports.
Needless to say, much of this information was of questionable reliability. In the vast majority of cases it was anything but comprehensive. As for understanding the “fair” price to pay, there really was no practical way to run a comparison. In virtually all cases the gathering of truly useful information was either impossible or a major hassle.
“A wealth of information creates a poverty of attention.”
—Herbert Simon
Today we face a veritable tsunami of information, and our challenge is often how to separate the signal from the noise. A shopper can readily find a vast amount of data and perspectives from a plethora of sources, including fellow shoppers. Most retailers’ websites contain highly detailed product information pages, and many now include customer reviews, demonstration videos, and the ability to do side-by-side product comparisons. Sites that aggregate product or service information like TripAdvisor, eBay, and Rakuten do much of the same but typically add the ability to compare products across different retailers. There are seemingly endless product review sites, expert blogs on just about anything you can imagine, and “listicles” of every conceivable iteration.
Years ago it was hard to feel truly empowered by information. Today the consumer holds most of the cards.
Access Is No Longer Scarce
Before online shopping existed, the stuff you could buy was pretty much limited to the stores in your town. If you lived in a big city, you usually had a decent range of options. At the other end of the spectrum, if you lived in a rural area, your options were quite restricted. Sure, you could drive to the big city, but most of the time that wasn’t practical or would be reserved for special occasions. Mail-order catalogs could meet some needs, but product offerings were narrow, delivery times long, and shipping costs could often be prohibitive.
Access was also constrained by the hours you could utilize available retail locations. The 7-Eleven might be open much of the time, but most stores had far more limited hours and many weren’t open on Sunday.
Today, most consumers have access to just about anything they might want from just about anywhere in the world just about any time they want. Since the advent of smartphones we no longer even need to go to our home desktop or office workstation to gain access. Access is often at our fingertips almost everywhere we go. And we don’t have to worry about a particular store’s hours or whether they happen to be open on Sundays. The internet never closes and we can now shop anywhere, anytime our smart device is with us.
Not only has access expanded radically and been digitally enabled, many of the channels are different. Shopping is often embedded in news, blogs, and other content, and many social media sites (Facebook, Instagram, et al.) are now effectively retail shopping channels.
Choice Is No Longer Scarce
Even if you were fortunate enough to have a wide variety of stores near your home or place of business that were open reasonably convenient hours, most of them didn’t carry a big enough selection to meet your ideal needs or desires. Just carrying a breadth of in-stock colors and sizes remains an issue for even the largest stores in the largest markets. If you were in a smaller market, your choices were far more limited.
By comparison with traditional brick-and-mortar models, where premium location rents and the cost of distributing inventory across many locations constrained how much product physical retailers would stock, it is much less expensive to carry inventory in an e-commerce warehouse. This gave rise to new business models like Zappos, which could dramatically increase its assortment compared to a local department store or shoe specialty store. The growth of marketplaces, and the advent of direct-ship models from manufacturers’ warehouses, also greatly expanded the availability of products.
Today, in many circumstances, choice is no longer constrained by how many aisles the various stores within a reasonable drive time contain. The aisles are virtually endless, and the long tail of selection is often taken for granted. Choice is now so abundant that even the most idiosyncratic of tastes can be satisfied.
Convenience Is No Longer Scarce
Having worked in several direct-to-consumer and home-delivery businesses, I have to laugh about the hurdles we faced even in the fairly recent past. Could we deliver furniture or home appliances in under a week and shrink our promised delivery windows from four hours to two? Should we charge a premium to get a package delivered in two or three days instead of the usual five to ten? Could we recover most of our expenses through our delivery charges?
Given how much has changed in the past few years, at some point we will probably stop calling 7-Elevens and their brethren “convenience stores.” What made them convenient was largely that they
