The Future of Retail – Category You. Our May article for The Melbourne Review

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Online retailers are getting smarter about the way they sell to us, but are they still blinded by out-dated paradigms?

May 2013
David Ansett & Peter Singline

Recently Amazon launched an online store dedicated to the Over 50 market. For the first time a major global retailer has broken ranks and focused on a specific target market, rather than their product line.

Chance Wales, Director of Health & Beauty at Amazon says; “We’re excited to offer customers in the 50+ age range a place to easily discover hundreds of thousands of items that promote active and healthy living. This is a destination where a customer can purchase anything from vitamins and blood pressure monitors to skin care items and books on traveling the world”.

In addition to the usual product range, product info, ratings, recommendations and reviews, that we’ve come to expect from Amazon, the new online store offers a ‘Resource Centre,’ providing tips on beauty, healthy eating, care-giving, and other topics relevant to these customer and designed to aid shoppers in product discovery.

The Over 50 market is the current Holy Grail for companies all over the world from retailers to property developers, finance and insurance companies to pharmaceutical manufacturers. They’ve been called ‘Senior Citizens’, ‘Wrinklies’, the ‘Grey Market’ and most recently ‘Third-Agers’. In most Western markets people aged 55 to 64 have the highest disposable income of any age group, with the 50+ market make up over one third of the population in countries such as the US, the UK and Australia. It’s little wonder retailers are looking for a larger slice of their pie.

The change we’re seeing is Amazon evolving further from the traditional retail model, towards a customer relationship model, where they’re becoming a highly customized aggregator of products and information. Like the products they sell, the content provided on their site isn’t their own, it’s created the third party; GrandParents.com, who have market specific expertise and are able to speak with authority, relevance and authenticity to this market on subjects like ‘Boosting Brain Power’ and ‘Losing Weight’.

This new mindset is more telling than appears at first glance. Amazon are taking a genuinely customer centric approach, seeking to stock whatever products are most important to their Over 50 customer, rather than looking to flog the products they have to whomever might want to buy them.

This paradigm shift represents a fascinating direction for retail that’s well suited to online. For years now eCommerce businesses have been collecting data on our shopping habits, but with few exceptions, we’ve yet to see this mountain of ‘big data’ translating into any kind of customer benefit.

His vision memorably included ‘the dinner date pack’ with all of the elements required to pull-off a romantic dinner date including; cooking utensils, recipe book, ingredients, candles, and a Barry White CD.

Years ago, before Amazon was a twinkle in the eye, we worked with a retail entrepreneur who had a vision for an ‘All Male Retail Store’; a department store format where every element from product range to store layout, brand and customer service was crafted to appeal to the way men preferred to shop. His vision memorably included ‘the dinner date pack’ with all of the elements required to pull-off a romantic dinner date including; cooking utensils, recipe book, ingredients, candles, and a Barry White CD.

I have to admit; I find the idea of highly personalized retail offerings to be very compelling. But the sting in the tail of this concept is truly understanding who the customer is and getting the offer right.

And this is where I believe Amazon has got it wrong. There’s a very good reason why the Over 50 market has proven a handful for brands to master, and that’s because it’s not a single ‘market’ – not even close.

The 50+ category is sub-segmented into as many as forty different types, each grouping determined by influences such as state of mind (how old I feel, not how old I am), age and wealth, lifestyle, sex, and family dependencies. Picture the 50-60 year olds in your life and you begin to grasp the dramatic differences in the way they walk, talk, dress, and even more importantly, the way they think. Many fifty year olds share a greater affinity (not to mention shopping and technology habbits) with those a decade younger than them than a decade older.

For Amazon to group all customers 50 years old and above into a single customer offer undermines the very principle of what they are trying to achieve with their new venture.

Journalist and 50+ cusper Joe Wilcox recently wrote: ‘My first reaction to the new Amazon store: Why would anyone want to shop someplace that makes them feel old? I may be over 50 but identify more with younger folks or those of my generation, like President Barack Obama, who still evoke vitality and youth (surely his daughters’ energy helps there). I don’t obsess about vitamins, don’t want to shop anywhere prominently promoting adult diapers or see model images of the elderly. Hell, describing the store makes me feel old. Yuck.’

What we’re seeing from Amazon is a great new approach to retail that is letting itself down in execution by not understanding their target audience nearly well enough.

But let’s not throw the Baby Boomer out with the bath water. Amazon has offered us a glimpse of the future, where online retailers truly have an intimate understanding of a market – how they like to shop, what they like to buy, and what complimentary product purchases genuinely add positively to their lives. In this futurescape, why wouldn’t I choose to shop at a store (online or otherwise) where every nuance from product range to branding, from recommendations by peers to published content of interest was specifically and carefully crafted to suit slightly aging (even if in denial), creatively oriented, passionate about travel and good food, time poor fathers of teenagers?

As an intelligent aggregator of product and content focussed entirely on me, the potential exists for these new breed retailers to fine-tune and fine tune their understanding of my shopping habits, lifestyle and what pushes my buttons. Over time their offer could be targeted to me in a personalised manner that current retailers could only ever dream of.

The ultimate endgame is for online retailers to leverage their ‘big data’ to literally create a segment of one, an online marketplace just for me – a concept I find both enthralling and a little unsettling.

David Ansett and Peter Singline
Peter Singline and David Ansett are co-founders and direc­tors of Truly Deeply, a Mel­bourne based brand strat­egy and design con­sul­tancy.
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Photo Credit: Rabih
Source – Flickr – Creative Commons
http://www.flickr.com/people/rabih/

3 Comments

  1. Hi Tim, thanks for your comment. What I think is so interesting here is that true individualisation is a completely different process from a consumer perspective to consumer categorization. Whilst I resent being pigeon holed as part of a group of ‘like people’, I feel very positively towards a brand who is genuinely trying to customise the experience just for me.

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