What is the Customization Revolution?

Evolution of Big Stores: Retail giants struggle as customer empowerment and mass customization reshape industries, challenging traditional models.



Exploring the Evolution of Big Stores


Over the past two decades, we've witnessed the era of massive retail, where giant supermarkets wowed shoppers with an abundance of everyday items. However, lately, signs suggest that these retail behemoths might be losing their grip. Retail giants such as Walmart, Tesco, and Carrefour have admitted to falling short of their profit expectations. While some might dismiss this as a typical economic ebb and flow, it could signal something more profound. To understand this, let's envision the world's economic history as a race between innovations in transportation and advances in communication. These innovations shaped the way we produce and consume goods, leading to the rise of standardization and, eventually, customization in different economic eras.


The Age of Customer Empowerment


In today's landscape, communication technologies empower customers to voice their preferences rather than settling for standardized offerings. A prime example is Amazon, the online retail juggernaut that disrupted the bookstore industry by offering an unparalleled array of options and hefty discounts. However, early e-commerce still resembled a megastore, lacking the full potential of customization.


Currently, we're witnessing the rise of near-customization as the new normal. Electronic devices like tablets and smartphones provide access to specialized apps tailored to an ever-expanding range of interests and needs. YouTube, too, has invested heavily, allocating $100 million to create numerous TV-style channels catering to niche audiences.


Even Amazon, transitioning from a digital megastore, now operates more as an information hub, aligning customer desires with nearly tailor-made products. We're entering an era where ordering a custom shirt, produced in the most cost-effective location globally, is set to become routine.



A looming challenge for megastores


So, will megastores follow a similar path to bookstores? Some forward-thinking companies are adapting to this new reality by investing in innovative systems. Yet, even if these retail giants survive, their traditional business models may not. Companies and consumers alike must prepare for the dawn of the mass customization era.


The Impact of Mass Customization Across Industries


The Customer Revolution transcends industry boundaries, affecting manufacturing, technology, services, and retail alike. It compels enterprises to heed customer demands, with customization emerging as the most meaningful response. This trend extends to niche shops offering high-cost handmade products and an entirely new business sphere enabled by technology, where manufacturers produce customized items at costs and scales comparable to mass production. Welcome to the realm of mass customization, a trend foreseen to persist by most analysts.


Mass customization prioritizes the methodology of production over product quality. A case in point is Ascot Chang, the renowned Hong Kong shirtmaker. Their hand-crafted customized shirts at their New York store saw sales grow from just over $3 million in 1996 to over $4 million in 1997. Each shirt is priced between $92.50 and $189.50, delivering consistency with a commitment to satisfying even the most discerning customers. Manager Thomas Yu emphasizes that their body measurements are manually taken, avoiding high-tech involvement.


 Customization in Varying Production Methods


Clarkson University's business professor, Charles Mosier, delves into the conventional view of manufacturing, describing it as a continuum from custom products to batch-produced goods. This continuum spans various manufacturing technologies, encompassing low-volume, high-cost artisanal production to high-volume, low-cost, 'hard' automation. Customized products occupy various points within this spectrum, blending human labor with advanced manufacturing techniques.


Revamping Processes for Customer-Centricity


Transitioning to mass customization isn't solely about customer-centric products but also about overhauling the processes that deliver these products. This necessitates reimagining traditional supply chains, embracing digital technologies, and establishing adaptable production systems that can respond swiftly to changing customer demands. In the era of the Customer Revolution, innovation extends beyond inventing new products; it encompasses redefining how we produce and deliver them.




From Personalized Handcrafting to Unique Products


Mass customization's implications extend deep. At its core, it involves the handcrafting of personalized products. Aveda Cosmetics exemplifies this with "Personal Blends," personalized perfumes combining floral and herbal scents to match individual personalities. However, these products, despite offering personalization and uniqueness, don't constitute mass customization, as the final mix is done by sales representatives, not in a mass production setting.


Mass Customization's Focus: Methodology Over Product Quality


Mass customization, while rooted in customization, places a stronger emphasis on methodology than product quality. Ascot Chang's hand-crafted customized shirts in New York, which saw a significant sales boost, remain a prime example. Each shirt is priced between $92.50 and $189.50, with a commitment to satisfying even the most discerning customers. Manager Thomas Yu highlights that their body measurements are still manually taken, avoiding high-tech solutions.

As we step into the era of mass customization, some believe it's a harbinger of things to come. "I'm not a visionary," she says. "My clients want it."


Goodhew elaborates on the concept of tailored mass production. It's akin to buying a tailored suit where a tailor measures you and starts from a bolt of cloth to create a suit specifically for you. It's not entirely ready-made, yet it's not fully custom. The tailor cuts a standard suit and makes adjustments before the machine stitches it together. It strikes a balance, offering the efficiency of mass production while providing a product that appears custom-made before the machine finishes it.



Mass Customization Beyond Clothing


While clothing manufacturing often illustrates mass customization, other industries have also embraced bulk purchasing processes. Inspired by the automotive sector, furniture companies introduced customizable interiors in the 1970s. In the Western world, Krause's led the way, while Choice Seating took the mantle in the East. In 1984, Dell Computers revolutionized computer sales by assembling specified components on-demand. In 1990, Los Angeles-based French Rags pioneered mass customization in clothing, launching a $500-value line of customized knitted sweaters, jackets, and coats. By 1994, Levi Strauss popularized the process with the Personal Pair jeans program, initially accessible only through Levi's stores, making it available to the masses.


The Future of Mass Customization


Some theorists, like Stan Davis, author of "Future Perfect," predict that modern information technology and automated manufacturing equipment will lower the cost of mass-customized goods to match that of mass-produced ones. This could become a reality for certain companies as mass customization reduces waste and excess manufacturing costs. However, for most, mass customization holds more promise in markets where mass production isn't feasible or where costs are less prohibitive than in the mass market. Currently, most mass customization companies either charge a premium for customization (e.g., Levi's Personal Jeans retail at $65 per pair, while ready-made jeans are $45) or absorb the additional costs within the higher-end price range of their products


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