As part of our ongoing Industry Experts column, we caught up with Richard Kestenbaum, partner at Triangle Capital LLC, a firm that raises money and handles mergers and acquisitions for companies in accessories, apparel, retail and other consumer products businesses. For a partial list of Triangle Capital LLC transactions by industry, click here.
Here’s what he has to say about customization, prsonalization and organization, with the question: Is that what customers want? This article is reprinted with permission from Kestenbaum’s blog.
Companies that sell customized products think of themselves as offering the ultimate indulgence to their customers. They’ll make a garment to your exact specifications and it will fit you better than anything off the rack. It will allow you to express your individuality in your own you unique way. You pick the color, the style, the fit that works for you best. And you’ll pay the highest price for it because after all, it’s custom.
Maybe this is a silly question but, is that what consumers want?
In a world that is so totally consumer-focused, and the range of offerings is as broad as the types of people and bodies there are, do consumers really want to tell the designers how to make products? Do consumers want unlimited choices or are there enough choices on the rack?
Here’s a crazy question: is it possible that consumers prefer to be told what they need?
The e-tailer MM La Fleur started life as a line of women’s clothing for work and offered the consumer a range of products. But according to their CEO Sara Miyazawa, “when we changed our business model to a subscription service and took away our consumers’ choices, our monthly revenue tripled immediately.”
Maybe what consumers really want is not so much independence and choice, maybe what they want is guidance.
The best insight into this phenomenon may be the bridal market. No matter what her economic level, brides spend a lot of money on their wedding dresses, usually more than they ever have before on one garment. And they spend enough that they could have their dresses custom made if they wanted to. But generally, they don’t do that. They may make a lot of changes and alterations to a wedding dress, they personalize it, but they usually don’t have it custom made.
And that may make the bridal market the paradigm of how consumers want to be treated. When consumers are willing to spend more, they don’t usually want customized. What they want is personalized.
But if that’s right, then how do you apply that to most other products besides bridal and tailored clothing? How do you make a pen, a swimsuit or a scarf personalized? How can you take a designed product and still make it flexible enough to be molded to the customer?
Some of the answer is in technology. 3-D printing, for example, will allow a consumer to adapt an existing product to their own taste and needs. Look at this company, Electroloom.com, on this link. You put a fluid into a 3-D printer and a few hours later a seamless garment comes out. The technology is in a very early stage and many improvements are yet to be made but the implication for custom-made garments, produced on the spot, even in the consumer’s home, are incredible.
But usually, the answer is not in the technology, it’s in the organization.
Look at how the market for prescription glasses is set up. The consumer starts with a frame that a designer thought up and it can’t be modified. Then a lens that fits just that consumer is inserted. The product is designed to be adapted. And the process itself, the traditional optical retailer, is geared toward the process of personalization. And while everyone talks about Warby Parker, they haven’t changed that fundamental aspect of the eyeglass product.
But it’s not just eyewear that can be sold that way. There are retailers like Birchbox and MM LaFleur that make the choices for the consumer very limited and focused and then allow the consumer to choose from a much more limited offering.
And the data indicate that when consumers have a choice, they don’t want to be their own designer, they want to select from what designers have made for them and even then, they want the designer to make most of the choices and offer a limited selection.
A good retailer edits a line so that it offers only choices that a consumer will want. A good piece of software will show a consumer what they would want and avoid showing them things they will find unappealing.
And isn’t that what consumers want, choices and direction without having to do it themselves?
To help consumers make the right choices, it doesn’t take customization, it takes an organization that can use data to make the right choices for consumers and serve it to them at the right moment, when they’re in the store or online. And having the right organization with the right skills, no matter what the technology, is the age-old problem that managers will always puzzle over and refine.