business news in context, analysis with attitude

The Washington Post reported last week about how a number of retailers in a variety of venues – including Starbucks, McDonald’s, Stop & Shop, Eddie Bauer, Gap and Hecht’s – are using technology to turn their stores into shopping destinations.

At a Starbucks in Santa Monica, California, for example, consumers can burn customized CDs with their favorite songs. At select McDonald’s and supermarkets such as Stop & Shop, Redbox vending machines offer $1-per-day video rentals; McDonald’s also has one store where consumers can download ring tones to their cell phones. Stores such as Gap and Eddie Bauer are offering consumers CDs with music mixes appropriate to their brands. C-store chain 7-Eleven sells pre-paid cell phones. And, the Post wrote, “Hecht's department stores offered shoppers who bought $50 worth of Dockers clothing a free Blackberry wireless handheld, and financial services companies like Citibank have promised iPods to customers who sign up for an account with a certain balance.”

At the same time, the Wall Street Journal reported that “travelers, hotel guests and visitors to fast-food restaurants now can use vending machines to buy electronic gadgets and other items that cost as much as $500” – acquiring not just DVDs, but iPods, digital cameras and other technology items.

One company, according to the paper, is Zoom Systems, which “plans to add more than 100 locations by the end of the year to its existing system of 165 high-end vending machines that sell expensive Bose headphones, iPods and wireless laptop cards. The machines are in airports, hotels and grocery stores. Zoom says it plans to be in a total of about 3,000 locations within the next two years, including office campuses and universities around the country.”

The impact of all these retailers getting into various stages of the technology biz is that innovations that might have been viewed as revolutionary or specialized in the recent past now are being seen more as commodities being integrated almost seamlessly into consumers’ daily lives.
KC's View:
In some ways, this may say more about consumers than it does about the retailers; after all, the chains are simply following the crowd and seeing where the opportunities are. In some cases, the offerings are going to be consistent with the retailer’s broader brand image, and in some cases not – but in a competitive marketplace, retailers are looking to build sales wherever and however possible.

But as the Post points out in a sidebar, it also suggests some fundamental changes taking place in the realm of consumer expectations. It used to be that Tuesday was seen as the day on which new albums were released…and while that remains true to a certain extent, people no longer have to line up to buy a new album at the local music store. They just go online and download the album – or, more precisely, download only the songs on the album that seem interesting to them.

It is all about the consumer desire for instant gratification. The emerging consumer class is defined by this desire – perhaps to the point where it is becoming a craving.

Retailers in all venues need to pay close attention to this burgeoning consumer demand. If it applies to music now, it seems to us, it could easily apply to food later. And maybe sooner.