An Example Of ‘Business Disruption’ and The Lessons Of Innovation From ‘Aristide Boucicaut’
The year 1834, Belleme, France, 18-year-old Aristide Boucicaut, an ambitious person, was a street vendor selling fabrics. But the intense competition, increasing price wars, and shrinking profit margins had rendered his business unsustainable. (As his products/services were almost similar to the next vendor, he could compete only on price). He had to finally close down his business.
Boucicaut then moved to Paris, went to work in a novelty store on rue de Bac, the Petit Saint-Thomas, which sold women’s clothing. He began as a salesperson of shawls. Soon he rose up the career ladder. But again in 1948, Petit Saint-Thomas had to be closed down due to the intense competition.
Red-Queen Effect: Boucicaut realised that he had been running the business to survive rather than to grow. Whatever new incremental innovations he could implement, were providing only a minuscule growth, as the competitors copied them in no time. He became aware that he needs to break away from the competition and he had to create a new ‘Value Proposition’. He had to innovate. He had to disrupt the market. But How?
CONTEST WITHOUT ANY COMPETITION
Clayton Christensen in his book “The Innovator’s solution” offers a suggestion — To disrupt, we need to either look at new customers who previously lacked money, skills to buy and use the product(Targeting Non Customers), or different situations in which a product can be used.
W.Chan Kim and Renee Mauborgne in their book “Blue Ocean Strategy” also have some suggestions for market disruption or creating a blue ocean(uncontested marketplace) — One of their suggestions is “If you would like to reach beyond existing demand then unlock a new mass of customers that did not exist before. Reorient the focus from your existing customers to non-customers. “
They further added, “Looking at non-customers would help us to redefine the problem, look from a different perspective and reconstruct new buyer value elements”.
The Meaning Of Congruence — When we fight with our competitors in the existing market, we would be dividing the customers into finer segments and naturally would look for value differences, preferences in those customer segments, so that we could customize our product or service. But Chan and Renee indicate that if we look at non-customers, we could think in terms of commonalities that buyers would value rather than wasting our time in identifying differences. Finding commonalities would be easier than finding the differences.
What kind of non-customers did Boucicaut target?. Let see what Clayton Christensen says about choosing Non-Customers. He furnishes a couple of options to be explored in the beginning.
01) Can the product or service be provided to less affluent people in a more convenient context, something that historically was available only to more skilled or more affluent people? Less affluent people and a more convenient context(A critical parameter).
02) He also provides another condition — Is there a large population available?
Aristide Boucicaut sees a potential opportunity in the emerging middle class, as they are getting wealthier from the Industrial Revolution. Before industrialisation, people had few things available in the market that could be owned. Mass production has enabled accessibility to exciting items. People could now own more things. Boucicaut feels that this class of people desire to belong to be a part of a higher class. They are a steadily growing group and got new aspirations.
Boucicaut knew that every other shop owner would target this emerging middle class. He has to dig his head below the surface and see things where most people would not explore so that he could locate his ‘Non-Customers’ as soon as possible. After brief research and with his own experience, Boucicaut figures out his potential ‘Non-customers’ — Women from the emerging middle class.
Why Target Women?
Women in the 1830s were considered intellectually inferior to men. They were treated as a kind of privileged slave. A man was considered rational, energetic, stronger and was thought to have natures suited to the public world. Women were stereotyped as a weak, passive, emotionally vulnerable, socially familial, dependant and suited to the private world. Respectable women of upper classes, emerging middle classes had no other sources of exciting activities or recreation other than visiting family tombs or friend’s homes along with her husband. They were bored… They needed excitement… They too needed space on their own… Women of the emerging middle class were desperate to fit into the upper class. They were desperate to be part of the higher class. Though they already own things, they continue to acquire more and more things.
“Boucicaut senses that the opportunity exists in not meeting customer’s necessities or needs but meeting their desires. The opportunity is not selling goods to them but selling a lifestyle, selling experiences”.
Boucicaut’s non-customers ‘Women of the emerging middle class’ matched Clayton Christensen’s conditions — 1) Is there less affluent people, who previously lacked money, skills to buy, 2) Is there a large available population? 3) Can a Convenient context be provided?
As W.Chan Kim and Renee Mauborgne point out, “When you are creating a new market, you are no more fighting any incumbent or your present competitor, you are fighting against “Non-Consumption”. Boucicaut’s challenge is to overcome the non-consumption. He needed to design a convenient context and encourage the users to try the product or service.
When Canon made photocopying convenient, people ended up making a lot more copies.
Designing a convenient context
To begin with, Boucicaut had a good understanding of his customers, as he had earlier worked for years selling women’s clothing. His foremost thought was to treat his customers not as buyers but as guests.
“When you think of them as guests, your shop should appear like home to their eyes. They should feel your shop as a home away from home. A palace.”
The above thought had helped Boucicaut to transform the store design. He fantasized a store of vast space similar to a palace, beautifully lit, with plenty of items from all around the world and have wonderful customer service.
By 1852, The world’s departmental store ‘Le Bon Marche’ was born.
From the Wikipedia, “The annual income of the store increased from 500,000 francs in 1852 to five million in 1860. In 1869 he built a much larger building at 24 rue de Sèvres on the Left Bank, and enlarged the store again in 1872, with help from the engineering firm of Gustave Eiffel, creator of the Eiffel Tower”.
Designing A Wholesome Experience — As Boucicaut was clear that he needs to fulfil the desires of consumers rather than their needs, he focussed on providing a wholesome experience for the customer rather than just selling goods. An inspiring store environment not only would add value, provide experience but also would remain in the consumer’s emotional memory.
To tempt the customers, Boucicaut was ready to provide experience for all the senses.
Boucicaut’s store architecture was considered innovative for its time. The industrial revolution has made manufacturing of massive glass pieces possible and Boucicaut utilised them in his store’s architecture to provide a bright, well-lit interior.
He designed the internal environment, placed goods based on consumer’s behaviour, preferences, goals, and aspirations. He had an understanding of utilising colours, textures in making an awesome visual impression and thereby overloading the consumer’s senses. The industrial revolution had enabled the availability of new pigments and Boucicaut was ready to exploit them. He encouraged displaying of garments in different colours adjacent to each other to create breathtaking visual displays. He introduced elaborate window displays. He was particular that displays need to capture the consumer’s imagination.
The Anxiety Challenge
Boucicaut’s next challenge was how to make people come to the store and then how to make them buy the products.
Free To Browse — The store culture in the 1850s was different. You were not free to look around the store and locate items within your budget. None of the stores encouraged browsing. Unless you knew the product what you need and its price, you would be afraid of entering the store. In every store, the floorwalkers stalked the aisles and they made sure that you get out as soon as possible if you had planned to browse. Floorwalker’s job was to pressurise to buy or force you out.
Price tags — In the 1850s, it was rare to see the prices being mentioned in the products. Emerging middle-class people had a fear to ask the price as they were afraid whether they could afford or not. They could not judge whether they could desire the product or not.
To allay those fears, Boucicaut introduced ‘Free Entry’ concept to the store, encouraged browsing in all his advertising communications. He never allowed any floorwalkers. Boucicaut then introduced a major innovation — price tags. This radically changed the concept of the supermarket.
Boucicaut brought items from all over the world and made sure that the choice of goods is overwhelming. He introduced seasonal sales by reducing prices on selected items.
Anxiety Of Meaningful Benefit — How to make the consumers buy? The emerging middle class was still price conscious — They had a fear — what if the products were not to their expectations? Boucicaut introduced another innovation — Trialability. He felt that if he had made it easy to try the products, it would remove the anxiety and would encourage people to buy more. Trialability provides an instant experience leaving a mark in mind. He seduced his consumers by letting them touch and try things, dresses, accessories without any store attendant’s help. He transformed the consumer’s experience. As his targeted customers were women, he also hired a lot of women as employees.
Boucicaut still had another challenge — To make sure that his ‘Non-customers’ women would spend a considerable amount of time in his store so that they could buy more items. The number of items bought is directly proportional to the number of hours spent inside the store. In the 1850s, the public space belonged only to men. You would rarely find women toilets in public spaces. As women were considered pure in the society, they were supposed to hang on and, not going to the toilet. Boucicaut knew that he needs to keep women as long as possible in the building. So, he built public toilets for women — an innovation at that time. He truly created a home away from home.
Boucicaut also introduced other innovations of the time to reduce further anxieties of women — a reading room for husbands while their wives shopped; facilities to engage and entertain children.
Boucicaut’s success shows us that we need to treat consumers as humans rather than buyers, provide them a wholesome experience rather than products/services, think every aspect of the business from their perspective, inspire them to have dreams, help them to accomplish those dreams and become part of their memories.
References: The Birth Of Shopping documentary 2011, Article on Women in Nineteenth-Century by Kimberly M. Radek-Hall, Emotional Branding by Marc Gobe, The Innovator’s Solution by Clayton M. Christensen and Michael E. Raynor, Blue Ocean Strategy by Renée Mauborgne and W. Chan Kim.