COVER STORY
American Retail Store Wars
By Prof . Dr Ajit Patil
This article is my effort at introducing readers to the great American Retail Warfare . I have been visiting and researching American Retailers ever since 1997 . I live in Mumbai but we had a house in Boston earlier and in Atlanta since the year 2010 . My only brother Jayant , his dear wife Anuradha and lovely son Nishant are American citizens . I always missed them and looked for an opportunity to reach Boston and Atlanta just to stay with them for a month and a half , every year .
During these 24 years , I have spent months in all of these American retail stores . I was more in the stores than at home . I did this just out of passion and love for studying marketing , retail and strategy . I never wrote about it , barring an article on Walmart on LinkedIn . From the perspective of retailing in developing countries in general and Indian retail in particular , I am a man who saw tomorrow . My PhD thesis was on Indian retailing . I have studied retail in America , Western Europe and China for a couple of decades . I have studied , researched , taught , practiced and also advised retailers and marketers . I hope you will find my articulation interesting and useful .
On 24 th January 1848 , James Marshall found gold in California . The news spread in America like wildfire . America was then restricted only to the East coast . People started to go to the West and the Goldrush began . That was the point from where America came into limelight . Post World War-2 when industrialization got momentum , America became the nation of mega brands . They transformed commodities and products in every category into brands . Brands not only gave assurance but created a cult .
They didn ’ t just stop at satisfying customers . American brands travelled the extra mile to delight customers by providing consumer surplus . They also aroused consumers ’ needs which were latent . Brands not only aroused such needs but transformed them into pressing needs creating a strong urge to use them .
Coca Cola became a powerful brand by convincing American consumers that only Coke can quench their thirst . Pepsi didn ’ t just compete with Coke for their pound of flesh but expanded this theme further making Americans remember only Coke or Pepsi when they have thirst . Nike made Americans wear sporty , stylish , more comfortable , and athlete like shoes . They didn ’ t stop at up-selling . They segmented the market further . Made customers buy different shoes for different use , occasions and sports . They increased shoe use and consumption multi-fold by luring customers to buy more shoes by launching new models year after year . Americans stopped repairing and re-using old shoes . Nike , Reebok , Adidas and other brands made customers buy 5 to 6 pairs of shoes when they were previously hardly buying one . They also made customers change those shoes more frequently by introducing new materials , designs , and styles more often .
Developing Brands To Expand Markets
Brands worked on a step-by-step customer development process : Arouse the need , create the aspiration , convert the non-users by making them buy for the first time , increase the occasions of use , increase the number of product applications , increase the quantity per consumption , transform the first-time buyers to repeat buyers and then as clients . Brands monetized customer delight by charging a brand premium . They charged their customers to the extent that customers became advocates who not only just spread the positive word of mouth but also partnered with brands to promote them . Brands used tricks like loyalty schemes , reward points , referral bonus to lure delighted customers to become brand ambassadors and increase the brand community , and command the brand premium by generating delight through providing consumer surplus . Brands created ‘ consumption culture ’ in America by triggering ‘ pride of possession ’.
Credit Card Economy
Americans enjoy this weekend , then earn to repay what they enjoyed , in the coming weeks . This is the confidence and culture of the developed world . Sitting in developing countries , one can ’ t imagine it . Our socio-economic situations , political instability , dynamic VUCA environment takes us to a saving-oriented economy . We save for rainy days ; we save for summer ; we save for winter . Americans work hard in all seasons . They get opportunities all 365 days . They live for today , don ’ t waste time repenting for yesterday and don ’ t wait for tomorrow .
The consumption culture created by brands was well nourished by the Credit Card revolution . Credit cards made customers buy more and supported the cause of branding . CNBC report reveals that as of 2021 , Americans have a credit card loan of more than $ 900 billion . On average 15 % of the future income is already
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