Some people believe what they see. But in truth, I think the opposite is true. Most people see what they believe.
Nowhere is that more true than in the political landscape. If you believe that the President of the United States should be removed from office, you’ll see evidence that supports your point of view. If you believe he’s innocent and was duly elected and is doing a good job, then that’s what you’ll see.
If you believe that eating beef is healthy for you, then you’ll see the evidence that supports that point of view. If you’re Vegan and you believe that beef is bad for you, then you’ll see the evidence to support that point of view.
I’m not telling you anything new. But there’s a link between this and economic survival.
Consumers increasingly want to work with businesses who deliver all the values of price and convenience, but also those contribute outside the transaction in a societal way.
Toms Shoes is a company that exemplifies this kind of impact. They invented the buy a pair, give a pair model. To date, they’ve given away almost 100 million pairs of shoes to people in need.
Last week at the World Economic Forum in Davos, the CEO of Walmart spoke very eloquently about how these social factors are influencing consumer choices.
Walmart is starting to look at Vegan products and are catering to consumers who match the values alignment with those products.
The big question is what kinds of businesses are going to be successful in the next decade. Those that are local and only compete on a local basis will continue to do well, provided of course that they deliver a quality product and good value for their customers. Increasingly, they need to cater to their values, not just deliver the product. Some people will order a cup of coffee because it tastes good. Others will only order from a coffee shop that advertises “Fair trade” coffee.
Commodity businesses are those that compete on a global basis where scale, convenience and lowest cost are the over-riding factors. This is the world of commodity. When the value is unclear, the discussion always degenerates to price. Price always wins in commodity.
You can’t get your hair cut online and your dentist had better be local. But if you have a high ticket item, you can bet that an online purchase will be the way to go. Carrying that inventory in a bricks and mortar store will always lose. I just purchased a dishwasher for a commercial property online. There’s no need for the bricks and mortar store.
But if loyalty to a store is going to exist, it requires three things:
- Repeat business. Transactions that occur infrequently such as once in a lifetime, or once a decade don’t generate loyalty. Wedding dress shops don’t have any customer loyalty. That’s why
- Competitive price and service.
- A connection between the buyer and seller. Increasingly these days, values alignment is being tested as a
Could it be that businesses that identify as Tea Party values will be attractive to that target audience. Perhaps businesses that identify as LGBT friendly will connect with a large segment of the population? Businesses that are explicitly immigrant friendly. If you or your parents are new to the country, then you are part of the immigrant experience. Businesses that speak to you and the immigrant mindset might be more attractive.
There’s no question that the landscape of business is changing. But the question is how is it changing? As a real estate investor, you need to know how business is changing because that’s the economic engine that ultimately pays for the rent in the buildings you own, whether you’re in the world of multi-family apartments, office, retail, or storage. All of these segments don’t survive without a vibrant local economy underpinning the community.