In my recent article I discuss how manufacturing and agriculture have declined in our country to be replaced by services. To quickly recap, services represent the fastest growing sector not just in our US economy ( 70% of GDP), but in the economies of all the industrial nations of the world. If you are like me and grew up in an economy that emphasized goods, you might have been a little surprised by this news too.
However, what I wanted to discuss here is how value added services relate to goods and the market. I now realize the potential that value added services combined with goods have to change the face of our market. If you want to stay abreast of where our economy is moving and be at the forefront of this economic shift, then I invite you to read on and share your thoughts.
Early in my career I hoped to one day develop some widget and see it come to market. Getting to work at Xerox, a company that manufactured printers was a great fit for my experience in software while also getting to learn about the manufacturing field. I was initially surprised to learn our printer chassis came from Asian developers. Even more of a surprise was that many other companies would pick up the same model we used!
To my way of thinking in order to make money you needed exclusive distribution or lowest price. However, what set Xerox apart was the additional value of its software added to improve the printer! They were never the cheapest product, just the BEST. It is this model of combining goods with a service that offers an entirely new way to approach the market place.
I want to list a couple of examples of this goods plus services model, and hopefully invite others to share their thoughts about the subject too. Here are a few of the new entrepreneurs who are putting the twist on retail by offering a distinct value added service.
Ellen Geiger Originals (EGO) product is clothing. However, her value added service is artistically hand painted fabrics and sewing. If you want cheap clothes, go to the mall, but if you want to wear your art and set yourself apart from others, then Ego Originals are for you.
Haven Home Design sells furniture and home furnishings something that you can find in many retail locations. The primary difference is that the owner, Michelle Thorstom is an interior designer. She will come to your home, look at the furnishings you already have, then make recommendations on paint, color, furnishings and decorations to help your home have a finished comfortable elegance.
The point I hope to have made is that many retailers strategy for business is to be either the exclusive distributor of a product, or to undersell the competition. This sets up an environment where margins are razor thin and the key to success is volume which makes having a relationship with your customers difficult. However, value added services are a way for retailers to create their own Blue Ocean Strategy: "instead of focusing on beating the competition, make the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space."