Guiding Lines: The Long Forgotten Past

According to Wikipedia, the general meaning of customization is “the manufacturing of mass products for a specific order based on the personal details or characteristics provided.

Mass customization is the ability for a company to give its customers an opportunity to create and choose product to certain specifications. The main task is to create a feeling in the user that work is done specifically for them and for their satisfaction.

It is almost the ideal cooperation between the producer of the good or service and the client, ethically attractive and economically profitable, because it provides competitive advantage thanks to the creation of higher value (in price) for the client. And therefore creates loyalty in the consumer in relation to the seller. But the Russian market regards customization suspiciously.

At the same time more consumers are turning away from “en mass” to “personalization” and strive to obtain goods and services that correspond to their individual concepts. Discounts and cards already don’t entice them.

They only buy what meets their own requirements – this is the current fashion. The current fashion but not the new fashion. Customization is returning to the roots of trade. The roots of this phenomenon go back literally centuries: for example, clothes and shoes were sewed to order. Scents were ordered from perfumers, cream and cosmetics from pharmacists. And it was only much later, at approximately the beginning of the twentieth century, together with the growth of capacities that network trade began to develop. Manufacturers have come to the conclusion that the century of the majority of goods is not long. In such a situation it is necessary to reduce costs and prices.

Yulia Dalnova, director of the commercial real estate department at Knight Frank, considers that in the Russian market there is still too great a demand from customers to talk about customization in the average price segment. As for the mass market, everything is being sold perfectly, the expert assures. Dalnova is assured: it is first of all a question of costs for the manufacturer. Why alter a cheap product for individual requirements? The top price segment is another matter. Here sellers have really sensitively reacted to the fact that buyers are looking for an individual approach and are prepared to pay for it.

Independent experts are sure: by and large the use of customisation will not lower the revenue of the seller, and will not push away buyers from it. And actually on the contrary - will attract new ones. Each happy buyer will not only return - but will result in two or three more happy buyers. And imagine that those recommended by him will also be happy... Such an approach is also favourable to proprietors of shopping centers: attendance can increase. The main thing is to make sure that it doesn’t lead to a sharp increase in rental rates.

Alexander Osipov, head of the consulting department at Astera, has said that according to research carried out by marketing agencies, at - gradually 10-15 per cent of consumers are prepared to be original and unlike everybody else. In London on Savile Row tailors make suits, shirts, ties and cuff links to order, Osipov gives as an example. Such manufacturers do not have organizational, industrial, marketing or development costs. The final price for the product depends on: the cost of the material and its quantity and expenditures on labour. In such cases the tailor does not need too many clients, a circle of steady customers is formed, from which profit is made.

But large manufacturers also have the above-mentioned costs. And if we assume that a well-known brand in the average price segment will start customisation, then expenses on production, marketing and advertising will sharply increase. And it will still be necessary to conduct large-scale research on the tastes and preferences of certain groups of buyers. And even after all this there is a big difference between the number of clients, between 1000 consumers and 100 000 consumers. And the personal approach will nevertheless reduce the number of buyers, Osipov disagrees with the experts.

However, he is not sure that manufacturers’ profits will significantly fall. But with such an approach there is the risk of incorrectly choosing the target audience.

The mass market is nevertheless resorting to customisation. For example, at Zara there are certain styles of clothes in limited number. And in the average price segment this is also possible. For example, Anna Zotova, HR director of a well-known jewelry company, has made a business plan and wants to open her own business. Zotova has seriously thought out using originality in wholesale. And for this purpose to open a clothes, shoe and accessories shop where it will be possible to create practically with your own hands your own image. Customers will be offered different parts (e.g. collar, cuffs, sleeves, heels etc) of clothing and shoes which can be united to form an original item and by principle the designer will be the buyer.

According to Zotova’s calculations, she can correspond to the average price segment. And buyers up to the age of 40 will be her target audience. Zotova has already patented her idea and is now looking for an investor. But will proprietors of shopping centers allow an unknown brand and non-chain store to rent premises their complex.