Growing up in Florida, cold weather (and related clothing) were non-issues.
For example, before moving to the Bay Area two years ago, I owned one jacket, one sweatshirt, and one pair of gloves – which I used at most once per year.
The reality was that because they were so infrequently used – the items were more about utility – than style.
(Seriously, when it gets cold in Florida – no one goes outside – and if they do – people are so confused by the weather – they’re not thinking at all about what anyone is wearing – this photo above was taken in the middle of December)
Because of that – one of my first challenges with life in a colder climate – was starting to understand “layers” as elements of a broader outfit – not simply checking off the box with having “an item to keep my hands warm.”
Over time my closet began to grow, first with different colors of sweaters and jackets – then starting to understand the different types of outerwear and eventually moving into owning different pairs of gloves and scarves that go with various outfits. (I refuse to own more than three scarves – I’m still not sure how to correctly tie or use them.)
However, rather than utility, my purchasing decisions were now driven by style and how the various elements fit into my broader closet (or more specifically, how my very patient friends were educating me to think about “cold weather clothing options.”
Retailers and merchants capitalize on this thinking by offering a wide variety of SKUs (or individual products) to their customer base. Just think about the last time you visited Nordstrom’s or Macy’s – the number of different styles (and colors within a given style) is driven by the idea that consumer’s want choices that fit into their closet and lifestyle.
The broader business strategy is that for any given customer – the cost of customer acquisition is fixed – but the lifetime value of a customer is bounded only by the number of items the company sells that the customer would be interested in purchasing. I may walk into Banana Republic focused on buying a new pair of jeans – but given their selection of different other items – I may walk out also purchasing a new belt, some socks, and a new jacket.
With this lens, its been interesting to watch the explosion of interest in “Google Glasses” and the fundraising progress of the “Pebble Watch” project on Kickstarter - and thinking about how these products could change into companies and jump into the mainstream population.*
The issue I keep coming back to is the fundamental divide between utility and style – and how it affects how people make purchasing decisions.
For watches, there isn’t a lot of quality data around average number of wrist watches owned per person (Though Yahoo! Answers would give you guidance between 2 and 10 per person) – but simply look at the explosive growth in the Swiss Watch Market from 2.5 billion pounds in 1986 up to over 10 billion pounds in 2010 (a time when high-end wrist watches would be less useful than phones and more focused on style) – for an indicator that purchasing may be more driven by style than utility.
Anecdotally, Bernie Madoff was arrested with 17 Rolexes and 7 Cartiers and my father owns 5 different watches. (I own 0 – but I think that goes back to not being that stylish)
Individual purchasing data is similarly hard to track down in the “Eyewear Category” but simply look at the structure of the overall market for an indicator about the importance of breadth of SKUs – specifically that roughly 60% of the “Eyewear” market by units and value was owned by two companies – “Luxottica” and “Safilo.”
Though you may not have heard of these two companies – you’ll know their brands which include Oakley, Ray Ban, Nine West, Marc Jacobs, Persol and many others. These holding companies license the brands of major brands before designing and producing associated eyewear products – which inherently compete with their existing product base – all designed to give consumers more options and choice within their family of products.
Looking forward, this is the challenge faced by the new crop of wearable computing companies who are focused on general use consumer products:
- Mainstream wearable products are driven by style
- Consumers want many different choices and want to be able to purchase multiple items for different outfits
- Designing, producing, and holding inventory for many different SKUs is expensive and a non-starter for most startups
* In the spirit of disclosure, I pre-purchased a Pebble Watch and am extremely excited about it