The Customization Revolution
NEW DELHI – The last two decades were the era of hypermarkets – massive superstores that could dazzle customers with an astonishing array of standardized products. But there are signs that the superstore’s age of dominance may be over. In recent months, hypermarkets around the world – Walmart, Tesco, Carrefour – have announced results that fell short of expectations. Conventional wisdom is that this reflects the economic cycle, but it may be the first sign of a more fundamental shift.
The world’s economic history can be seen as a race between transportation and communications. Transportation innovations allow supply chains to carry increasingly large quantities, which thereby encourages standardization. Communications innovations, on the other hand, allow for better specification of design, quality, quantity, and time of delivery, which tends to encourage customization. The dominant economic model of any era emerges from the relative evolution of these two technologies.
In ancient times, transportation technology was poor, and the production of most goods was local. Since consumers and producers could communicate directly with each other, artisan manufacturing was mostly customized. This was the age of the village blacksmith, weaver, potter, and cobbler.