Shoppers get physical again

Shoppers get physical again

Two months ago, when I was in London for a business trip, I read an interesting story in The Guardian newspaper.

It was about how the global music retailer HMV is now almost neck-and-neck with Amazon in the fight to be Britain's biggest music and DVD retailer - having amassed 19 per cent of the market against Amazon's 20 per cent.

When I came home and repeated this piece of news to friends and business contacts, all expressed surprise. How is that possible, they asked, since no one these days really buys CDs or DVDs any more, and everyone just downloads content from the Internet?

In fact, it was precisely because of declining physical music sales that HMV collapsed less than two years ago. In Britain, the business was sold to a firm called Hilco. Now that it is only half the size it used to be, it is mind-boggling to think that HMV can challenge Amazon.

Having been a big music fan who has visited HMV stores all my life, I was cheered immensely by the news. As to whether I was surprised by it, the answer is yes and no. The speed of HMV's comeback was certainly startling, but the change that fuelled it - people going back to buying physical items from a physical retail store - was much less so.

If you look back at the last 10 years, quantum leaps in data download speeds and digital compression technology have revolutionised the way we live our lives. We can read stories from almost any newspaper around the world and buy almost anything from any retailer.

At the start, one might have waited 10 minutes to download a single three-minute song. Over time, 10 minutes of waiting netted you progressively more: a whole album of songs, a music video, an episode of a television series, and now, even an entire movie in high-definition Blu-ray is possible.

In fact, there is no need to even wait to download anything today because broadband connections are fast enough to stream music and video in real-time to users, and you can pay to access huge libraries of television shows and movies. Of course, there are also people who engage in file sharing and know where to go to get everything they want free of charge.

What happens, therefore, when technology has taken things to the extreme and people find themselves living in an infinite-choice, almost zero-cost digital world?

Human nature is to want more, or at least something different from everyone else. And since we seem to have reached the logical limit in the digital space, some people are going back to the physical realm to look for it.

To me, there are some things the digital world cannot deliver. The first, and most obvious, is the sensuality of physical objects and places - the scent of the pages of a new book or CD, the beautiful large-scale artwork and "warm" sound of vinyl records, the kinship you feel with like-minded enthusiasts at a retail store or at a live concert.

At a recent talk I attended, PwC's global leader for the entertainment and media practice Marcel Fenez said his firm's research has found that consumers are increasingly willing to pay extra for the "experience" associated with their purchase.

This accounts for why sales of vinyl records or LPs in the United States are growing at an astounding rate of 40 per cent, according to latest figures for the first half of this year from Nielsen, even as CD sales continue to plummet.

Of course, this is from a very low base but a decade ago, LP sales were barely significant. Now, they represent about 4.6 per cent of total physical album sales.

In its own music industry forecast for the next five years, PwC sees sales of music downloads declining as customers swop them for streaming services, but, tellingly, also posits a holding steady or even slight increase in the sales of physical music media.

This nascent trend can also be found if you go to a good bookstore, where you may be surprised by a surfeit of independent magazines like Monocle, Frankie and Kinfolk produced with the print reader in mind first and foremost.

Yes, many of them have electronic editions in PDF format, but in the physical world they are printed on heavy, sometimes exquisitely textured paper and are always a feast for the senses with beautiful pictures and layout. If you open the pages, you will often find content curated from around the world. It has to be, given that these magazines are now competing with the vastness of the Internet for a reader's attention. The same principle applies to the many "hipster" retail stores that have opened in Singapore and many cities around the world by young entrepreneurs. When a potential customer can buy almost anything off the Internet at a potentially lower price, one had better choose and display one's wares expertly.

Why do these stores and magazines seem to thrive despite having the economics of the purchase stacked against them?

Well, after veering towards an incessant customisation of the world according to one's individual preferences, some customers are rediscovering the joys of curation, said PwC's Mr Fenez.

I think some people are discovering that physical things are the most outward and permanent expression of their identity, preferences and taste. How would I know that you are a really big fan of Scottish indie pop darlings Belle and Sebastian if all you have done is assemble a long playlist of the cult band's music on Spotify?

One reason sales of physical media have stopped falling, or are even rising in some cases, is that young enthusiasts want to put these magazines, books and albums on their shelves again, if only to prove to others - or even just themselves - that they like something enough to invest more in it than the average Joe with a fast broadband connection.

I am not, by any means, forecasting a reversal of the world's relentless migration to digital media. That will continue and even gather pace with each new technological breakthrough.

I was also reminded of the fragility of the current resurgence of physical media by a senior executive from the New York Times who was in Singapore for a digital media conference last week.

"That's just us," she said, referring to the fact that we are about the same age. "It's because we actually remember the touch and feel of physical things. Many kids never even had these experiences growing up; to them it's a fad that could die out next year."

Maybe it's an ember that will eventually go out or not amount to anything very much in our vast new infinite-choice, zero-cost world. But it's one that I think is worth keeping alight.

ignatius@sph.com.sg


This article was first published on Nov 23, 2014.
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