The Decline and Fall of Independent Urban Brick-and-Mortar Consumption Sites

I recently blogged about the decline, at least in part because of the explosion in  digital consumption, of brick-and-mortar consumption sites such as shopping malls and various chain stores. However, a recent editorial in the New York Times (“No Shop Around the Corner”, November 20, 2017, p. A22) made it clear that I had failed to mention the decline of small, independent, urban, brick-and-mortar consumption sites. As a native New Yorker, I had noticed that decline several years ago when I stayed in midtown Manhattan. I went in search of the kind of local, “greasy spoon”, restaurants I had grown up with. I quickly discovered that they were nowhere to be found, at least in the midtown area in which I searched. Instead, what I did find were a number of outlets of various fast food chains.

The Times article focused on the “scourge” of store closings in New York City, mostly in Manhattan. While some those stores remain closed, others have been replaced by the outlets of national chains. Both alternatives adversely affect the distinctive nature and quality of life in New York and other large cities. Empty storefronts with large “For Rent” or “For Sale” signs cast a pall over the city (just as they do in shopping malls). Storefronts that become chain stores have a different kind of deleterious effect. Instead of a local shop, consumers are faced with a choice among the same kinds of chain stores found in many other parts of the United States, and increasingly elsewhere in the world. This has a homogenizing effect everywhere. The quite unique Manhattan of my youth is largely gone making it increasingly difficult to differentiate New York from other U.S. cities and even from the remaining shopping malls. The owners of the real estate on which Manhattan’s local shops are built are, at least in some cases, charging exorbitant rents that tend to force out small independent shop owners. The result is vacant shops. The landlords hope that a national chain (e.g. Sephora) that is able to afford the rent (or even to pay more), will open in those vacated locations.

Also worth mentioning in this context is the transformation the sleazy Times Square and 42nd Street of my youth, an era and area that is currently being fictionalized in HBO’s “The Deuce”. Forty-second street between Seventh and Eighth Avenue has been transformed into a squeaky clean, Disney-like theme park with, among other things, a Disney theatre, a large McDonald’s, an Applebees, AMC and Regal multiplex movie theaters, and one of the Hilton’s hotel chain, with a Westin hotel just north of 42nd street. In other words, 42nd street is no longer sleazy, but it is also no longer distinctive. It now encompasses a similar mix of businesses to those found in many other locales.

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Sleeping with the Digital Enemy: Salvation for Brick-and-Mortar Shops?

While many brick-and-mortar consumption sites are going bankrupt (Radio Shack, Payless), dying (Sears), or are long gone (Circuit City, numerous dead malls [see deadmalls.com]), several late 2017 articles in the New York Times suggested that it is premature to sound the death knell for brick-and-mortar stores.

Some brick-and-mortar consumption sites, most notably fast food restaurants, are not dying. In fact, they will continue to exist, if not prosper, at least until the day when technology is advanced enough to deliver burgers and fries to our homes digitally (e.g., that can be produced on our 3-D printers, or by even more advanced technologies of the future).  Many other kinds of stores (e.g. supermarkets) will survive for many of the same reasons. Furthermore, still other brick-and-mortar stores will continue to exist if for no other reason than the fact that many people will continue to feel the need to get out of the house and away from their computers, at least some of the time. Since consumption is, for many people, their major form of recreation, this will undoubtedly lead them to updated brick-and-mortar shops, malls, amusement parks, and the like.

There are also hopeful, but contradictory, possibilities for other brick-and-mortar sites such as, making them smaller (more focused, more personal and intimate) or more multi-functional. However, there is general agreement on the need to make such sites more experiential (for example, malls that have fewer stores and more restaurants and movie theaters; showrooms offering more personalized services and an array of amenities such as manicures and a glass of wine). Beyond that, such sites can move beyond a focus on brick-and-mortar shops and, among other things, transform themselves into “event spaces, classrooms, community centers”. While there is some promise in these changes, they seem, at best, dim hopes. The chief executive of Oscar de la Renta is quoted as saying that brick-and-mortar stores are no longer necessarily advantageous and in the second-tier markets they might be considered “millstones”.

The main source of salvation for brick-and-mortar stores is said to be augmentation with that- digital consumption sites- which have been, are, and will continue to be the greatest threat to them. The major hope for many of the brick-and-mortar consumption sites that continue to exist is in synergistic relationships with digital sites. While this will keep some brick-and-mortar locales alive, they will clearly be subordinated to the digital and on life-support. Further, that which is keeping them alive, at least faintly, is the very digital force that has been killing them and will continue to be fatal to them in the future. Brick-and-mortar stores are eagerly climbing into bed with their mortal enemy. If the alliance with the digital world does not kill brick-and-mortar sites, it will reduce them to insignificant appendages to the digital.

Also not offering much hope to the brick-and-mortar world are the material sites Amazon has created (bookstores, convenience stores) or purchased (the Whole Foods chain of over 460 supermarkets). They are destined to be an infinitesimal part of Amazon’s total business. They may be useful for experimentation, the application of the massive amounts of data collected by Amazon.com, and for new bodies of data on consumers, but they are not going to contribute much to Amazon’s bottom line. On the other hand, Wal-Mart will gain much more by its move away from its massive number of brick-and-mortar stores and in the direction of becoming a greater presence in the digital world.

Prosuming Machines: Some Recent Advancements

In 2015 I published an article on “prosuming machines”, or those that are able to produce and consume more-or-less simultaneously and increasingly without the intervention of human prosumers. While the human prosumer has recently been rediscovered in the academic literature and much attention has now been devoted to the topic, the irony is that the human prosumer is in the early stages of being supplanted by prosuming machines. A few recent developments in this area are worth mentioning.

The most advanced prosuming machines, at least the ones that seem closest to wide-scale acceptance and use, are self-driving automobiles (including taxis), as well as trucks. Automobiles are difficult to automate since they must be able to navigate crowded and complex city streets. However, since much of their time will be spent on straight, often nearly empty, highways, it is proving to be much easier to automate trucks, especially those devoted to long-distance hauling. Furthermore, trucking companies have a huge incentive to bring self-driving trucks online since they will lead to a dramatic reduction in various costs associated with human drivers such as pay, insurance, and other expenses (e.g. lawsuits) associated with accidents caused by human error. Of course there will be other kinds of losses associated with the automation of trucking, such as jobs (especially long-haul truck drivers) and those now to be had in truck stops.

In the area of Artificial Intelligence (for example, Google’s AutoML), we will see the elimination, at least some extent, of highly skilled human prosumers. This will occur as a result of automating the production of new forms of AI (and algorithms) based on algorithms that learn (a form of consumption) on their own. This development is driven, in part, by a shortage of humans (as prosumers) skilled enough to do the work.

Then there are the advancements in smart (or digital) pills (e.g. anti-psychotics such as Abilify). Such pills have built-in sensors that are not only consumed by humans to, hopefully, produce the desired effect on them, but more importantly to produce information on their use to be consumed by other interested parties (relatives, doctors, etc.). The goal is to help insure that people, especially the elderly and the mentally ill, not only actually take the medications prescribed for them, but that they use them in the appropriate manner (dosage, timing, etc.). Another objective is be sure that patients (e.g. those who have just had surgery) do not abuse the use of drugs such as opiods. Also in the works, as well as in limited use, is the “exercise pill” (or “exercise-in-a-pill”). After such a pill is ingested (consumed), it produces biochemical changes with the beneficial effects (lower blood pressure, lower cholesterol, and weight loss) associated with exercise, but without the need to move a muscle.

There will continue to be dramatic advances in prosuming machines further limiting, if not eliminating, the human prosumer.

 

It’s Time to Pay Digital Prosumers for the Data They Now Provide Free of Charge

A recent New York Times article made the case that users- prosumers- provide highly valuable information to internet sites such as Google, Facebook and Amazon.com. That information is currently worth $1,000 per user, an amount that will rise rapidly in the coming years. The argument is made that these companies, as well as the data brokerages (with current revenue of $150 billion a year) that purchase and sell such data, ought to be taxed. While this a radical suggestion, at least as far as those who run these companies are concerned, it does not go nearly far enough. If we are willing to say that these companies should be taxed for this information, a far more consequential change would involve actually paying prosumers for the information they now provide, consciously and unconsciously, free of charge.

Hidden from view is the fact that the vast success and wealth of Google, Facebook, Amazon.com, and other companies of their ilk are largely based on the free labor provided by prosumers. As things now stand, prosumers are even more exploited than the workers in traditional capitalist businesses. Such workers have generally been paid as little as possible (the fast food industry is a notable example), but those prosumers who “work” on these online sites receive no pay at all. They are expected to be satisfied with rewards such as the ease of ordering products online and of maintaining contact with, and being informed about the lives of, family and friends. This just not enough!

After all, those at the top of these digital businesses are billionaires many times over largely because of this free labor. (Admittedly, these entrepreneurs deserve to be rewarded for their ideas and for the infrastructure they provide online prosumers that allows them to consume and produce). In thinking about paying prosumers, consider how much it would cost these digital businesses to hire traditional market researchers to collect and compile all of these data. In fact, given the vast and rapidly growing amount of data, it would be impossible for them to do at any price.

Digital businesses are getting an incomparable gift from their users. It is time for them to offer economic rewards to these prosumers commensurate with their contributions to the corporate bottom line.

Globalization Has Not Had its Day

The misguided idea that globalization has had its day has come to the fore (again!) because of such recent global events as Donald Trump’s “American Firstism”, the United Kingdom’s exit from the EU, and the increased strength of the European right. While all of these developments are important, they must be viewed in a broader context of changes in the worldwide multidirectional flow of people, information, ideas and objects. Those flows are sometimes expedited, but at other times they are slowed, or even blocked, by barriers. They have been expedited for decades, but a counter-reaction has arisen due to the excesses, real or perceived, of the growth of openness to such flows. That counter-reaction has gained notoriety leading to some real changes (e.g. Brexit) that will impede some global flows. However, much of the counter-reaction has led to little change (e.g. the American Congress’s refusal, at least thus far, to fund Trump’s proposed wall between the United States and Mexico).

While the counter-reaction against “globalism” can still have a great impact, it is not going to end globalization. Globalization is multi-faceted. While some elements (e.g. the flow of people) may be slowed in some parts of the world, many others (especially the flow of information and ideas through such internet sites as Facebook and its almost 2 billion active users worldwide) are accelerating by the day. That these are unstoppable is clear, among other places, in the failure of the Chinese government to close down access to Google. Each new effort is countered by Chinese citizens who quickly find a new way around the most recent barriers.

 

 

Viewers as Prosuming Machines or as Directors of Highly Personalized Movies?

A recent (January 30, 2017) New Yorker article deals with interactive filmmaking. This revolutionary change will allow viewers to affect, consciously and unconsciously, what transpires in movies, perhaps on a moment-to-moment basis. Of course, from my point of view, such viewers (audiences) are prosumers. While viewers- and audiences- are inherently prosumers, this technological development allows for a great expansion of their role in the prosumption process. This is especially true of the productive aspect (which has always been there) of the prosumption of movies.

One of those at the forefront of this development had been influenced by the interactive “Choose Your Own Adventure” novels he had read when he was young (as well as by video games which inherently clearly involve both production and consumption). At central points in those stories, readers are allowed to make choices in the direction taken by the story and instructed to go to the page where the story moves in the chosen direction.

Early experiments in interactive movies put controllers in the audience members’ hands, but this technology offered them only limited options. Momentum started to build when Investors began to see the economic potential inherent in interactive technology, including the fact that it would allow them to collect useful and potentially profitable information on audience members.

The technology already exists allowing audience members to make conscious choices in the direction taken by a movie’s story. Envisioned is a system that tracks viewers’ story preferences and provides it to them. This would be much like the online tracking of our interests and then having ads appear that are in line with them. Even further, there soon will be eye-tracking technology leading to movies that focus on where viewers direct their attention, rather than having the focus predetermined by a director.

Such systems are, and increasingly will be, “prosuming machines”. They will consume an audience member’s preferences- either explicit or implicit in, for example, eye movement- and customize ensuing, or even ongoing, content in the movie to those preferences. In the process, as prosumption itself becomes increasingly unconscious, human prosumers will be transformed into prosuming machines more and more lacking in agency.

However, another possibility is technology that would allow viewers to move objects on the screen. In that case, viewers would have much more agency as they actively direct the movie as it unfolds. The next step, at least conceivably, would allow the audience to be able to insert entirely different objects, as well as people and events, into the story.

Whether it is unconscious or conscious, viewers in the future will be much more productive prosumers of the movies.

Demonizing the “Founder” of McDonald’s: It’s Much More the System than the Man

Although it is rooted in the 1950s and the creation of McDonald’s, the movie “The Founder” is a not-so-subtle attack on ruthless Trumpian-style and –era business practices.

The “founder” in question is Ray Kroc (who never founded anything- not the restaurant, its system, menu additions like Egg McMuffin, the idea that the real money was in the owning of the land on which the franchises were built and the rent that came from it, and so on). After many early failures as a Willy-Loman-like salesman, Kroc was drawn to the McDonald’s brothers’ revolutionary new business model in San Bernardino, California because it had placed an unusually large order for several of the milk shake machines he was hawking. The brothers were happy with their modest success and had no interest in building an empire. Kroc did and to his credit he was willing to work hard and risk all- including his home- on the future of the business which he saw in franchising (another idea and system not founded by Kroc).

But Kroc, like Trump, was ruthless and unethical both in his business and personal life eventually lying repeatedly to succeed. He ultimately screwed the McDonald brothers out of the $100 million a year he had verbally promised to them, but had refused to put in writing. In the end, one wonders whether the deceit was worth it. True, Kroc became a billionaire but he sold his soul in the process. In addition, after his death his wife gave it all away, much of it to the Salvation Army.

The movie is strong on the system that the McDonald brothers created. Its essence is depicted in a neatly choreographed scene on a tennis court with a chalk-drawn and re-drawn floor plan of the restaurant. The system they created drew heavily on Taylorism and time-and-motion studies, as well as on Henry Ford’s assembly line. Indeed, McDonald’s pioneered the assembly-line production of burgers (and other foods) and the treating of its customers as if they were on an assembly-line (especially in the later drive-throughs).

Beyond the McDonald’s “system”, the McDonald brothers created high(er) quality burgers and shakes (both eventually compromised by Kroc), finger food that did not require utensils, a self-service restaurant that kept customers moving because there were no seats, and a clean restaurant and environment that discouraged teenagers from hanging around and making a mess and lots of noise.

Kroc also quickly recognized the value of the name and of the golden arches (also created by the McDonald brothers). As depicted in the movie, he saw a similarity between those arches and church steeples and courthouse structures. In my terms, he is depicted as implicitly recognizing that he was creating a new “cathedral of consumption”.

One of the major problems with the movie is the failure to address some of the larger issues that are part of the process of “McDonaldization”. These include the broader changes that contributed greatly to McDonald’s success (the post WWII growth of automobile sales and travel, the national highway system, and the suburbs) as well as the broader changes it has wrought, especially the McDonaldization of society and of many of its institutions (schools, churches, etc.). Also missing is coverage of the many irrationalities associated with fast food chains (adverse impact on health, the environment, etc) and of McDonaldization more generally (e.g., increased homogenization), as well as even broader issues such as the globalization of the chain, its basic ideas, and its irrationalities which all played a major role in the “globalization of nothing”.

In the end, the movie focuses too much on one “demon” (Kroc), but minimizes larger demons (capitalism) and totally ignores others (the McDonaldization of society and its many irrationalities). As is true in much of the popular media and its products, The Founder individualizes and psychologizes when it needs to “sociologize”.

Woefully Little “Sharing” in the Neo-Liberal Ride-Hailing Industry

In previous posts, I have dealt with the ride-hailing company, Uber, as part of what is supposed to be a “sharing” economy, but is, in reality, a triumph of the greed and one-sidedness inherent in neo-liberalism. Two 2017 New York Times articles (January 15, 16) underscored the difficulties raised in those earlier posts and pointed to new, even more problematic outcomes. The articles dealt with Uber as well as Lyfft, Via, Juno, and Gett and their disastrous impact on the taxi industry. Declining dramatically are the number of taxicabs, trips by taxi, taxicab drivers (many of whom have switched to working for ride-hailing companies), the amount of money spent on fares, and the cost and value of the medallion needed to operate a taxi in New York. In contrast, the ride-hailing companies are growing rapidly. There are now 60,000 cars in New York City with ride-hailing apps, but only 13,000 yellow cabs.

Uber drivers tend to earn twice as much as taxi drivers. While they enjoy their higher income and being self-employed, they incur additional costs and responsibilities being on their own in a neo-liberal world. Because of the need to get high ratings from customers, there is great pressure on them to keep their newer-model cars well-maintained, clean on the outside and spic-and-span on the inside; to dress respectably; and even in some cases to provide refreshments for their passengers. These expenses, as well as the cost of automobile insurance, can eat up as much as 50% of an Uber driver’s earnings. Then, there is percentage the ride-hailing companies take off the top of a driver’s earnings.

Uber has great power over the drivers and there is little they could do when, for example, Uber raised its percentage from 10% to 25%. Since drivers are not employees, they are not entitled to a minimum wage, or sick and holiday pay. They also have little in the way of defense as Uber and the other ride-hailing companies move in the direction of driverless cars which would completely eliminate the need for drivers.

There is little sharing in the ride-hailing economy since the drivers do all of the work, pay all relevant expenses, and take on all of the responsibility. What they do share- and can ill-afford- is their relatively meagre net income with many others, especially the ride-hailing companies.

This not a defense of the traditional taxicab industry. My father was a New York City taxi driver who earned little and was ill-treated by the company that employed him. However, the neo-liberal world now in development in the ride-hailing industry- and in many other sectors of the economy- promises to be much worse. Uber is a far more powerful company- and infinitely richer- than the taxi companies of my father’s day. Uber has even less interest in those who do “gigs” than the old taxi companies had for their expendable drivers.

Donald Trump: The Ultimate Prosumer

While it is far from his worst, or even his most defining, characteristic, Donald Trump is perhaps the ultimate prosumer. This is made clear in a December 12, 2016 New York Times article (“The New TV Reality: All Trump”):  “For the next four years at least, we are living in a TV show that Mr. Trump is simultaneously starring in, consuming and live-tweeting”.

Unpacking that statement in my terms, Trump is producing his act (his creation of the performance of the starring role in his- and the current U.S.’s- life), he is consuming that act as he reportedly continually watches himself on the television “shows” (where he also seems to get much of his information about the U.S. and the world), and he is using that information in producing live-tweets in response to some of what is said on those shows (often and not incidentally about himself). His tweets increasingly lead to re-tweets and further news coverage that he is likely to consume and to which he will, when the mood hits him, produce a response.

This endless cycle of consuming-producing-consuming is a particularly good example of prosumption– the interrelated process of production and consumption. While production and consumption are separated out in the preceding paragraph to make the elements of the process clear, they are in reality tightly intertwined in that case, indeed in all cases.

While this only serves to reframe Trump’s approach, there is a critique implicit in this reframing. That is, in this case, the prosumption lens reveals an extreme example of a person’s consciousness being shaped by interaction with others. While this is true of all of us, in Trump’s case it is more an interaction mediated by television where many of the normal interaction cues are more difficult to discern or are absent. Furthermore, Trump seems obsessed with looking at the mediated version of himself, and how others see him, on television. While most of us like to look in the mirror now and again, such narcissism takes a very different and more extreme form in Trump’s case. Furthermore, millions of others are peeking into that mirror at the same time.

As largely a prosumer of himself, Trump is not only shaping his own consciousness in this way, but more worryingly shaping the consciousness of many others, to say nothing of the domestic and foreign policies of the United States.

Amazon.Go: New Heights of McDonaldization

Not that I can take any credit for it, but Amazon has unwittingly managed to wrap up much of what I have been thinking and writing about for the last three decades in one nice little material world bundle, Amazon Go. The prototype of this updated version of a convenience store now exists in Amazon’s new office building in downtown Seattle.

It is a highly McDonaldized setting in which, as in all McDonaldized settings:

  • Its operations are very efficient (e.g. no checkout lines; just “walk-through”, “grab-and-go”, and “walk out”),
  • It is calculable, with an emphasis on speed in getting through the store and offering quickly eaten finger foods
  • It is predictable, specializing in pre-prepared meals and “chef-made meal kits”
  • It makes great use of non-human technologies: smartphone apps to gain entry; sensors to keep track of what is being taken off the shelf and is purchased; automated technologies to total the purchases and to charge them to the consumer’s account. This is made necessary by the fact that few employees are likely to be present since there will be no checkout counter- a clear threat to the 3.5 million cashiers in the United States.
  • The threat to jobs is one of the irrationalities of this rational system. It will help to further reduce the number of paying jobs (using technology similar to that used in driverless cars that is costing taxi drivers their jobs) and to add to the working class discontent that helped fuel the rise of Donald Trump, Brexit, etc..

 

From the point of view of consumption, Amazon Go is a place (a new means of consumption, or cathedral of consumption) to which people are drawn to consume. However, it is better thought of as a place (a means of prosumption) where people go to prosume, that is, produce what they consume. Consumption is traditionally a process where others, especially employees, produce in various ways what others consume. This has declined in recent years as there are ever-fewer employees to do such work. Consumers are required do an increasing amount of that work either on their own (carrying their own trays in fast food restaurants, gathering their own food in supermarkets) or with the help of new technologies (e.g. self-checkout and check-in systems). This is especially the case in online sites and stores, including Amazon.com, where the consumer does all of the work of finding, ordering and paying for a purchase. This kind of a system is more difficult to create in a bricks-and-mortar store, but Amazon’s Go, if it is successful and widely implemented, will be an important step in that direction.