Self-Service revolution.

Self-Service revolution.

It defeats the purpose when businesses heap work on their customers.

 Once upon a time shops used to keep all their goods behind the counter. When customers came to the shop, all they had to do was to tell the sales clerk what they wanted, and then wait while their purchases are bagged up. It is only then that they would hand over their money. All these changed in 1916 when Clarence Saunders, the father of modern retailing, opened his first Piggly Wiggly supermarket in Memphis, Tennessee.¹ Saunders changed the face of retailing when he introduced the idea of self-service, in which customers selected their own groceries from the shelves. They will then take their baskets or carts to a cashier on their way out. Saunders claimed that his idea would slay the demon of high prices by cutting labor costs.²

 
By 1932 the Piggly Wiggly store was the undisputed king of the retail industry, with 2,660 stores across United States. In the 1920s, Saunders did lost control of the company. However, that did not stop him from continuing to innovate and look for ways to perfect the fully automated shop. One of his innovations include the “shopping brain” – a feature that allows customers to choose items displayed under glass as well as keep a tally of their bills.³ As a business, Piggly Wiggly is no longer as popular as it used to be. As a matter of fact, it is now a shadow of its former self. As of three months ago, it has only about 600 stores in United States, and it operates only in 17 states.⁴ But their “self-service” idea, among others, has conquered the world.

You are on your own, folks

 The self-service revolution is still very popular on to this day. In many states, the CVS, a large American pharmacy chain, has replaced cashiers with self-service pay-points. Also a British grocery chain by name Waitrose, offers their customers what can be considered a modern-day version of Saunders’ shopping brain. In that regard their customers were given the choice to scan and tally their purchases. Another institutions that has almost perfected the self-service model are the banks. Most banks are cutting down their branches while, at the same time, making it ever easier for customers to do transactions online as well as via the ATM. Companies like Unilever and other consumer goods giants are seeking to convert some of their emerging market customers into freelance sales folk – a model pioneered in United States by such firms as Avon and Tupperware. Such customers who became their freelance sales people peddle Unilever’s products to friends and neighbors.⁵

 The travel  industry has also joined the elf-service club. And the industry is very ruthless when it comes to engineering its own employees out of its business. For instance, by using the apps in their smartphones, customers can now book their own trip. They no longer need the airline employees to print their boarding passes as they can do this in their houses before setting out. When the customers get to the airport, they are allowed to scan their boarding passes and passports at a machine. And in some airlines, customers can weigh and tag their own luggage. They can even haul it to the conveyor by themselves. In many hotels, a customer may not see any check-in staff or porters. A good example is the Omena Hotels – a Scandinavian hotel empire. This hotel sends PIN codes to its customers to enable them open their doors. Soon all the customer needs to do to get into their room at this hotel will be to simply wave the Apple Watch on their wrists.⁶

It is not an exaggeration to say that the variety of businesses touched by the self-service revolution is growing every year. Take Threadless,⁷ a group of clothes designers. This company invites customers to submit their own patterns, after which they are given the chance to vote on which ones should be produced. Threadless is just one of them: some technology companies now turn their smart customers into unpaid troubleshooters. They do this by encouraging these customers to participate in user forums where their insights can be used to solve other customers’ technical problems. Some newspapers, particularly the Huffington Post, encourage its readers to write as unpaid columnists. How about multinational companies like GE? The story is the same: GE is currently working towards creating a new business model. Under this model, GE will no longer need to keep a stock of spare parts for its jet engines. Instead, their customers will have the option of downloading digital designs of the parts on their computers. They can then make such parts on their own by means of a 3D printers.⁸

 There is no doubt that all these are wonderful for businesses. But does their customers feel the same way?  According to the available published evidence, these days many people are constantly being asked to do “unseen” jobs by everybody from Amazon to the Internal Revenue Service. No wonder many people constantly feel stressed and overworked. And because people these days spend so much time pressing buttons and speaking to machines rather than interacting with other people, they also feel so alienated sometimes.⁹

The above picture may look too gloomy, but they are not always the case. This is because the self-service revolution is not only about the companies. As a matter of fact, it is sometimes driven by customers’ preferences. For instance, there are lots of customers who finds it quicker to choose their own groceries than to wait for someone to do it for them. A lot of customers don’t like queuing at the check-in counter at the airport. Such customers usually prefer to print their boarding passes at home. Besides, customers can always fight back if they get frustrated about a company’s self-service model. For instance, many companies were forced to revert to having people answer the phone when customers complained about automated telephone services. Also many people now choose to have their shopping delivered to them, instead of driving to out-of-town, self-service supermarket.¹⁰

 The vital questions

The self-service revolution did raise two key concerns. First, self-service industries may claim that they have eliminated personal touch from their mass-market offerings. But they had continued to chase the wealthy and the well-heeled customers with extravagant, premium offerings. In other words, they had divided consumers into two classes: the poor consumers belong to the “cattle class” while the wealthy consumers are the “business class.” This classification makes it easy for these companies to “herd” the cattle class into the back of the cabin and to offer them little service; while the business class are pampered with superior service. A good example is Virgin Atlantic, a British airline. Their customers that fly Upper Class were provided with private cars to take them to and fro airports – a privilege which economy class customers do not get. Their Upper Class customers also have flunkeys waiting in the lounge to cut their hairs and polish their shoes. One thing is for certain: this type of preferential treatment might intensify resentment of the haves by the  have-nots. Not only that, it also make it hard for the have-nots to get entry-level jobs.¹¹

 Second, businesses need to understand the importance of meeting with their customers. If they never meet their customers, the result may be disastrous: they will lose touch with them.  From a business standpoint, self-service is great for saving costs. But this saving comes at a high cost for the business. This is because the effect of self-service over time is to train customers to shop on price. This means that the customers can easily switch as soon as a slightly cheaper rival comes along. And one final point: British’s mainstream supermarkets are now suffering from an inversion of German discounters.¹² Firms will be making themselves vulnerable to the same fate if they stop trying to differentiate themselves with good service.

 

 

References

 

¹Clarence Saunders. (2014). NNDB,  Retrieved August 25, 2015 from http://www.nndb.com/people/054/000166553/.

²Schumpeter: The Piggly Wiggly Way. (2015, May 9). The Economist. Retrieved August 25, 2015 from http://www.economist.com/news/business/21650554-businesses-should-think-carefully-about-continuing-heap-work-their-customers-piggly.

³Mitchell, Tucker. 2013. "A Pig’s Tale: How the Grocery Store Was Invented ." SCNow, January 16: Retrieved August 25, 2015 from http://www.scnow.com/opinion/columns/article_5137c928-56c3-11e2-a5c2-001a4bcf6878.html.

⁴Schumpeter: The Piggly Wiggly Way, op. cit., p. 64

⁵Ibid

⁶Ibid

⁷Threadless(2015). Shop Threadless. Retrieved August 25, 2015 from https://www.threadless.com/

 

⁸Schumpeter: The Piggly Wiggly Way, op. cit., p. 64

⁹Lambert C.(2015): Shadow Work – The Unpaid, Unseen Jobs that Fills Your Day. Berkeley, CA: Counterpoint.

¹⁰Schumpeter: The Piggly Wiggly Way, op. cit., p. 64

¹¹Ibid

¹²Ibid

 

 

 

 

 

 

This is Lagos.

The trouble for Lagos is that it is a city that feeds on endless population growth. It is crowded, nosy and, sometimes, violent. On the other hand, it can be a model for the rest of Nigeria’s cities.

Only a few Nigerians doubt that Lagos needs a lot of improvement. As Nigeria’s commercial center, Lagos has a lousy reputation. Just consider this:  mention the name “Lagos” to any Nigerian and they will immediately conjure images of motionless traffic, crime and corruption. In Lagos, it is not a new thing to see men urinate on don’t urinate signs. Neither do Lagos people look surprised when they see a loiter by no loitering sign or if they see people hawk by don’t hawk signs. Even at the poshest part of Lagos, such as the Victoria Garden City,¹ commuters are sometimes caught in shoot-outs between robbers and policemen.²

On the positive side, Lagos is, to a very large extent, better now than it was two decades ago. When Bola Tinubu, the former governor of Lagos was in charge, Lagos was literally a slum. Tinubu became the governor in 1999 when civilian rule was restored in Nigeria.³ During that time, the traffic in Lagos was chaotic. Not only that, the city’s infrastructure was rapidly disintegrating. Armed robbery was rampant and people were being murdered almost every week. That period was a bad one for Lagos because dead bodies were being picked on the street on average 10 times a week. There were mountainous refuse all over Lagos.⁴ Basically, it was total chaos in Lagos.

Some kind of normal

It is not an exaggeration to say that Lagos was rundown in the late 1990s simply because it was badly run. As rural migrants flock to the city in search of jobs, the high population growth that resulted outstripped the infrastructure.⁵ There is really nobody, including the Lagos State government, who can say how many people live in Lagos. Even though estimates range from 10 million to 21 million,⁶ the bottom line is that the city’s congested roads and bridges can accommodate just a fraction of them.

Lagos was neglected by the central government during the military rule. It is worth bearing in mind that Nigeria’s capital was moved from Lagos to Abuja in 1991.⁷ Abuja, the current capital, was built in the middle of  the country to symbolize unity. As  the Nigeria’s capital moved to Abuja, public spending followed the politicians there to pay for the new city’s marble-floored palaces and wide boulevards. Lagos still found itself even more neglected after the restoration of democracy in 1999. The main reason this time was not because of the Nigerian politicians’  love affair with Abuja. It was because the then ruling party politicians, the People’s Democratic Party(PDP) politicians, were mad at Lagos’ citizens for voting for the opposition parties. It is important to note here that these opposition parties were the forerunners of the current All Progressives Congress(APC) that earlier this year defeated the incumbent PDP – a party that had almost ran Nigeria to its grave since 1999.⁸

Mr. Tinubu and his successor as governor, Babatunde Fashiola, tried their best for Lagos. Both of them experienced big and similar political challenges when they were the state’s governor: their effort to reform Lagos and improve the lives of the residents were often frustrated by the PDP-led government. For instance, despite their appeals to the PDP-led federal government, it failed to upgrade the main roads in the city that were under federal control. The federal government did not put into consideration the fact that one of the roads in question led to West Africa’s biggest port. The then federal government also delayed approval for an important train line requested by Lagos State government, even though the latter was willing to pay for its construction.⁹

The good thing about these frustrations from the PDP-led federal government at the time was that it made Lagos State government to be more creative. For example, it stopped relying on Abuja for funds. Instead, it started generating its revenue internally. To create room for transparency, it created passable systems to monitor its own spending. Even though Lagos residents are not known for their eager compliance with their tax obligations, the state government devised a strategy that squeezed taxes out of them anyway. As a matter of fact, almost from nothing a few years ago, Lagos’ internally generated revenue  has risen to 23 billion naira(about $115 million) per month.¹⁰ Given the population of Lagos, this amount constitute only a few tax dollars per person. However, the state government has used it as a leverage to borrow enough money to finance laudable projects. Such projects include, among others, the much-needed bridge linking the upmarket areas of Lekki and Ikoyi.¹¹ Moreover, the states newly found independence with respect to federal revenue means that it had to rely more on local tax collection. This has forced it to improve it services so as to attract businesses. And, to a very large extent, it has done well in that regard. In terms of goods and services, the state produces as much as $90 billion a year. This value makes it economy larger than that of most African countries, particularly the economies of Ghana and Kenya.

 It is important to state here that much of Nigeria’s industry once thrived in the northern part of the country. But today, most of the Nigeria’s industries can now be found in the suburban manufacturing estate of Agbara in Lagos State. Cranes hang over many areas of the city of Lagos. In addition, land is being reclaimed from the sea to satisfy the appetites of the city’s developers who were obsessed with acquiring large amount of property.¹²

Studies have found that local elections in Lagos favor candidates who show competence and pragmatism. This is a sharp contrast to what is obtained in Nigeria’s national elections, which are often a squabble over petrodollars. This explains why the opposition party, the APC, won the state’s election: its success in managing Lagos is the source of its sweeping victory in the state election held earlier this year. This equally explains why more Nigerians voted for its candidate, President Buhari, in the national election.¹³ The city now has a chance to do better still, especially now that the APC holds power in Abuja as well as Lagos.

One thing is for certain: Lagos’ experience could teach Nigerian politicians a thing or two. The first lesson is that fostering a broad tax base is very important to the survival of a state. It does not make any sense to just rely on oil, which provides more than 67 percent of Nigeria government’s revenues.¹⁴ Besides, a better tax collection will greatly improve the country’s budget by making it less vulnerable to wild swings in the global oil prices. And because people who pay tax tend to demand better services in return, it might also lead to more accountable governance. The second lessons is that better infrastructure boosts economic growth. So, if a country or a state don’t have the money to pay for it upfront, it can adopt Lagos’ model: get private investors to do the job and allow them to collect tolls until they recover their investment capital and make some profit.

References

¹Victoria Garden City (n.d.): Images of Victoria Garden City. Retrieved August 15, 2015 from https://www.google.com/search?q=victoria+garden+city+lagos&biw=1366&bih=667&tbm=isch&tbo=u&source=univ&sa=X&sqi=2&ved=0CB8QsARqFQoTCPLluOSsqscCFcw4Pgodm0UIFg&dpr=1

²Nigeria: Learning From Lagos. (2015, July 4). The Economist. Retrieved August 15, 2015 from http://www.economist.com/news/middle-east-and-africa/21656701-nigerias-commercial-capital-crowded-noisy-violentand-model-rest.

³Ibid p. 40

⁴Ibid                                  

        

⁵Walt, V. (2014, June 12). Lagos, Nigeria: Africa’s Big Apple. Fortune. Retrieved August 15, 2015 from http://fortune.com/2014/06/12/lagos-nigeria-big-apple/

⁶Campbell, J. (2012, July 10). This Is Africa's New Biggest City: Lagos, Nigeria, Population 21 Million. The Atlantic. Retrieved August 15, 2015 from http://www.theatlantic.com/international/archive/2012/07/this-is-africas-new-biggest-city-lagos-nigeria-population-21-million/259611/.

⁷Ogunlesi, T. (2014, May 4). Abuja, Nigeria’s Capital City, Grows and Flourishes. Financial Times. Retrieved August 15, 2015 from http://www.ft.com/intl/cms/s/0/68c28016-bb16-11e3-948c-00144feabdc0.html#axzz3irWnZDx7.

⁸Nigeria: Learning From Lagos, op. cit., p. 41

⁹Ibid

¹⁰Akinsanmiâ, G. (2015, April 16).  Lagos Govt Puts IGR at N23bn Monthly, Drags 686 Tax Defaulters to Court. ThisDay Live. Retrieved August 15, 2015 from http://www.thisdaylive.com/articles/lagos-govt-puts-igr-at-n23bn-monthly-drags-686-tax-defaulters-to-court/206948/

¹¹Alao, D. (2015). Nigeria Infrastructure Advisory Facility. Lagos: Nigeria Infrastructure Advisory Facility. Retrieved August 16, 2015 from http://niafng.org/wp-content/uploads/2015/02/Lekki-Ikoyi-link-Project.pdf

¹²Nigeria: Learning From Lagos, op. cit., p. 41

¹³Ibid