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Coping with a swirl of choices

Call it 'New Economy smog.' For better and for worse, consumers' universe expands.

By Staff writer of The Christian Science Monitor / September 30, 2002



Next time someone disses the New Economy, take them to the local supermarket.

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Point out the eye-popping variety of food: the multitude of specialty coffees, the array of condiments. (Americans buy more than 800 varieties of mustard alone.)

Then suggest that all those bar codes and scanners, electronic cash registers and inventory-control systems, have given consumers more of one thing than they've ever had before:

Choice.

The New Economy is creating a golden age of consumer discretion. Americans can get products cheaper and more customized than in the past. And they're getting these things not from a flurry of dotcoms, but from old-line merchants and manufacturers that are reengineering themselves to take advantage of the new information technology.

These forces will give rise to new gadgets and services, of course. More important, they're pushing the consumer into unfamiliar territory.

The New Economy consumer will have more power, will be interacted with rather than sold to. The smorgasbord of options threatens to overwhelm her, but transactions will be streamlined. And service – whether it's using a cellphone or buying a house – will be, well, queen.

"The New Economy is really about this transition from hardware to software," says Regis McKenna, author of five books on technology and marketing. "Local retailers, they are connecting those [store] shelves to suppliers and the suppliers to the cash register. That automation is what allows us to go to the grocery store and have almost an infinite choice of products."

Small wonder: The average supermarket carries more than three times the number of products it did in 1980.

And it's not just grocers. Retailers like Wal-Mart, and manufacturers such as the Big Three automakers (which banded together two years ago to form an online supplier exchange) have retooled themselves to streamline operations, cut costs, and offer more variety. Even niche companies are making the transition.

"We sell bikes the same way Dell sells computers," says Jamie Raddin, president and founder of Airborne Cycles, a maker of high-end titanium bicycles in Springboro, Ohio.

Customers who visit Airborne's website (www.airborne.net) can pick a frame, choose from a variety of handlebars, front forks, pedals, and so on until they've designed their dream bike.

The computer keeps track of the bike's weight and its cost (average price: $2,500). Then the order gets built and shipped and received by the customer within seven business days.

But selling online only reaches a narrow audience. So two years ago, the company began selling its bikes through a network of traditional dealers, who use a parallel online ordering system. Customers end up paying the same price as if they'd gone online, but the dealer gets a cut of the profit.

That second piece – working with existing dealers – is what many of the dotcoms forgot. By concentrating on online consumer transactions, many start-ups missed much bigger opportunities in the less visible business-to-business arena. The result: the fall of the dotcom and the steady rise of established players in the online world.

"The entrepreneurial start-up model ... was the wrong model," says Rob Atkinson, director of the new economy project at the Progressive Policy Institute, a think tank affiliated with the centrist Democratic Leadership Council in Washington, D.C.

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