Flea Market Capitalism
The industrial economy is in the process of running its course and while countries will continue to industrialize and the mechanics of this revolution will continue to have an outsize impact on our world, the network is the driver of the 21st Century and the impact of that shift is being felt first in the most industrialized countries. Specifically, we see this impact in the interactions between consumer and producer. The broad idea of the Network Economy is a significant, nuanced, grand idea but there is an emerging consumption trend that I think illustrates much of the movement from industrialization to networking in our economy. That trend is the emergence of the flea market/farmers market as distribution channel, this trend is manifest both physically and digitally.
Flea markets are the physical manifestation of the network economy in that they rely on authenticity, uniqueness, place, outsize success, failure, and information advantage. Consider these dynamics versus a relic of the industrial age distribution, the mall. Both a mall and a market rely upon generating foot traffic and providing a variety of options. That’s where the comparison ends. Tenants in a mall, retailers, commit to long term leases and must deliver revenues in excess of their costs just as theoretically a vendor at a market would. The difference is that the market vendor does not have a long term commitment, they are able to very quickly change their inventory or test out new products to respond to the marketplace. If they sell out, that creates future demand for their product, in a mall the tenant is stuck in a lease and if trends go against them they respond not with inspired differentiation, but with risk avoidance, their financial burden is too high or their supply chain to rigid for them to make bold business decision. Yet look who is succeeding, Top Shop, Uniqlo, Zara or highly differentiated shops like Alife. The reality is that one size does not fit all and flee markets are taking advantage of that with their endless varieties of merchandise and risk taking entrepreneurs who have been able to take advantage of these congregations of people to efficiently sell their wares in ways that malls and even standard retail shops do not allow them.
The network economy is about fast failure, adaptation and low initial costs. Scale is built not at the industrial level through massive upfront bets on mega trends, but rather maximizing the value of individual items. At theBrooklyn Flea folks line up to get Salvadorian pupusas from Red Hook food vendors, but you also see companies like Madewell making their way into the mix. Guess who owns Madewell, J.Crew, exactly! This is the ultimate in consumer engagement, down and dirty pricing, consumer interaction and authenticity. With supply chains increasing in flexibility and more and more craft designers popping up it seems that these type of informal/formal shopping experiences, informed not only by the goods, but by the social context point to the future of commerce.
Flea market capitalism is about community both in terms of buyers and sellers. Flea market capitalism is about sellers taking personal risk in merchandising their own booths and sharing the enthusiasm that comes with that risk with their buyers. Flea market capitalism is about buyers seeking what is unique and using their fellow shoppers as buying inspiration. Flea market capitalism is about willing to fail, knowing that you can survive failure.
Flea market capitalism is an ethos that can and should imbue every organization large or small, because scale is no longer an advantage. Connection is the advantage.
