Here comes the niche big thing

The mass marketplace may be breaking down, reports Nick Walker

In shopping heaven, there are no changing rooms. If you want to buy a pair of jeans, the assistant brings out a tape and takes five measurements: waist, hips, inside leg, outside leg, rise. Next, this angel of commerce feeds your measurements into a hand-held computer console. On a screen in front of you appears the perfect pair of jeans, chosen from 4,224 possible options.

Banished is the baggy bum and the gap above the line of your trainers. You pick a colour. A button is clicked and your order is passed to a factory. Another computer cuts the denim. A couple of weeks later, your jeans are delivered to your door. Bespoke is not only back on Savile Row - it's available in 50 Levi's stores in North America.

Manufacturers know consumers want to be different. But, like teenagers, customers want to be different en masse. The answer was once niche marketing, the domain of the small company. A niche was determined by customer circumstance, characteristic or taste, and the manufacturer would produce goods for any number in the market.

"Servicing a niche market is traditionally very expensive," says Arthur Morrison, associate head of the business and information department at Napier University, Edinburgh. "Changes in technology are enabling larger firms to target smaller segments."

With technology has come mass customisation, and with mass customisation will come shopping heaven. It's personal. It's easy. If you want another pair of Levi's, all you have to do is flash the barcode on your new jeans through the shop computer or tap your personal number down the phone.

Roy Westbrook is assistant professor of operations management at the London Business School. He specialises in mass customisation, which, he says, came from Japan in the late Eighties: the National Panasonic bicycle company would invite customers to sit on a measuring frame in the shop and offer bespoke spokes.

"For mass customisation," Mr Westbrook explains, "you need to make an explicit market offering. Car companies have been offering a choice of colour and extras such as sun-roofs for years, but they haven't made a virtue of it."

Mark Elliott, of Levi Strauss, says: "What we want is to let the consumer have the guarantee of buying a brand that they know will give them quality and has a good track record, but also giving them a choice so that they feel the product has been personalised. The company that gets this right should profit tremendously."

Rick Magill is an independent manufacturing consultant who has advised the Department of Trade and Industry on mass customisation and helped to put it into practice with British firms. "Niche marketing ultimately leads to one-to-one customisation. It's no longer a question of going out and finding new customers that is concerning companies. It's keeping them." One of his clients, the cycle manufacturer Raleigh, has taken the notion of bike customisation way beyond poking a cigarette card between your spokes. By filling out a "custom" form, consumers can design their own carbon-fibred, hot cherry-tinted dream machine with personalised graphics.

"There are a number of competitive pressures which are forcing British brands to diversify: price competition from cheap imports, brand identification against competition, educated consumers who are demanding more flexibility. These companies can't win a price war. Something like mass customisation is a very effective route."

Supply dovetails so perfectly and neatly with consumer demand that the days are gone when, to paraphrase Henry Ford, you could have any colour so long as it was black. Today you could have a different colour for every car component. Indeed, there is the story of one car company that offered customers a choice of 60 steering wheels. It was too much. Excess fell flat on its face. The consumer suffers from that truly Nineties angst, what the author Douglas Coupland termed "choice paralysis", where so much variety is on offer that no choice is made.

"This is where marketing can really come into play," says Mr Westbrook. "You have to decide what kind of choice the consumer wants. There is no point in adding cost if the consumer doesn't need it. For instance, you know most customers want a choice of colour if they are buying a bike. But do they also want a choice of frame?"

There are more dangers. Small firms could ultimately lose out if large firms focus on customised products and stop producing low-cost, mass- produced mediocrity - the backbone of capitalism. Mr Morrison, though, is optimistic: "Markets are breaking up. This is a continuing process. Mass customisation can only offer more choice. And there will always be new market niches for small firms to exploit."