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The Economics of Aesthetics

(originally published by Booz & Company)

During hard economic times, you would expect consumers to look for bargains and be less concerned with amenities — and companies to respond with low prices and plain products and services

So why is McDonald’s adding “premium salads” with a recommended price of $3.99 — $2.99 more than its standard side salad — and arugula in the lettuce mix and Newman’s Own dressing on the side? Why is Schlotzsky’s redecorating its sandwich shops, adding stone and exposed brick, warmer colors, and comfortable couches? Why is the scent of fresh-baked loaves drawing customers to Panera Bread restaurants, where sales are expected to top $1 billion this year? With fast-food joints offering bargains for a buck, why are diners turning to “fast casual” restaurants, where the typical tab runs $7 to $9?

These companies have discovered what Starbucks learned long ago. Nowadays, customers don’t want just fuel. They want pleasure — good food in an aesthetically appealing environment.

That’s why, faced with lagging sales, Schlotzsky’s invested in the look and feel of its stores. “We tried to elevate the experience to that of the quality of the food,” designer Santiago Crespo told Nation’s Restaurant News, adding, “It’s not just about the food. It’s about how you feel there.”

Competition and a slow economy may drive down prices, but it also raises expectations — not just for service, function, and reliability, but for sensory experience. “Look and feel” increasingly drives economic value. Businesses today face an aesthetic imperative. Style can no longer be an afterthought. It has become a critical source of product identity and economic value. The desire for interesting, enjoyable, and meaningful sensory experiences is everywhere.

Starbucks is to the age of aesthetics what McDonald’s was to the age of convenience or Ford was to the age of mass production. It’s the touchstone, the pioneer others seek to imitate.

“Every Starbucks store is carefully designed to enhance the quality of everything the customers see, touch, hear, smell, or taste,” writes Starbucks Chairman Howard Schultz in Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time (Hyperion, 1997). “All the sensory signals have to appeal to the same high standards. The artwork, the music, the aromas, the surfaces all have to send the same subliminal message as the flavor of the coffee: Everything here is best-of-class.”

For businesses, aesthetics is not a matter of esoteric art theory. It’s the way we communicate through the senses, the art of creating reactions without words. Aesthetics is the way we make the world around us special. Successful businesses understand that aesthetics is more pervasive than it used to be — not restricted to a social, economic, or artistic elite, or limited to only a few settings or industries, or designed to communicate only power, influence, and wealth.

Formerly bland malls try to emulate the sumptuousness of upscale hotel lobbies. Well-designed restaurants extend their attention to look and feel into their restrooms. As suburban tract homes routinely incorporate granite and marble (whose prices have dropped because of new supplies and fabricating equipment), hotels must follow suit.

Aesthetics is not just for places. Computers, for example, all used to look pretty much the same. Now they, too, can be special.

The drive for aesthetic value is creating opportunity throughout the supply chain. “Aesthetics, or styling, has become an accepted unique selling point,” says the head of GE Plastics’ global aesthetic program.

At the GE Plastics design center in Selkirk, N.Y., customers’ industrial designers and marketers brainstorm and develop new products, ranging from razors to car bumpers, inspired by new materials. Since 1995, GE Plastics has introduced 20 new visual effects. Its heavy-duty engineered thermoplastics can now emulate metal, stone, marble, or mother-of-pearl; they can diffuse light or change colors depending on the viewer’s perspective; they can be embedded with tiny, sparkling glass fragments.

GE experts say they listen to their customers “talk about their dreams.” One engineer from the Japanese electronics manufacturer Kyocera told technicians he wanted a “more masculine” design for the company’s new mobile phone. That’s how the trim on the phone changed from silver to gunmetal gray. “I figured they would look at me as if I was nuts,” he told a reporter. “But they didn’t. They came back a few minutes later with exactly what I wanted.”

Look and feel doesn’t trump function, of course. Some consumers may prefer mobile phones with a masculine look, whereas others want something cute. But everyone expects the phones to work. Aesthetics is critical today not because other factors don’t matter, but because competition has pushed quality so high and prices so low that style is often the only way to stand out.

To turn aesthetic pluralism into an opportunity, hard-nosed engineers, real estate developers, and MBAs must study what consumers value about look and feel — not prestige but enjoyment, not conspicuous consumption but personal meaning. A fancy label isn’t enough. Even luxury brands like Viking stoves are prestigious not because they’re expensive, but because of the sensual pleasures they offer. “Sometimes, I turn it on just to feel its power,” says a Viking owner. Another compares the stove to a “painting that makes the kitchen look good.”

Aesthetic plenty creates new challenges for companies. The more they incorporate aesthetics into their products and services, the higher customers’ expectations become.

To keep its stores distinctive and fresh, Starbucks has scores of designers on its staff. Yesterday’s cutting-edge restaurants, from TGI Friday’s to California Pizza Kitchen, are today’s standard suburban fare. Like every other measure of quality, aesthetics offers innovators a short-term advantage. But in a competitive market, investing in aesthetics isn’t a sure route to profits. It’s a cost of staying in the game.


Virginia Postrel ( is the author of The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture, and Consciousness (HarperCollins, 2003) and an economics columnist for the New York Times. Her Web site is
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