Here is a quick definition of mass customization: "Production of personalized or custom-tailored goods or services to meet consumers' diverse and changing needs at near mass production prices. Enabled by technologies such as computerization, Internet, product modularization, and lean production, it portends the ultimate stage in market segmentation where every customer can have exactly what he or she wants". (http://www.businessdictionary.com/)
The classic example of mass customization is Dell, which allows customers to essentially build their computers by selecting every product feature through its website. A number of e-tailers now provide customization for almost everything including, shoes, jewelry, clothing and even chocolate bars.
Even though mass customization is most often adopted by online retailers, I would argue that it could be particularly beneficial and profitable for selected traditional retailers. In fact, the customization process itself would add a level of engagement, which would certainly appeal to an increasing number of customers.
Retailers could set up design areas where customers would be able to design their own customized product with the help of dedicated staff acting as "stylists" or "designers". The customers would then be able to pick up their personalized item at the store, where they could apply additional small modifications. The personal assistance and dedicated advice would place this service ahead of the online offers. The design center would also draw additional customers in the store, increasing the sales of other regular items as well.
Nike adopted this very concept in its New York flagship store by introducing the Nike iD Studio back in 2007. Production methods and technologies for mass customization are now more commonly available and the decrease of the associated costs make it a possibility for smaller retailers as well.
Prodir, a company that produces writing instruments, is one such company. In its concept store in Zurich, Switzerland, it designed a multi touch application to let its clients create and personalize their writing instruments and pen-books. See the video below.
Timbuk2 is another retailer that employs customization. As a matter of fact, it makes it the central part of its business. Timbuk2 has been making custom messenger bags in San Francisco since 1989. As you can see in the video below, customers are able to touch and feel all the various features that will be part of their bags. Moreover, they can use the touchscreen with the help of the retail staff to finalize their personalized bag.
Mass customization for most retailer would be a small part of their business. However, it could be another tool to increase in-store traffic and customer engagement. It would also help retailers to develop a competitive advantage and a defensible position versus their competitors, as consumers increasingly demand more and more personalized products and services.