“Retail Apocalypse.” The term has its own Wikipedia entry. This transformation, of “biblical” proportions, is often blamed on Amazon.
What if Amazon is not the brick-and-mortar store killer? What if Amazon is retail’s champion?
To paraphrase Mark Twain, the reports of retail’s death have been greatly exaggerated. The retail industry is not in dire shape, it’s in a different shape. Change is essential: it’s not easy, nor painless.
And, there is an important difference between correlation and causation. Amazon’s success and the disruption of the legacy retail market are certainly related, this does not mean one caused the other. Amazon did not overturn the traditional retail model: Macroeconomics drove this disruption.
Amazon is strategically and significantly investing in mortar-and-brick retail. Further, the company provides valuable tools to third-party retailers to help them succeed. And, critical to its own success, Amazon needs other retailers to thrive.
6 Reasons the Current Retail Transformation Was Inevitable
The world’s leading experts studied the challenge, identified the opportunity, and – sparing no expense – built the solution. It was perfect. It performed as expected. And, it was useless.
Lately, the term “disruption” is often used, and misused. In the business community, disruption is used to describe economic transformations, changes to consumer path-to-purchase, shifts toward digital consumption, the “retail apocalypse,” and jobs lost.
At our factory in Central America, disruption takes on a deeper meaning.
This video is about disruption, innovation, and leveraging historical expertise…
At the end of my presentation a woman stood up to ask a question. Actually, she made a statement.
“I own a fashion retail store,” she exclaimed. “I’m a good merchant, it’s a good store. It’s been in business a long time. Customers shop my store with their smartphone in their hand… and then they buy the item on Amazon Prime.”
UBS Financial estimates that for every 1 percent increase in eCommerce penetration to total retail sales (excluding food & gas), 9,000 retail stores would need to close in order to maintain current levels of sales per physical store.
This would be the equivalent to shutting down seven Toys ‘R’ Us chains.
Americans spent 22 BILLION minutes on Amazon shopping platforms in December 2017 alone. More than the next nine platforms combined.
Interestingly, there is a large gap between time spent and dollars spent on mobile vs. desktop devices: while Americans spent nearly two thirds of their online shopping time on smartphones or tablets in Q4 2017, more than 75 percent of e-commerce dollars were spent on desktop devices. This indicates that many people browse products on their mobile devices, but prefer the convenience of a larger screen and keyboard to complete the checkout process.
I’m not a doctor, but I really did play one on TV.
25 years ago, I sold consumer products, mostly luggage, to HSN and QVC. I hired a “guest host” to appear on-air, to work with the network “show host” and to demonstrate our products. One day the guest host was delayed, and I ended up with make-up on my face, a microphone up my shirt and an IFB in my ear. Continue reading “What I learned from playing a doctor on TV”→
Choosing the right innovation model for your company is all about context.
This article from Boston Consulting Group well articulates the need to evaluate industry context, your culture and core competencies as they relate to innovation.
Industry context matters because only a subset of models can succeed in most industries. Some models are better suited to—and increase shareholder value in—certain industries and sectors than others. For example, four models drive TSR premiums in consumer retail:
Creators take on more risk but can achieve dramatic success. Lululemon Athletica, for example, capitalized on the growing yoga movement by offering a distinctive life style brand that encompasses everything from the actual products to the in-store customer experience to corporate philanthropy.
Solution builders create loyalty by understanding specific shopper segments and meeting their needs. For instance, Target delivers a “cheap but chic” set of offerings that meet the needs of its young, often trendy customers.
Leveragers create a superior business model and then capitalize on it to sustain a position of industry leadership. Costco, for example, combines everyday low prices, a lean supplier network, and a members-only approach to stand out from the retail pack.
Expanders achieve rapid share growth by moving into adjacent markets. For instance, Amazon brings its consumer data analytics, logistics capabilities, and exceptional customer service to an ever-expanding number of retail sectors, including fashion, luxury apparel, and—with the company’s recent purchase of Whole Foods—brick-and-mortar grocery.
“Everything that can be invented has been invented.”
The “Eureka” effect is based upon an ancient myth regarding the Greek mathematician Archimedes, who upon discovering how to measure the volume of an irregular object, supposedly leaped out of a public bath, and ran home naked shouting “eureka,” (I found it).
Most of us would agree that there is still much to be invented and discovered. We tend to think these new “inventions” will be more extraordinary, advanced and innovative than those which preceded them. This is not entirely true. Many prior advances were revolutionary and extraordinary. An invention need not be revolutionary, or even unique, to be significant. Finally, many “new” inventions are derivative of their predecessors.
From door locks to light bulbs, shovels to toilets, and the classic mouse-trap, innovation comes in many forms and from many directions, often right under our noses. Sliced bread? Bottled water?