Traditional retail made up of large national and department store retailers seems to be in a down cycle and potentially going through its death throes. I know it's been said before by many people and I’m sure that this time as well we are going through major revisions now rather than the death of traditional retail. I think it is more accurate to state that we now seeing many large national retailers going through major upheaval that will see failures along with major changes to the retailers that make it through these difficult times. These changes are the direct result of millennial growth in the market and the ability to make changes in shopping practices and demand that retailers in turn change their practices to support the consumer demands.
We all realize that millennials simply provide the tipping point to shove the retailers over the edge. The change in these times is the introduction and embrace of mobile technology that allows all consumers to shop and interact with both other consumers and retailers in new ways that bring great change and upheaval to the traditional retailers. Retailers have been controlling the marketplace for a long time and they continue now to place controls on the market. The difference now though is that consumers can simply bypass the controls completely with the traditional retailer, or simply purchase the same product from another retailer.
Traditional retailers are at a great disadvantage because of the potential cost of supporting the changes demanded by consumers. The national retailers have focused on the cost advantages of size and have driven these cost savings expectations for consumers which results in a drag on profits. This drag on profits reduces the capital available for the types of major technology investments that are now required to meet consumer demands. Large national retailers have a huge base of technology investments in each store that requires upgrades and revisions in order to meet the demands and these large retailers cannot afford such investments. So instead these retailers nibble around the edges of investment and place controls on consumers that in the past have succeeded where now they are failing because of the capabilities available through mobile technologies and wireless networks.
You can see the results in many different facets of the retail marketplace, from the reduced traffic in malls, to the increase in eCommerce sales, to the entry now of Amazon on the brick and mortar market. As I stated earlier this does not necessarily spell the end for traditional retailers however we certainly are in the midst of dramatic changes to the retail market and there will be a shake out period where some of these major retailers do not make it through without major changes to their model.
And now for the audience participation portion of the show…
ECommerce will have wide ranging impacts on both the retail and manufacturing sectors. How can you focus these abilities to improve the consumer's experience? Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes. In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas. How can you support these continuously changing requirements?