It may sound catastrophic, but saying that we are living the end of retail is nothing more than the reflection of something that we have been living for a few years now.
With this we do not say that we are not going to continue going shopping or that absolutely everything is going to be sold online, far from it … Simply that the Retail, as we know it, will disappear and undergo such a brutal transformation that it will become something different and unrecognizable.
And to say this I do not rely solely on the large numbers of closures of chain stores around the world, if not on many other elements and stories that we are currently experiencing and that allow us to form a more complete and clarifying story of what is happening. . Let’s see some of these points.
- 1 1.- Internet has meant the end of all those who were engaged in distribution or intermediation, and will continue to do so.
- 2 2.- Every time we see more clearly that there are only two ways to continue being relevant: brands / manufacturers and marketplaces.
- 3 3.- The clients what they have been looking for for a long time are not products, they are experiences.
- 4 4.- The new technologies that come will change everything even more.
- 5 5.- And it is very good that the Retail is forced to change.
1.- Internet has meant the end of all those who were engaged in distribution or intermediation, and will continue to do so.
Years ago, when access to information was much more complex, the role of all these industries was very important.
You went to a travel store to discover possible destinations and evaluate prices, you went to an appliance store to find out what fridge you could buy to replace the one that no longer worked properly or you used to see what clothes your favorite brands had taken.
Today, any consumer can do this on the Internet, spending much less time and getting higher quality information, because you do not have to believe a single source, but you can search for that information in a multitude of existing online channels.
On the other hand, Internet brings a lot of operational efficiency to business, if it is not enough to see that El Corte Inglés has 91,690 employees for a total income of 15,505 million euros, while Amazon achieved 144,640 million euros of turnover in 2017 with 566,000 employees.
2.- Every time we see more clearly that there are only two ways to continue being relevant: brands / manufacturers and marketplaces.
I leave you with some figures that summarize it very well (they are a couple of years old and the trends they show have only become more radicalized):
The marketplaces go to more and more and the brands / manufacturers are obviously necessary to generate the products that are sold in the marketplaces and also play another very important role to see in subsequent points.
With this panorama there is hardly any room for other intermediaries, beyond super players specialized in very specific niches.
3.- The clients what they have been looking for for a long time are not products, they are experiences.
And we can see that clearly by the boom in recent years of brands very focused on experience (Apple, Starbucks, Hawkers, etc.) as well as in the movement of spending from retail to other sectors of leisure such as restaurants, travel , hotels and, in short, much more experiential leisure than shopping.
And for the new generations this is even more important. They have not lived economically hard times that take them to a psychological state in which consumerism gives them a sufficient reward, and it is enough to see what they like to share in their Instagram profiles: meals, beaches, experiences, friends, life as a great experience.
4.- The new technologies that come will change everything even more.
Think that if with what we have lived of technological revolution until now, especially thanks to Internet and later to Mobile Commerce, retail has suffered intensely, what will happen with all the technological advances that come?
On the one hand we are very close to having virtual assistants that control our needs, such as Alexa, Siri, Cortana, etc. These assistants will radically transform the way we have to relate to the world, as on the one hand they will allow us to communicate with the voice (and thus be more integrated with our day to day as we will not need to pay our full attention to be able to interact with them) and, on the other hand, they will be able to make decisions for us and we will get used to buying what they think we need and not so much what brands sell us that we should buy. Can you imagine the conversion to sale that can be achieved with this type of technology?
But let’s go further to the future. What will happen to retail when fully autonomous cars arrive? On the one hand consumers will drastically change many of our behavior patterns, but on the other hand, brands, manufacturers and sellers will have new channels and means of sale, with vans circulating alone in the cities, creating fully automated pop-up stores in any place and, surely, with experiences that today we are not even able to imagine.
5.- And it is very good that the Retail is forced to change.
This is a totally subjective assessment, but I think that the fact that Retail is forced to change is something very positive for the Society in general, since it implies that we distance ourselves from consumption by consumption and consider other ways of enjoying life.
It also breaks an economic cycle in which retail companies have been indebted to unsustainable levels and have created not very healthy ecosystems.
On the other hand, the current retail is not prepared to really align with the interest of consumers, and should be new companies born in these new times that lead the new ways of selling products being much closer to consumers.
Be that as it may … The Retail is dead! Long live the Retail!