【HBR After Hours Podcast 】Is Retail Dying? — Series #S2E2
Being in the retail industry, Professor Mihir’s opening immediately caught my attention.
- Is retail dying?
- If it is, why?
- What’s interesting now in the Retail sector?
I’d love to share some notes and my thoughts when listening to the amazing discussion in “After Hours”, and you can listen here.
Brief intro of this podcast(Highly Recommend):
Harvard Business School professors discuss and debate current events that sit at the crossroads of business and culture.Informed by their unique expertise as professors at one of the world’s leading business schools, their takes are always surprising, unconventional, and insightful.
In short, the three professors think that:
Retail is not dying, it’s a renaissance because:
- Over 90% of the revenues come from brick-and-motor
- Online is transforming retail and pushing this sector forward
- More companies opened than closed. (While legacy retail companies closed, more new players join to the field and provide innovative experiences)
Is Retail dying? why?
Here are some details from each professor.
From professor Youngme’s perspective:
Now is the most exciting moment for Retail.
Online does not replace Retail, online transforms Retail.
You may see there are many collapses for the legacy retail companies such as Sears, but there are much more new entries that join into Retail industries. For retails that collapsed, it’s because of their outdated business model and their unwillingness to invest.
Here Youngme uses the evolution of Walmart to support her argument.
Walmart now is totally different than Walmart 10 years ago, they’ve invested so much in improving their shopping experience. They paid the cost associated and kept moving forward.
On the other hand, Mattress world is one example of failing
The Mattress World maintained the outdated business model that shows many mattresses in the physical stores and charges you high prices. However, the mindset that consumers now do not know the real price of that mattress is no longer valid.
For formidable players like Amazon, it’s actually pushing the retail industry to grow faster.
From professor Felix’s perspective
Felix starts by stating numbers related to retail. Now in the U.S., 91% of the revenue still comes from brick-and-motor stores. Although online sales continue to grow, brick-and-motor is still the majority.
People now are more price sensitive, and luxury is booming, causing the middle price group is now diminishing.
However, every one middle price store closed, three low priced store open.
What’s interesting now in the Retail sector?
Rebecca Minkoff — Enriching customers online behavior through offline experiences.
In 2014, Rebecca Minkoff partnered with eBay to install connected mirrors in fitting rooms. Customers can use these interactive displays to browse and order different styles or sizes. Also, customers can review what they wear at home and purchase later.
My thoughts on this:
I love how professor Youngme addresses this issue: Retail is not dying, online is transforming Retail.
Before discussing whether retail is dying, I think we need to define what is “Retail”.
Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit.(Wiki)
Based on this definition, I would say that retail is not dying, what dying is the outdated process of selling.
After listening to this discussion, one thing that’s important to know is that Retail includes both online and offline stores. If we view Retail separately, while online retail is booming, it only takes about 10% of the total retail revenue. I would say that online retail does have a big impact on the whole retail industry, but it definitely does not replace or destroy the whole retail industry.
Let’s see from the brick-and-motor side, while you may see many physical stores are unoccupied or go bankrupt, it does not necessarily mean that offline retail is dying. Take a closer look, based on Deloitte’s report, actually, more brick-and-motor stores opened than closed, and for those that really died, those are the companies that did not keep up with the trend. As you can see from Walmart’s success and the failure of Mattress World.
In other words, Retail is not dying as a whole.
Only those retails that do not evolve its business models died.
My learning:
I guess in order to succeed in this era, we can not view online and offline retail as two different entities.
It’s about delivering holistic customer experience, no matter it happens offline or online.
I think both online and offline compensates each other. No matter companies start from digital brick-and-motor, what’s more important is to think about how to deliver a seamless experience to their customers.
