On Driverless Cars, Online Shopping and the Future
Professors Doug Fisher and Mark Eppli on the intersection of supply chain management and real estate
Supply chain management and commercial real estate industries are inextricably linked. So it’s no wonder the directors of Marquette Business’ respective centers are good friends, often having long conversations about how their worlds converge. What follows are choice excerpts from one of their chats — Drs. Doug Fisher and Mark Eppli on retail’s Amazon effect, parking structures and driverless vehicles. Conversation edited for brevity by Christopher Stolarski
On how brick-and-mortar can compete with online:
Fisher: What does Walmart have to do to compete with Amazon? Amazon has 120-plus warehouses in North America. Interestingly enough, they’re adding 20 every quarter. They’re trying to get as close to the customer as they possibly can.
Walmart, as an example, has, what, 1,800 stores in the United States? Those are warehouses, but their whole model is built on filling shelves, not responding to someone who clicked to buy — and now I have to send someone to find that piece of merchandise on a shelf, come back, put it in a box, and get it to UPS and shipped out to you.
Eppli: So, a handful of good retailers failed last year. Kohl’s struggled. Macy’s is closing 100 stores. Sears just sold their Craftsman line — the core of all core assets for Sears. So they’re trying to find their ground level. Can they afford to keep inventory at a place where people will come and purchase it? In the end, I believe there will be a necessity along the whole continuum, and still some of that brick-and-mortar real estate.
But I could easily see more and more retail outlets being showrooms rather than inventory-carrying outlets, whereby you would have one of each size and one of each color and type to allow everybody to have a great selection of things — but nobody leaves the store with any goods. On the way out, you tap your phone, and it’ll be at your door before you get there.
On the future of malls and big-box stores:
Eppli: Stores need to provide a shopping experience. So it’s more about the experience you have when you go there — the food experience, the environments. In looking at replacing Sears and Sports Authority at the local mall, they’re going to redesign that completely and provide more of a shopping experience that includes a whole series of things.
Fisher: The other side of the big-box story is some of these Walmarts, Targets, etc. are changing their layouts to be mini distribution centers. So, I now have the potential of 1,800 Walmart mini distribution centers. That’s huge. I’ve got a store reconfiguration, I’ve got a change in operation, but I already have the location. And I can Uber the shipment. “You’re going home? Take this box to your neighbor.”
On what happens to all the parking structures as ride-hailing services proliferate:
Eppli: The need for two cars or even one car per family really should go away. Why not share that, especially given the wild inefficiencies we have with the usage of our automobiles? And now, we’ve got parking structures. How do we start to adaptively reuse our parking structures? How can they maybe start figuring into this supply chain?
Fisher: Amazon would love access to those parking structures.
A final thought — on driverless vehicles:
Fisher: Right now, trucks moving 80 percent of the commerce in the United States are limited by federal regulations on driver time. They can only drive eight hours a day with certain rest periods. Then they have to park — the truck parks too. With autonomous vehicles, I’ve got 24/7 asset utilization. I have now tripled the capacity of a trucking fleet.
Eppli: I had a cab this morning in Cleveland. Why not have that cab be driverless and take me from the hotel to the airport? I think those kinds of things are going to happen, and redeploying people into different and more interesting jobs will be really quite helpful for our economy overall.”