The analogy of the buggy whip industry being wiped out by the advent of the automobile is nauseatingly over-used. But that’s why I’m going to use it again, because it sends a clear, immediately understood message to the retail industry, even though the notion has been too slowly acted upon.
So I’m holding my nose and using it once again, hoping it is now prescient and scary enough to ignite a greater sense of urgency for proactive change among those old- world retailers, many of whom seem content to be merely reactive to the growing number of upstart “speedboats,” hundreds of which participated in Shoptalk’s second annual conference last week.
Hundreds of new technology and data empowered models, engaging consumers in ever more personal, indelible ways, and creating more efficient, effective and responsive value chains were presented and discussed by the old and new worlds, sharing knowledge and seeking synergies.
To expand on the narrative, imagine a transportation conference in 1908, attended by hundreds of companies in the wagon and carriage industry. The Ford Motor Company unveils its Model-T at the event. The legacy wagon, buggy whip and roller bearing companies must have been worried about their survival and how much time they had left. The smart ones would have proactively embraced Ford’s awesome disruptive innovation, and figured out how to pivot their business models to participate in a new world. For example, the Studebaker Brothers Manufacturing Company shifted from carriage making to auto making. Timken Company shifted its roller bearing business from carriage wheels to auto wheels…and it is a $3 billion company today. I couldn’t find one buggy whip manufacturer that survived. Being prescient and getting into the spark plug business at the time might have been a really smart idea.
Anyway, you get the idea. To survive, indeed succeed today, embrace disruption and adapt, adopt or acquire the new models. Do not sit in death’s waiting room like the buggy whip makers.
There is a major difference in the buggy whip metaphor and the current world of technology disruption. The automobile was one “thing” or “tool” that totally and fundamentally changed the world of personal transportation. There are many technology “things” and “tools” today that are changing the way we live and work. And from a commerce perspective, most of the tools that are disrupting the status quo are those that seamlessly integrate digital and physical value chains to be more effective, efficient, fluid, agile and more responsive to each and every consumer’s personal desires. This definition of a value chain includes all functions, from product or service creation all the way through to consumption.
It’s important to note that this definition, while not changing what businesses have always strived to accomplish (the most effective, efficient and rapidly responsive value chains), the tools of technology can enable them to achieve that goal on “steroids.” However, determining what technologies to use and how to use them is complex and costly, and more so for legacy, old-world retailers and brands, run largely by a generation of executives who did not grow up with technology.
Furthermore, there is an entire new language and vocabulary that was birthed by technology. And the millennial generation owns the language and too often they annoyingly use the “buzzy” acronyms with intent to show older management how smart they are. Message to millennials: those old “fogeys” will tune out the minute you condescend with your smartness and you will be mentally filed away as a “smart ass.”
Back to the Shoptalk Platform
So Shoptalk could be viewed not only as an incubator for old-world retailers and brands, but also as kind of a graduate school with a very broadly-encompassing curriculum. One can learn about hundreds of new technology solutions applied to every function of the value chain — from creation to consumption. Indeed, these innovative small “speedboats” provide an amazing picture of the future with models and ideas that can be translated into one’s old world current model. And even though nine out of 10 of these speedboats are not making any money and may very well fail, the one out of hundreds of “tens” who do successfully scale, will be formidable competitors. Uber, AirBnb, and others threaten to wipe out entire industries. Ooops! Let’s not forget Amazon.
As I have said, the old world must adapt to, adopt or acquire the new world of technology. In fact, many of the old world participants in Shoptalk’s keynotes and panels expressed their progress in how they are using technology and big data to transform their models. Further, many of them have been acquiring these innovators with expectations of not only gaining synergies while enabling them to scale faster with the help of their “deeper pockets,” but also of shrinking the company culture’s technological learning curve.
Walmart acquires Jet.com, Moosejaw Shoebuy and ModCloth. Unilever acquires Dollar Shave Club. PVH acquires customized bra e-tailer, True & Co. Nordstrom acquired flash-sale startup HauteLook and subscription site, TrunkClub. They have also made investments in men’s wear e-tailer Bonobos, (which is also operating in Nordstrom’s stores), Sole Society and BaubleBar. Bed Bath & Beyond grabbed One Kings Lane, DSW Shoe Warehouse acquired Ebuys, and Hudson’s Bay scooped up Gilt.
So the technology-age tsunami is breaking over the retail “beach” where many of the old-world retailers are now racing to the hills to avoid being sucked under. And if they move fast enough, outpace the wave, adapt, adopt and acquire, they will successfully transform their businesses.
Unfortunately, a lot of them, like the buggy whip guys, will take their time leaving the beach. And for them, the end will be, gurgle, gurgle, gurgle!