This blog first published in Retail Week
Demand for your products will not fall. Instead, customers will start spending their money with newer retail firms, and ‘they won’t be phoning you to say goodbye.’
Most retailers have yet to board the new technology train. Customers buying patterns have started to change, and it is not a case of it might happen, it has already begun to happen. The critical question is, will your firm be on board the new train?
The problem is straightforward. Customers want to buy things that most firms won't be selling, and they want to buy it in a different way. New start-ups and new technology will sort out the problem, and in the future, that is where the money will go. As demand changes, old retailers will carry on selling the same old products in the same old way.
We can’t pretend that change isn’t going to happen, so we can’t carry on making well-crafted arguments for maintaining the status quo because no one person can delay the inevitable, it's going to happen whether we like it or not.
The choice is yours. Directors can carry on thinking about what wine to drink this weekend and where to go on holiday or reflect on the insolvency company they might have to appoint in the future. Don't forget that disruptors always come from outside an industry.
If you don’t change, you will not be able to respond to the future needs of customers. Rest assured that if you don't respond, the market is so large that someone else will take your customers.
The bigger question is when the disruptors arrive, and the incumbents ignore them, are you going to behave like the Luddites? If you are, then start reading your history books now and learn from the past.
A disruptor is a new, alternative source of supply that appeals to customers in ways that the existing supplier can’t. The disruptors appeal lies in its ability to provide unique value to the customer in a way or a manner that the incumbent providers have overlooked, ignored, or as often is the case, they believed to be impossible. A disruptor typically adopts new business models profoundly different from the incumbent, one designed for the customer needs.
The disruption theory is that alternative suppliers grow market share, starting from the edges of a market of its least complex and lowest-value needs, then they work their way up and into higher-value sectors.
Then at a certain point, the established supplier collapses, and the challenger becomes the new incumbent. There are many examples of this pattern from retail, Internet, mobile phones and many other industries.
You can’t afford to put off worrying about disruption for one moment longer, and it's not about the millions you are turning over today, it's about the rapid loss of turnover that you will experience once the disruptors arrive. Don't put it off any longer. Don’t carry on adjusting the window dressing when it’s the foundations that need some attention.
When I talk to retailers, they always start with a little laugh and then tell me why things can’t change and how it’s not in the customers best interest. Retailers it seems are glass half empty people.
In 2006 I told the MD of a large firm that they better get ready, Amazon is coming, the response was, “we’re not worried about Amazon, they don’t have a sustainable business model,” I’ve still got the email.
A retail MD’s favourite line is “Look, you just don’t understand,” yes, I do.