COMMENTARY

Kagan: E-commerce threat gives retail a choice - fight or die

| by Jeff KAGAN
Kagan: E-commerce threat gives retail a choice - fight or die

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Recently I gave a keynote speech to a group of senior executives in the retail industry. I started by saying, retail is under attack -- how now is the time to either fight or die. I said the threat is how only some of today's retail success stories will remain leaders, and how many, if not most, will fail under the attack of e-commerce competitor.
 
The only question is whether you will be one of the winners. The answer has a direct relationship to what you are doing to prepare today. You have a choice. You can either be a leader or a follower. If you are not one or the other, you will likely fail.
 
The next questions are important: If everyone knows this about leaders and followers, why then is the retail industry not rapidly transforming and innovating everything? Why are there so few leaders? Why are most of the retail competitors moving so slowly?
 
Retailers must cannibalize or competitors will eat them alive

The bottom line is this. Retail must cannibalize or new competitors like Amazon Go and Whole Foods will eat it alive. There is no middle ground.
 
This is the key question: Are you a leader in innovation and change, or you are a follower? The choice is yours.  
 
E-commerce technologies continue to grow and to transform industries. Everyone knows this. Growth and leadership are linked. As a company you are on the growth wave. So, where on that wave is the question. You are either on the growth side or the falling side of the growth wave.
 
Retail must stay on growth side of growth wave
 
No company hovers. They are either growing or shrinking. Either succeeding or failing. To keep investors happy companies must stay on the growth side of the growth wave. Even non-public companies need to stay on the growth wave. The reason is simple. If you are not growing, everything starts to unwind.
 
At that point you begin to struggle. Once that happens it is very difficult to turn around. Add to that a changing industry with e-commerce players who are changing the playing field and you can see the immediate risk that must be addressed today if you intend to stay on the growth side of the growth wave.
 
Amazon Go and Whole Foods are transforming retail

We know what companies like Amazon.com are doing to the retail industry. It started with the book business back in the 1990s. Ever since, they are doing the same thing to other retail sectors as well. And their story is still new. They will continue on this path for a long time to come.
 
Now, with the Amazon acquisition of Whole Foods, Amazon is changing the grocery business. This will put incredible pressure on leaders in this sector. Amazon Go is another move into retail, challenging traditional ways of doing things. Amazon Go lets users walk in, grab a few items and walk out. Scanners charge your app for everything you want as you walk out the door.
 
So, traditional retail is being challenged. They are trying to change. They are innovating. The problem is they are not innovating fast enough. Retailers are moving forward, they just need to speed the process up or they will ultimately fail.
 
Remember, the choice is either to be a leader and write the rules for tomorrow, or be a follower, and take the road paved by others. Both can be successful, just different. The only ones who will surely fail are those who don't change. Most of them will sadly wither and die.
 
Retail is a setting where only the best and most innovative succeed.
 
This happens in all industries. Consider wireless. In the wireless world, AT&T Mobility is the innovator. First with iPhone, acquiring DirecTV, creating DirecTV NOW and wireless TV and expanding the marketplace. Verizon Wireless is a follower. They aren't the leader and don't create new opportunities, but they successfully continue to compete.
 
Sam's Club and Kroger changing retail

In retail, Sam's Club lets their shoppers use their app to pay for purchases. Customers no longer have to wait through long checkout lines. This is not as easy as Amazon Go, but it is definitely movement in the right direction.
 
Grocery store Kroger sees the threat and they are testing innovation in some stores letting customers use their smartphone app in similar ways. They need to move faster and roll this out nationally, but at least they are moving in the right direction.
 
Technology and e-commerce leaders in the grocery industry do not come from the major stores. Instead it comes from smaller retail chains like Trader Joe's and Sprouts who let shoppers pay using their smartphone app. They let shoppers pay for their order on their smartphone without touching a dirty keypad at the cash register.
 
This is similar to what Whole Foods is doing in their stores, so we can see the grocery industry is aware of the new e-commerce threat.
 
Traditional retail is not innovating quickly enough

The only real question is, are they moving fast enough to make a difference. With innovation, every retailer has a choice. Either lead, follow or get out of the way. Leaders set the rules. Followers follow and are also successful. Many others will ultimately fail.
 
We've seen this happen to companies and industries over the last couple decades. E-commerce impacts industry after industry. It started with Amazon in the book business putting Borders and others out of business. Countless other industries have been impacted over the last decade or two.
 
Now the threat is focused on the retail and grocery sector. The threat is real from both Amazon and other e-commerce players. Innovation is key. Leaders today need to understand they cannot sit still. The rules for success over the next decade are simple. Either innovate or die. Period.

 

 


Topics: Consumer Behavior, CRM, Customer Experience



Jeff KAGAN
Jeff Kagan is a Wireless Analyst, Telecom Analyst, speaker, author and consultant. Over 30 years he has followed the Customer Experience through technology like wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, AI, Mobile Pay, FinTech and more. Email him at jeff@jeffKAGAN.com. www

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