Hey friends,
Just three years ago, highly regarded tech guru turned venture capitalist Marc Andreessen predicted the death of retail stores here. He said, “Retail guys are going to go out of business and ecommerce will become the place everyone buys” and went on to say, “Retail chains are a fundamentally implausible economic structure if there’s a viable alternative.”
Perhaps Mr. Andreessen, like many technologists I meet, was a bit out of touch with the reality of human behavior, wants, and needs. Perhaps he never enjoyed traditional shopping, like many men. Perhaps he was very wrong.
ECommerce, led by Amazon, has had a powerful impact on retailing, rising to about 9% of US total retail sales today, and by my projections rising to 20% or so 20 years from now. But that is far from the death of traditional retailing.
In another aspect of life, as a 30-year music hobbyist, I witnessed the decline of analog synthesizers and the rise of digital ones, first in hardware then in software. Today those old synths sell for thousands of dollars as more musicians appreciate “old school” gear.
The media industries, from movies to newspapers, have been turned on their heads by virtual and social media substitutes. Many predicted the end of the ink-on-paper printed and bound book. The idea of the bookstore – an industry I spent many years in – was a certain goner, given the rise of eBooks combined with the “death of retail.”
And yet, in this recent New York Times article, we read:
“E-book sales fell by 10 percent in the first five months of this year, according to the Association of American Publishers, which collects data from nearly 1,200 publishers. Digital books accounted last year for around 20 percent of the market, roughly the same as they did a few years ago………The American Booksellers Association counted 1,712 member stores in 2,227 locations in 2015, up from 1,410 in 1,660 locations five years ago.”
In many aspects of our lives, “analog” is proving surprisingly durable. Even Amazon is opening stores. In a recent (December 28) episode of the excellent radio program Launch Pad from the Wharton School of Business, Professor Karl Ulrich interviewed Warby-Parker co-founder and co-CEO Neil Blumenthal. The online eyeglass company already has a valuation of over $1 billion. Blumenthal mentioned the great success of their physical stores, the higher cost of customer acquisition online, the over-enthusiasm for ECommerce and under-enthusiasm for bricks-and-mortar. His company has announced many new stores this year, rising to 70 by yearend. As I discuss in my article and my book on retailing, many of the best companies will do both online and bricks-and-mortar.
The new book Revenge of the Analog by David Sax “hits the nail on the head.” I urge you to read it to see a world that is a bit different from much “common wisdom.”
I would love to hear your thoughts here.
For some of my prior thoughts and data on these subjects, see:
https://www.linkedin.com/pulse/future-old-media-digital-age-gary-hoover
https://www.linkedin.com/pulse/future-ecommerce-vs-bricks-mortar-retailing-gary-hoover
https://www.linkedin.com/pulse/shopping-mall-dead-dying-gary-hoover
https://hooversworld.com/why-we-need-paper-maps/
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