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Disruptive retail - don't be on the receiving end

23 February 2018

The term disruptive gets bandied about a lot these days - seemingly for anything involving a couple of clicks or an app - but while the term is overused, it's a very real phenomenon. Ask Kodak or Blockbuster, who went from market leaders to market leavers when technology undercut their business models.

We might think of them - and other companies that have fallen by the wayside - as powerless in the face of a technological onslaught, but although disruption is rapid it doesn't happen overnight: many companies who have been overtaken had ample time to respond. Blockbusters had the opportunity to partner with Netflix, and Kodak even invented the digital camera. When engineer Steve Sasson presented it to management, their reaction was: "That's cute. But don't tell anyone about it."

If the 2000s were about digital technology putting the boot in conventional formats like film or video, this decade has been about the disruption of channels - in content, in retail. Amazon spans both: at the end of 2007 its trailing twelve month (TTM) revenue stood at $14.8 billion. Ten years on it was $177.9 billion.

Technology is now phenomenally important to retailing, yet this is one of the most conservative sectors, deliberately sticking with trusted solutions in bricks and mortar operations rather than embracing the risk of the new. And that's a problem. When established players in a sector can't run with a disruptive technology, history shows it resurfaces in the business model of a start-up.

Over the horizon radar

We can't see over the horizon, but there are clear trends we should anticipate and support. Shoppers want an informed, personalised, easy and rewarding experience, and for retailers, delivering that will increasingly only be a starting point. Smart buildings, data analytics and the customer-centred operating model will all drive innovation and bring opportunity, and they'll all make demands on your underlying IT systems: retail success will depend on a robust, flexible and easily-managed core network.

The technological cycle moves quickly. Successful ideas move from disruptive, to competitive advantage, to the price of doing business in the space of just a few years. Perhaps this helps explain retail's conservative approach to technology: while sensors, the internet of things, mobility and data fluidity all have the potential to be disruptive, technologies like card payments are fundamental to doing business. The priority has to be on the stable, secure networks on which everything depends.

 

Want to build the data platform for your future? Need an off-the-shelf, managed branch network up and running for a new premises? Whatever your retail challenges, I'm happy to talk: call me on 01273 957520, or get in touch online.


Image: Charles Knowles/Flickr, Creative Commons