Disruptive technology can’t come soon enough
In every age, new technologies disrupt the status quo. In markets, those rip down boundaries defining the territories of established businesses and instigate creative destruction.
The purveyors of digital technology are no exception. Alphabet’s Waymo(GOOG, US) is pushing auto giants like General Motors (GM, US) to accelerate the development of self-driving vehicles, Apple (AAPL, US) displaced IBM (IBM, US) as the lead innovator in personal and office technology by pioneering the smartphone and tablet, and Facebook (FB, US) will put heat on medical device manufacturers with its foray into direct computer-brain interface.
Perhaps nothing is more pervasive to the landscape of everyday life than the threat Amazon (AMZN, US) and other internet merchandisers pose to brick-and-mortar stores and shopping malls. They are successful because they make our lives richer and easier — and there is nothing new about engineers and entrepreneurs doing that.
In the 19th and early 20th centuries, improvements in the national railway system and American manufacturing created regional and then national markets for most household items and business necessities.
Ever since, Main Street shops and their successors have endured disruptions and reinvention. Mail-order catalogs like Sears and Montgomery Ward, department stores like Macy’s and Dillard’s, full-line discounters like Wal-Mart and Target, category killers like Best Buy and Staples, and now Amazon Prime and other internet aggregators.
Each wave shares three common themes — the newcomers buy and deliver products more efficiently, address changes in how Americans work and live, and exploit the hidebound management of the established retailers and municipal governments that host them.
I’m a serious road cyclist and I go through tires and biking apparel the way a 10-year-old does sneakers and play clothes. My local biking store is quite large and carries a decent assortment, generally at list prices.
Either on Amazon or through one of the big internet aggregators like Western Bikeworks, I can significantly beat prices on accessories, obtain a much wider selection of brands, and save a few hours after work better spent on my road racer.
The latter is terribly important. With more two-income households, the folks with money to spend working long hours and quite agile with handheld devices, and roads and transit systems ever more congested and stressed, going to the mall or downtown store is hardly entertaining — it’s old fashioned and often a needless waste of time.
Mall owners and local governments regulating access to on-street shops have sought to squeeze consumers just for the privilege of viewing the goods. Large urban shopping malls charge for parking or simply overbuild retail space for their lot’s capacity. And municipal governments, which once used parking meters with minimal fees to encourage turnover and boost store traffic, are now gouging visitors, limiting on-street parking and forcing shoppers into high-priced lots.
I don’t want to pay a stiff parking fee to visit Orvis in Arlington for the privilege of purchasing $20 worth of leaders and tippets for my fly rod (that’s the transparent stuff at the end of the line that holds the fly and disguises your presence from the fish) when I can get something comparable on the web for less than I pay in the store.
Strip-mall owners have taken to erecting fast-food restaurants and banks in the middle of once adequate parking facilities, forcing drivers to circle for spaces much like commercial aircraft at LaGuardia airport on a heavy travel day over New York.
My local Whole Foods sits on top of a torturously configured, congested and difficult to navigate underground parking lot. Without considerable care and concentration, it’s not hard to bump a pillar, another car or pedestrian. Yet these guardians of community conscious retailing are selling beer and wine by the glass upstairs as early as 7 a.m.
That surely enhances the dexterity and judgment of shoppers as they exit.
Less tony grocers and drug stores increasingly cajole shoppers to use cumbersome and frustrating automated check-out machines. Any wrinkle in a purchase — such as using a backpack to carry away goods in a jurisdiction that imposes a bag tax — can leave the contraption flummoxed and force the patron to seek assistance from a harried clerk.
Now Amazon wants to clean up Whole Foods. I hope it starts by shutting down the pub.
This article was licensed through Dow Jones Direct.
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