When the Stores Go Away

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When the Stores Go Away

By Dan McClure - 01/23/2015
What if there were no more stores? Would everything be sold online and the streets be choked with UPS trucks? It's unlikely. Few major transformations are so neat and tidy.
 
The traditional walls around the retail store are falling down, and with that Jericho moment comes new possibilities. Amazon and FedEx are not the only ones who can invent a place in the future of retail. In the absence of the brick-and-mortar retailer's marketplace dominance, all sorts of unfamiliar retail and brand innovators will have an opportunity to wander into customers' lives. Businesses that offer new and innovative capabilities will be the ones who thrive in the midst of unprecedented retail disruption.
 
The Fridge and the Egg Farmer
Do buyers have to be human? With the Internet of Things, connected cars and smart kitchens, previously dumb appliances are turning into personal partners for life's daily chores. We are not far from a kitchen that senses the ebb and flow of your family's life and understands your preference for fresh local produce.
 
Smart refrigerators are well positioned to become a new kind of retail buyer, with unfettered connections to a marketplace that increasingly operates in the cloud. While you wouldn't casually break weekly grocery shopping routines, your fridge is happy to patiently sift through a host of creative new buying options.
 
Perhaps it finds a local farmer that only intermittently has fresh organic eggs for sale. Micro-suppliers like this have fewer and fewer barriers to entry in a store-free world, as they don't need a storefront, evocative brand or even a continuous presence in the market. Stainless steel buyers sitting in the kitchen conspire with these micro-supplies to shatter the long supply chains serving centralized retail locations.
 
Shoe Shine Stands, Chefs and Hair Stylists: Could Service Businesses Offer Product Pick-up and Return?
Retailers and service businesses are on different trajectories. While storeowners continue to struggle to find a reason for maintaining a brick-and-mortar presence and unlock unique customer engagement opportunities, service businesses pay for their frontage with a rapidly growing set of diverse, place-based offerings.
 
The Census Bureau counted over 44,000 restaurants in New York City alone. Diners, hair stylists, spas and coffee shops literally touch a customer's life and have a persistent need for a presence along our daily footpath. Who is more ideally positioned than them to play the role of product pick-up and return?
  
The office building shoeshine stand may well have a more robust business model for the physical delivery of products than a retailer besieged by showrooming and online price commodification. While the shoeshine stand is, by necessity, rooted in a place that encounters large volumes of regular traffic everyday, it's a viable business that would profit by adding a bit of storage for just-in-time deliveries.
 
Rapidly growing businesses like Uber and AirBnb prove that, with the right tools, the public is quite willing to receive their services from an organic consortium of providers. AirBnb is particularly relevant, since it allows people to monetize the latent value of a home in a convenient location – and the shoeshine stand doesn't need to be far behind.
 
Bundling New Ideas for Crowd-Sourced Pizza
There's another type of retail disruption. In a cloud-based marketplace, it is increasingly easy to bundle and deliver services in ways that stretch the very definition of retail. As the focus on traditional stores fades, there are few barriers to someone else reimagining the value a retailer's customer receives.
 
New competitors can rush in, but this is perhaps the greatest opportunity a creative retailer has to fight back. For example, Australia's Domino's enterprise rolled out Pizza Mogul, a digital tool that allows anyone to design a unique combination of pizza toppings and then have them promoted on the Domino's website. Sales earn participants commissions, with some crowd-sourced chefs earning thousands of dollars.
 
Play with the New Kids
The fact that there are so many odd bedfellows waiting to be engaged should be seen as very good news. Putting an ever-finer point on historical retail thinking generates only the thinnest margins of competitive advantage. In a world of commoditized opportunity, putting new possibilities into the retail toolbox is the best hope for discovering a sustainable path into a radically different future.
 
Dan McClure is the Innovation Design Lead at ThoughtWorks.