17 Apr, 2017

RetailWire BrainTrust throwdown: Is it inevitable that tech companies will dominate retail?

 -News round up March 24th - artificial intelligence

By Rick Moss, President, Co-founder, RetailWire

From its origins with the Dutch West India Company through numerous evolutions, commerce is the engine that has driven the global prominence of the U.S. economy. Still, the e-commerce revolution that caught on in the late 1990s is so fundamentally different that the prior 400 years of traditional retail can be viewed as a prelude to the empowered, connected consumer age we exist in. We’re in the midst of a hi-tech revolution with no limits in sight.

We asked two of the most forward-thinking retailing experts from our BrainTrust panelists, Ken Lonyai and Ryan Mathews, to argue for and against the following premise:

The new model for retail, as exemplified by Amazon, is built on mastery of data, AI, and IT services. Legacy retail companies can’t possibly make a transition to this type of data-first company. Therefore, possibly within the next decade, big retail will be entirely dominated by tech companies.

Ken Lonyai

Ken is a 15-year veteran of interactive project development including some of the industry’s most unique experiential systems.

Amazon is the pinnacle of retail technology domination. Everything the company does is supported by data and technology and it’s working splendidly. Apple’s retail success is strongly attributed to changing the shopping experience by incorporating digital tools for checkout, fulfillment, and support. Other tech-driven commerce leaders are emerging too. Jet.com uses algorithms to aggregate savings. Starbucks’ mobile apps/payments fuel its growth. Warby Parker, Bonobos, Rent the Runway, BirchBox, Casper, and others leverage big data and technology to upend their respective markets.

None of these accomplishments would have come about simply with better-trained sales associates on a sales floor. Even associates need to be well equipped with data and the means to access and utilize it immediately or today’s enabled consumer will walk. As important as human factors are, software and hardware drive user interactions, inventory, logistics, package tracking/returns, etc. It’s the absolute differentiator that will continue to distance retail winners from also-rans.

Ryan Mathews

Ryan Mathews, founder and ceo of Black Monk Consulting, is a globally recognized futurist, best-selling author, speaker and storyteller. 

Arguing that tech companies are the future of retail is like saying power saws are the future of carpentry. Do they have a place in carpentry? Of course! Are they carpenters? Not even close.

We are so besotted by technology that we are blind to its essential role. At its most innovative, technology is a tool. Once it gains mass acceptance, it becomes a utility — invisible — freeing us to focus on real change drivers, like people.

Electricity allows stores to stay open later, keep products at proper temperature, illuminates the consumer’s shopping experience, fuels computing systems, etc. But it’s people that make or break retailing, not electricity or utility providers.

Technologists love process and systems. Merchants help people escape boxes. AI solves for the best choice. Retailers know the power of surprise. The future belongs to retailers that can exploit technology, not the other way around.


Other panelists from the BrainTrust joined in on what became one of the most active discussions of the year:

Paula Rosenblum, Managing Partner, RSR Research

“Everyone on both sides seems to forget the “X factor” (beyond Ryan’s passing mention) — the products being sold and the skill of the merchant in selecting and/or designing the things consumers want to buy.

So many specialty retailers are having trouble now because they’ve lost their merchandising touch. That’s not a technology issue.” 

Tom Dougherty, President, and CEO, Stealing Share

“Can traditional retailers make the transition? Certainly. Will they? Nah.

They are too busy trying to make the old models profitable and interesting again. They won’t change until it’s too late and new shopping habits will already be formed.

The winner? Tech. The loser? Everyone who is afraid to cannibalize their existing model. Many of the barriers to change are found in shareholders who notoriously hold onto quarterly profits and resist long-term investment. So how long would a Macy’s C-suite survive if they closed and reduced the brick-and-mortar retail space in favor of a real and dominant online experience? That management would get bounced out on their ears. The current model MUST defend real estate investments.”

Susan O’Neal, CEO, Founder Adjoy

“Ryan and Ken are both right. Both technology and data are only as good as the objective they are applied against. Amazon uses technology to capture the value of efficiency (time and money). Traditional brick-and-mortar retailers use people to capture the value of human relationships (trust and loyalty).”

Adrien Nussenbaum, U.S. CEO and co-founder, Mirakl

It is really about business models. Amazon’s marketplace business model is a driving factor in its success. It has created a platform business — and that platform is supported by technology. Technology will be critical because customers shop for experiences. Certainly, products are a part of the experience, but so are many other factors — price, an array of choice, availability of information, availability of value-add products or services, and trust of service quality. Technology that can make sure the experience is top notch will be critical. Therefore, technology providers can win big by enabling retailers to become platform businesses.” 

Read the entire RetailWire discussion…


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