BrainTrust throwdown: Is it inevitable that tech companies will dominate retail?
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 1990’s 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 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.
[For the purpose of this exercise, Mr. Lonyai will take the pro position and Mr. Mathews the con. The views expressed herein are not necessarily their own.]
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.
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.
DISCUSSION QUESTIONS: Which argument rings truest with you? Will the tech giants (think: Amazon, Google, Apple) soon rule retail? Can traditional retailers make the transition and compete effectively in this new environment?