The “Future of Retail” is Just the Evolution of Distribution

I met Bob Schwelm in the early 1980s when the running community in Philadelphia was small and the Broad Street Run fielded about 2,500 runners.  In 2016, more than 40,000 runners packed the local race.  In the early 1990’s Bob took his passion and opened up a store called the Bryn Mawr Running Company and I have been a loyal customer since moving to the suburbs in 1995.  I went to see my old friend last week to pick up a couple of pairs of new running shoes as I typically do 3 times a year for the past 21 years.  We talked about running, races, and commiserated about our slowing times and even slower recovery times from the long training runs.  As I do with most people, I asked Bob “How’s business?”  I always worry about small business owners like Bob - especially retail owners - and am curious to hear how they are doing in this changing world.  After losses like Robinson Luggage and other proud small family-owned retail stores over the past few years, I expected to hear the worst.  I was pleasantly surprised.

Bob shared that business was good, but he thinks the disruption is just about here.  He believes that within the next few years, stores like Bryn Mawr Running will still be around but will be just a showroom – without any inventory- for online companies like Amazon.  And he sounded like he couldn’t be happier.  “All of my money is tied up in inventory and it is really hard to make a profit.  But if I was a showroom and worked with Amazon, I would gladly take a small commission on every pair of shoes I sold and delivered the same day to the customer’s desired location.”

The disruption is almost here.

As I talked further with Bob and realized that he was happy and embracing the change, I realized that the future of retail is not a slow death, but the evolution of distribution, a critical distinction.

So many business experts, economists, politicians, business leaders, and consumers have a mental model that the global economy is ultimately driven by retail sales.  Each day that goes by, that mental model becomes more antiquated.  After all, what is retail?  Retail is a place where a customer goes to purchase a product or service.  At Advantexe, we have created a tool that we use in our business simulations and business acumen learning journeys called the Value Dashboard™ which illustrates the decision making process of a customer.  The typical retail value dashboard includes elements such as:

The existing mental model of shopping live retail is that a customer walks into a retail store with a budget and is looking for human interaction and service, fit, convenience, and the ability to use the product right away. The “Traditional Shopper” can never replace the shopping experience and the value they get from interacting with another human.

But what If they could have that and more?

I think Bob is right and that a store like Bryn Mawr Running is part of an evolved distribution ecosystem and the combination of the showroom plus Amazon offers a more effective value dashboard to customers.

In this evolved Value Dashboard where retail plus online drives the value dashboard, the price to the customer is actually lower, the convenience is higher, and everything else is about even.  In effect, this value dashboard combination actually presents customers with more value.

The future of retail may very well be bright and the impact to the economy could be overwhelming in a positive way.  Progressive retailers will have a new model, consumers gain more value and opportunities to get what they want, Amazon grows, and all of the suppliers of raw materials and components to the product manufacturers selling into companies who make the products sold in this new economy can will also thrive.

-------------------------------

If you would like to learn more about our customized retail business simulations please contact us at james.brodo@advantexe.com.