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I recently read some figures on the changes in stock evaluation between 2006 and 2018 of main retail chains in the US and they surely gave me something to brood upon (first figure 2006 value, second February 2018 value):
- Sears 14.3 $B >>> 0.3 $B -98%
- JC Penney 18.1 $B >>> 1.2 $B – 94%
- Macy’s 24.2$B >>> 9.3 $B – 62%
- Kohl’s 24.2$B >>> 11.2$B – 54%
- Best Buy 28.4$B >>> 21.4$B – 25%
- Amazon 17.5$B >>> 726.3$B +4050%
What happened is … eCommerce. And it is not a coincidence that Best Buy having embraced eCommerce has seen a smaller depreciation of its value (they have announced at the end of February 2018 they will close 250 cell phone stores in the US; this is both the result of a slowing down of cell phones sales and customers using eCommerce to buy them).
Warning: Notice that the decreased valuation of brick and mortar chains and the increased valuation of eCommerce companies does not level out, i.e. we don’t have a shift of value from the former to the latter. eCommerce companies have a market value that is far greater than what it can be expected looking at the earning and turnover (but this is a different story…).
In 2016 1.8 trillion $ have been spent buying through eCommerce all over the world. What is remarkable is that this represent just 10% of the overall spending in retail (meaning that 90% of retail sale went through brick-and-mortar store) and that only one fifth of the world population used eCommerce in 2016.
This means that although eCommerce has created huge ripples in the retail space what is laying ahead is way bigger. In the next decade 5 billion people are expected to turn to eCommerce (not necessarily giving up completely the brick-and-mortar experience but shifting part of their buying spree to the cyberspace).
The digital transformation has already begun (in 2017 some 6,700 brick-and-mortar stores in the US went out of business, mostly because of eCommerce competition) but its full impact will be experienced in the next decade and the retail space with its 20 trillion $ turn over will be deeply affected.
Are we going to see the disappearance of brick-and-mortar store by 2030? Interestingly, the consensus seems to be that we will continue to have them although they will be quite different from today’s stores. They will provide a different engagement with the product often through Augmented Reality and other technologies to make the in-store experience more engaging and valuable than buying on the web.
Artificial Intelligence might play a significant role in the customer experience in the next decade, anticipating her wishes and steering the shopping experience. This will apply both to the eCommerce experience and to the in store experience.
Part of that might be the presence of humanoid robots at the store. More of this in a coming post.
