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Author's profile photo Irfan Khan

Subtlety, Complexity, and the Future of Retail

Why is the future so difficult to predict? It is easy enough to jot down a few paragraphs on a given future topic, say the future of the retail industry and the impact that big data will have on it, but it is very difficult to have any assurance that those projections will map to anything that actually happens. Part of the problem is that we tend to see the future as an exaggerated version of the present rather than a world in which fundamental changes have occurred.

There is an old story in futurist circles, probably apocryphal, about a city planner in New York who in the late 19th century published a dire warning about the city’s future. The prediction was an extrapolation from then-current trends. According to his calculations, the rapid growth that the city was experiencing would prove to be its undoing in a matter of decades. By 1950, he predicted, New York City would be completely unlivable. With more people and more businesses would come more horses (naturally) and with more horses would come the waste that they produce. By 1950 the city would be literally buried under a mountain of horse manure.

Apocryphal or not, that mountain of horse leavings is one of the most compelling (and apt) images ever to be associated with predictions of the future. Look back at what was predicted for retail (or for any industry, for that matter) four or five decades ago and you will see very little that matches what is occurring today because disruptive innovation is so difficult to predict. Even when technology factored into predictions, it was difficult for forecasters to get a handle on how transformative the exponential growth in data, accompanied by the exponential growth in analytical capability, would prove to be.

Why is this? Some believe our expectations are too vivid, too imaginative, and that reality — being ever mundane and predictable — can’t hope to deliver. But I would make the case that the problem is neither vividness nor imagination. After all, our worried city planner could never have hoped to imagine the real challenges that New York faced in the middle part of the 20th century. The reality was much more vivid, much more complex, and ultimately much more subtle than his unsettling prediction.

But that vivid, complex, and ultimately subtle reality is, in fact, reality. And reality is a thing we tend to take for granted. Even when parts of it are novel or surprising or completely amazing, it’s difficult to keep that perspective when those things become a part of everyday life.

So let’s return to our subject, the future of retail. Let’s look at it from the consumer’s side: the shopping experience. What is — or maybe it is better to ask what was — the future of shopping supposed to be like? New Yorkers in 1950 might have predicted much bigger stores with more choices of merchandise. And they would have been right, as far as that goes. But they probably wouldn’t foresee a future wherein very few transactions are made on a cash basis, and of course the whole idea of online shopping would have been incomprehensible to them.

Imagine going back in time and trying to explain something like the Home Shopping Europe (HSE) network to some of those mid-20th-century shoppers. We’re used to the idea of TV-based home shopping, so it doesn’t seem extraordinary to us that a television network would broadcast retail offers all across Europe (24 hours a day, seven days a week) and generate half a billion in sales in the process. The parts of the scenario that would seem dramatic to them — television programming serving as a storefront, viewers placing orders over the phone — would seem completely commonplace to us.

And we would know, although hardly be impressed by the fact, that the real driver of HSE’s success is neither television nor telephone technology, but rather a vast infrastructure of IT systems, network technology, and data. When HSE talks about giving customers a common experience across a wide range of access options and perfecting the art of upselling and cross-selling their customers with additional offers suited to their tastes and budgets, we are once again dealing in the complex and the subtle. The infrastructure that supports such capability is obviously highly complex, and yet it is hidden from the everyday experience of the user.

Likewise, when Home Depot sets out to provide a system that will track any item in inventory (out of tens of thousands of categories) anywhere in 2200 different locations, or when Swiss retailer Tally Weijl manages five deliveries per week to some 800 stores serving the highly dynamic and demanding market of women age 16-25 — and manages all of this while dramatically growing revenues and cutting costs — we know that the reality of “the future of shopping” is far more dramatic than any scenario involving sleek skyscrapers or flying cars. Yet this extraordinary capability is delivered by technology that we all too quickly accustom ourselves to, and then scarcely think about.

And of course, the future is just beginning. Same-day fulfillment of online orders is here (in some markets, anyway.) What comes next? We know to expect drone helicopters shipping to our homes, but it gets even stranger than that.  In a scenario oddly reminiscent of the visionary film Minority Report — wherein the police “Precrime” division had officers tasked with preventing crimes before they are about to occur — we now have the promise of “pre-shopping,” with Amazon promising to send you your order before you place it.

As with the remarkable results retailers are already achieving, these images of things to come will be made real, if at all, by the subtle power of Big Data and the Cloud. Operating quietly behind the scenes, powerful technology can bring us capabilities we can scarcely imagine but will reward those that dare to.

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      Author's profile photo Mohamed Amer
      Mohamed Amer

      Irfan, thanks for sharing your retail insights with us!  Your last set of examples from Amazon demonstrate how one can take unconnected technologies and bring them together to create a new reality.  Challenging, yes. Invigorating, absolutely!


      Author's profile photo Former Member
      Former Member

      Interesting problem for New York, but there's more to it than horse droppings.  If we think through the 1900s-1920s, the introduction of horseless carriages by Packard, Ford, the Dodge brothers, and imports from Europe were responsible for a major change that fueled retail. Better roads, greater vehicle reliability, and petroleum refineries cause a huge shift.  Goods could now be obtained in rural communities much more affordably, and products could be delivered across greater distances than ever before. This drove a level of prosperity and access to a wider range of people. We also know this led to a big shift of population from rural farming areas into cities and suburbs. So the "horse problem" really is responsible for much of modern retailing, consumer society, and access to fresher and less expensive goods.  Will be interested to see what the next post-internet wave does to retail, and hope it is a positive development.

      Author's profile photo Former Member
      Former Member

      Great article Irfan!  I like "pre shopping" but I believe my teenage daughter will love even more!