retail news in context, analysis with attitude

by Kevin Coupe

I'm fascinated by a new study entitled "A Roadmap to Digital Value in the Retail Industry," suggesting that close to half of all retailers are at risk for digital disruption of their businesses, and that 85 percent of digital business opportunities are "still untapped by retailers."

I'm not sure about that 85 percent number ... it seems to me that while the rationale behind it is explained, it probably isn't hard to come with a different set of stats that would undermine it. (I'm no logistician ... so I'm the wrong guy to evaluate this kind of stuff.)

But the other numbers seem both reasonable and quantifiable. And disturbing ... like a shark slowly advancing, mouth open, on an industry that may not even want to admit that it is in deep water.

According to the report, "Forty-seven percent of retail leaders believe that digital disruption is a high-risk proposition," and that "four of today’s top 10 retail firms will be displaced over the next five years."

In part, this may be because "almost half of retail executives surveyed do not acknowledge the risk of digital disruption – or have not addressed it sufficiently. Only 24 percent have a plan and are willing to disrupt themselves in order to compete."

Ironically, the story also says that "retailers believe that newcomers, or start-ups, will likely be the biggest source of digital disruption. Nearly 38 percent believe these start-ups will come from inside the industry."

(The study, by the way, is from research from the Global Center for Digital Business Transformation (DBT Center), which is a joint initiative of the Institute for Management Development (IMD) and Cisco.)

These numbers seem consistent with many of the conversations I've had with retailers over the years - people seem to know that disruption is inevitable, but they seem unwilling or unable to commit themselves to the kinds of fundamental cultural and organizational changes that they need to have in order to create disruption from within.

They know it, but they're in denial about the inevitable impact it will have on their companies.

The study was released at the National Retail Federation (NRF) show in New York this week, where I spent some time yesterday at the MyWebGrocer booth meeting with old and new friends, chatting with MNB readers, and signing copies of 'The Big Picture: Essential Business Lessons from the Movies." We ended up talking a lot about movies, as often happens in these cases, and one of the movies that came up was Jaws ... which seems entirely appropriate in the context of this study about denial.

Because denial, of course, is typical of virtually every character in Jaws. The mayor is in denial about the impact a hungry shark will have on business when the shark starts eating the tourists, Quint thinks he can hunt the shark by himself, Hooper keeps getting into the water with the shark, and Brody doesn't know how to swim, hates the water, and lives on an island. Everybody is in denial ... until that moment when they see the shark and realize that they're going to need a bigger boat.

Many of the retailers quoted in the study have way too small a boat, and don't seem to be in the market for a bigger one.

It is the ultimate in denial. And an Eye-Opener.
KC's View: