In 2017 the companies that have filled for bankruptcy protection program are: Toys-r-us, The Limited, Wet Seal, BCBG, RadioShack, Payless Shoesource, Gymboree, True Religion, Perfumania, Vitamine World to mention some of the well know retail brands. if we consider 2016 some retails that filled chapter 11 were Aeropostale, Pacific Sunwear, Sports Authority, and American Apparel. If you look at the brands you would probably put yourself on a traditional shopping mall in the US. However, what happen to the and the main reason for the disappearance is call Amazon, with some changing consumer preference, shopping behavior, having a platform to check prices and delivery options, speed offers and having the analytics at hand.
At many malls in America foot traffic is on the decline as online and digital e-commerce surges. What is happening to the shopping mall is a transformation to retail and core tenants to services, more food, more gyms, more entertaining, because the only way to survive will be to evolve their business model.
The number of malls in the US is flat not growing any more, more services that did not use to be core to shopping malls are taking already 1 out of 5 stores of space and their revenue is increasing year on year. These tells us how the industry has been affected. Now many other countries would probably have the same effect as many online retailers and sites hit their markets.
Moreover, is this happening only in retail? of course not. Think of many of the industries that have an impact by technology. To mention some we have, taxi fleets have been taken over UBER, Amazon started by destroying the book stores, Airbnb challenged and had a massive impact on the hotel chains, Google basically got rid off research libraries, Skype transformed the long distance calls, Craigslist the classified ads and Expedia destroyed millions of small agencies around the world. If we look at the companies we just mentioned we can see a big impact on the way we do business, we shop, we behave and we now interact with technology that probably many companies are not looking at.
Richard Foster, from Yale University made a study to evaluate the lifespan of companies and his results mentioned that in 1920s the average company listed on the S&P 500 would be around for 67 years while today the average S&P 500 company will only be 15years. Taking this into account all the new companies such as Facebook, they have been around for 10 years and in order to survive they had to evolve their business model in many ways. From friend to friend into a media and content generation company without generating anything themselves or Google that in their 20 years they have include in their portfolio many new companies such as maps, play, gmail, youtube and now cell phones, self driving cars in order to maintain consumers engage and their shareholders happy with growth. What about Amazon, that started disrupting the Book Industry and book stores to make an impact on everything else, specially retails. What is interesting is that not only Technology companies that have transformed the way we shop or behave are protected, who remembers Palm Pilot that got ride by blackberry and they basically disappeared by Apple first smartphone, e-bay was a big success and has been quiet for a long time, they haven't evolve, Myspace was not able to compete but was the first peer to peer platform, and Aol as the company that provide internet access and not longer exist.
Today everyone is on a challenged business model mood and we need to re-think the way we work and the way to operate the businesses we are in. The old way of thinking, that we use to work on vertical industries not longer applies. Today we are competing agains consumers wallet and behavior that we need to understand better that any other manager in any industry in order to gain trust, attraction and loyalty to remain in our business and be always looking and improving the way we do things to be ready to r-evolutionize our business before the 15 years of lifespan we might be in. It is happening everywhere and today with access to more tools, faster and cheaper technology we have to be the drivers of change.
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