Despite 94% of American consumers who say that they believe doing business within their local communities is important, 2017 ended with a staggering number of over 6,700 brick and mortar stores closing.[i] Famous brands such as Walgreens, Nike, and Footlocker have decided to eliminate physical locations and shift their sales to the online market. With online retailers such as Amazon providing e-commerce platforms for low cost products to be delivered—sometimes within a day—undifferentiated retail will not survive.[ii] The Trump Administration’s new tax plan has touted positive responses from businesses vowing to bring back their branches from abroad. However, while it may bring back businesses that require physical locations, the reality is that the economy is heading towards a service-based, technology-driven economy.
Shift from Local to Global
Many local business owners are seeing a shift in the needs of customers who visit their brick-and-mortar locations. Generally, customers go into those stores to utilize the owner’s expertise, learn, and ask questions before making their purchases online. David Moore, owner of a brick-and-mortar store and online blog called PawsStop.com, sells specialty dog food. Having experienced the competition of online retailers first hand, he firmly believes that “[I]f you don’t deliver service and expertise, then your customers are going to buy from the low bidder.”[iii] Ultimately, store owners will need to look to other methods to convince customers to purchase locally at a higher price or risk having to move out.
The evolution of the more sophisticated consumer looking for lower cost alternatives presents a revolution of opportunities and has created a hybrid model of retailers. While a record number of retailers have decided to downsize or altogether cease their physical locations, other retailers have successfully managed to sell both online and in brick-and-mortar stores. Warby Parker is an e-commerce company that has stepped into the traditional retail arena. Warby Parker is an eyewear brand that provides consumers with the convenience of online shopping while offering in-store pick-up or returns. Shopping centers are also changing their strategy to add a social and entertainment value rather than just being a center to purchase clothing or other retail items. Landlords are looking to redevelop large spaces that have been vacated into smaller shops, restaurants, entertainment, and other alternatives, such as indoor golf. “People go out because they want experiences, and restaurants and entertainment deliver that. So that has become the real focus for new development,” says Steven K. Graul, CCIM, president and principal broker at Innovative Concept Associates, a restaurant real estate advisory firm based in Reston, Va.[iv] While the concept of shopping malls is rapidly declining, new trends are filling in for the empty spaces driven heavily by a tech-conscious society.
Opportunity With Market Restructuring
Although some businesses are being driven out, there are new opportunities being created in new markets with the ongoing explosion of technology advancements. Entrepreneurial activity is at an all-time high. Clocking into the traditional workplace is easily replaced with advancements in technology that support a flexible work environment. “Supported by ubiquitous cloud services, accessible, low-cost open source software, big data analytics capability, and professionals hungry for new opportunities beyond the 9-to-5 corporate walls.”[v] Technology based startups are on the rise and have grown 47% in the last decade.[vi] While fears that our economy may suffer due to traditional and small businesses being forced out by faster, better, and more efficient technology, there may be room for growth through the implementation of technology instead. While the media focuses heavily on technology giants such as Google, Apple, and Microsoft, the reality is that startups are contributing to a large majority of jobs,[vii] whereas Fortune 500 companies employ only about 17% of the total workforce. In fact, technology and innovation-driven startups are proof that there is room for new entrants, and these ventures offer “better paying, longer lasting jobs than any other startups.”[ix] Ultimately, these startups are successful because they provide a service or product for a population that is interested in technology. The U.S. is a “DIY economy,” and these startups are successful because they supply services that are high in demand. The population has access to information at their fingertips and is interested in partaking in the new way things can be done in turn driving this increased demand.
Apple just announced that it is on the search for a second campus as part of their five-year and $30 billion U.S. investment plan.[x] Shortly after President Trump’s tax plan was signed into law, Apple announced their tax payment to be $38 billion on overseas cash. The successful tech company, among several others, has decided to bring its business back to the U.S. after growing pressure for previously outsourcing work abroad. Under the new spending plan, Apple will be hiring 20,000 employees and will spend over $350 million over the next five years. Despite being known for their gadgets, Apple is making an effort to push their subscription services, rather than just products. Moving away from the concept of selling a product and closer towards giving customers an experience to be a part of the new tech movement, sales of computers are now a secondary focus.
Impacts of the Most Connected Generation
South Korea has been ranked first at having the most technologically savvy generation.[xi] 99% of the population uses broadband connections with a small digital divide.[xii] South Korea is working on deploying 5G technology ahead of the 2018 Olympics and expanding their “Internet of Things,” the concept of expanding the use of technology across a variety of sectors. In many ways, South Korea is a peek into the future of what other nations will look like when they catch up technologically. South Korea offers entirely online grocery stores, mainly online intermediaries, and an aggressive individualized marketing technique for their demographics making shopping easier.[xiii] South Korea continues to see huge growth across all of commerce and ranks only behind the U.K. on the Digital Consumer Index, which measures the interplay of digital connectivity and digital commerce potential.[xiv] More importantly, we should explore the positive benefits this new generation will have because of wide access to technology.
Developing Technology Benefits
Apple recently released wireless headphones reducing the time wasted due to constantly untangling wires. Technological advancements, such as the newest gadgets or accessories like these new headphones, are oftentimes viewed as a non-necessity. However, the continued innovation of technology has a wider impact globally than the ability to buy expensive accessories. Technology is a never-ending resource that can be used for the education of populations that may not have the monetary resources to access a school, physical books, or a teacher. The internet gives us an opportunity to educate ourselves from the comfort of where we are in the world. CoderDojo, a nonprofit organization started in 2011, runs a free coding club and regular coding sessions across the world.[xv] The sessions are all run by volunteers wanting to give young people the opportunity to learn how to code. This is just one example of the impact technology has on the world.
Healthcare is another area that has the biggest potential for technology to be of benefit to help diagnose and treat illnesses and injuries. The use of computers in healthcare in the 1950s led to the invention of the first CT scanner. Biomedical engineers alongside with doctors have significantly improved the mobility and creation of prosthetic limbs for patients who previously had difficulty using the uncomfortable and largely inconvenient prosthetics. These are just a few of the ways that technology impacts everyone.
The creation of technology can spark the innovation of a program or gadget that can change the entire way the world functions, such as the invention of the iPhone. While the widespread impact can greatly disrupt the current economic market, as we are seeing with the decline of shopping centers, this is the price we have always paid for progress in our inventions. The workforce has shifted with the ebbs and flows of economic demands towards different industries. While the future and direction of technology is extremely unpredictable, the direction of global participation and the desire for inclusion in the next “big thing” will be a key feature in how we progress going forward.
[i] Keshia Hannam, A Record Amount of brick and mortar Stores Will Close in 2017, Fortune Magazine (Oct. 26, 2017), http://fortune.com/2017/10/26/a-record-amount-of-brick-and-mortar-stores-will-close-in-2017/.
[iv] Beth Mattson-Teig, Glimmers of Hope In the throes of an evolution, retail is forging new paths., Commercial Investment Real Estate (May, Jun. 2017), https://www.ccim.com/cire-magazine/articles/2017/05/glimmers–of-hope/?gmSsoPc=1.
[v] Joe McKendrick, Technology Is Driving Entrepreneurial Growth, And We’re Not Just Talking About Silicon Valley, Forbes.com (Nov. 28, 2017, 11:43AM), https://www.forbes.com/sites/joemckendrick/2017/11/28/technology-is-driving-entrepreneurial-growth-and-were-not-just-talking-about-silicon-valley/#784825d27cd0.
[x] Stephen Nellis, Apple plans new U.S. campus, to pay $38 billion in foreign cash taxes, Yahoo.com (Jan. 17, 2018, 12:16PM), https://finance.yahoo.com/news/apple-pay-38-billion-repatriation-181530477.html.
[xi] Gabriel Dominguez & Srinivas Mazumdaru, Why innovation is king in South Korea, DW.com (Oct. 2, 2016), http://www.dw.com/en/why-innovation-is-king-in-south-korea/a-19038625. “[T]he 2016 Bloomberg Innovation Index ranked the country as having the world’s most innovative economy, ahead of Germany, Sweden, Japan and Switzerland.” Id.
[xii] Michelle Evans, Meet The World’s Most Connected Population And Future Home For Digital Commerce Growth, Forbes.com (Dec. 14, 2016, 12:01PM), https://www.forbes.com/sites/michelleevans1/2016/12/14/meet-the-worlds-most-connected-population-and-future-home-for-digital-commerce-growth/#7258c82bcef1.
[xv] CoderDojo.com (last visited February 15, 2018).