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Monday, 3 April 2017

A Dutch retail canary in a global coal mine (2)

Back in the 1960s, the Retail business model was largely based on home delivery through visits by suppliers (eg, bread, eggs, fruit, milk, vegetables). Back then, Retail was about sales and distribution to customers. Since the 1970s or so, customers visited retail outlets. Distribution became their responsibility, apart from optional (and paid) services offered by retailers (eg, IKEA).

In the 1980s, shopping malls became very popular and not only for shopping but also as a leisure or fun activity. Those days are over. Shopping malls increasingly face vacancies due to enormous shifts in consumer behaviour. Online shopping and home delivery is often cheaper and also takes less time. Increasingly, online shopping is also safer (eg, shopping mall shootings).

A March 2017 Business Insider article claims that "The retail apocalypse has officially descended on America". BI: "Thousands of mall-based stores are shutting down in what’s fast becoming one of the biggest waves of retail closures in decades. Some retailers are exiting the brick-and-mortar business altogether and trying to shift to an all-online model." Also see USA Today: "the death of department stores and traditional shopping".

On 28 March 2017, several Dutch media reported that the online supermarket Picnic was able to raise 100 million euro for its further expansion into online ordering and home delivery (eg, DistriFood, HFD). This news shows the latest Retail trend in the shift from bricks to clicks. Also see my 25 February 2016 blog. The "online order to home delivery" cycle is now leading in Retail.

For almost 50 years, the retail business model was based on receiving customers and a split in sales and distribution. Today, Retail is integrating them once again by visiting customers, similar to my childhood days. I am slightly puzzled by the success of home distribution in Retail.

My Needs, Wants & Beliefs concept may also apply to Retail. Shopping was a necessity (Needs) in the 1960s and before. In the 1980s, visiting shopping malls was a desirable leisure activity (Wants). The Retail shift to home distribution must be rooted in a Belief.

Change is defined by its parameters Time, Space, History, People and Why, see my 28 March 2017 blog. The change in Retail shopping behaviour may relate to (1) saving time and money, (2) feeling less safe and secure in public areas following ongoing news coverage on shooting or terrorist "incidents", or (3) a sense of too many people. The Why must relate to a Belief.

The 7 Belief systems give 3 possible answers: Money (eg, economy, unemployment), Philosophy (eg, consumerism, Less = More) and Politics (eg, fear for personal safety and security). The other 4 belief systems do not appear relevant: Love, Religion, Science, and the Truth.

The Dutch-US similarity suggests that Politics is the main answer to the Why. The fear for our safety and security, following a string of American shooting and European terrorist "incidents", is causing a shift in consumer behaviour. That same fear is also causing a surge in Nationalism due to the fear over losing national identity. I'm afraid I've underestimated the psychology of Fear.

Mad World (1982) by Tears for Fears - artistslyrics, video, Wiki-1, Wiki-2