Retail Is At An Inflection Point

Many processes in nature and technology follow an exponential curve – or a logistics curve when there is a resource cap that ultimately limits growth. Internet data usage is a classic example of exponential growth and the number of cell phone subscribers follows a logistics curve.

Unfortunately, people are not good at thinking in terms of mathematical curves. We almost always slip back into linear thinking, which explains why Bill Gates said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” As Ponzi schemes demonstrate, many people also ignore the factors that ultimately limit growth for some products and markets.

The trick is to recognize the trends that are non-linear, manage expectations to that reality, and recognize the inflection point so that investments can be accelerated at the appropriate time.

In retail, for example, we have long-term visions of distributed manufacturing using 3-D printing and drones to deliver the product within an hour of ordering. But what will the inflection point look like? How will we know when to accelerate our investment in mCommerce and distribution systems? Fortunately, the answer doesn’t require complex mathematics. The inflection point looks like French burnt peanuts.

On a cross-country drive with my family, I entered a truck stop and was reminded of a snack I used to eat on road trips – French burnt peanuts. They didn’t have any, so I checked a few more places as the trip progressed but struck out. On Friday, after thinking about French burnt peanuts for a week, I ordered a 1.5 pound bag via Amazon Prime for $10.60. Today, on Sunday, it arrived at my front door, and I saw the inflection point.

When you can order a relatively small bag of candy and have it delivered on Sunday for no additional charge, things have changed in a fundamental way. Competitors will have to respond regardless of the short-term economics; and each will have to be better than the last, putting us in a phase of radically accelerating change. Several players are already working toward same day delivery. Delivery within an hour is easy to project, disrupting grocery stores, convenience stores, and even vending machines.

This is not limited to snacks. The retail shopping cycle has been described with variations of: awareness, research, comparison, purchase, and advocacy/retention. With technology such as Interactive TV, Google Glass, and Amazon Firefly, customers will see something they want and have it in their hands within hours.

There will always be people who love to shop and products worth researching, but in far more cases than we imagine today, the buying cycle will be: want it, have it. It has been coming for years, but we have hit a point of radical acceleration. To be relevant, retailers must be there at the want.