Patterns of Disruption in Retailing HDCS 4393/4394 Internship Dr. Shirley Ezell What Can We Learn? Some would describe retailing as an industry filled with uncertainty.
HDCS 4393/4394 InternshipDr. Shirley Ezell
The 4 major disruptions were:
1. Department Stores
2. Mail-order Catalogs
3. Discount Department Stores
4. Internet Retailing.
The 4th retailing disruption: The Internet can deliver on 3 of the original retail missions. The Internet can offer a wide range of products. It can earn 125% return on inventory investments and it can turn its inventory 25 times each year needing only 5% gross margins.
Currently, the web seems to be repeating both patterns. However, the Internet department stores will not yield market share to specialized retailers. As the volume of purchases in individual categories grow, search engines and bandwidth may make it easier for consumers to find specialized e-tailors.
In analyzing the retailing disruptions, the generalist stores and catalogs dominated at the beginning of the disruptions but were dominated by specialized retailers. The specialists emerged when the market for the new form of retailing was large enough to support sales for narrower but deeper product mix. The disruptive retailers used simple branded product mix comprehended visually and numerically and shifted their mix toward higher-margin products to compete with the discounters.
That historically experts have underestimated the ultimate reach of disruptive technologies. Organizations and managers need to recognize the impact of technologies, and move into the mainstream, compete, and change the environment.