The high street has been under threat for many years from the emergence of the Internet, but although many have predicted doom, people have continued to shop in the real world in surprising numbers. Roughly two decades after the Internet first starting gaining traction, a cruel combination of factors are emerging that will pretty much disrupt every retailer that lives on the high street.
Technology is at the heart of these changes, mainly a mixture of mobile, social media and cloud technologies are coming together to cause what I predict will be a year of huge turmoil for shops, brands and retailers that have been around for as far back as our memories stretch. Here is why the high street is about to change in front of our eyes over the next couple of years.
You know you are in trouble when all the tech entrepreneurs are starting to invade your space with dollar signs flashing in their eyes. The companies that are getting the biggest buzz in Silicon Valley and other tech hubs around the world are ones that are attempting to disrupt the connection between online and the real world. They are all getting massive funding and you only have to look at LeWeb conference next month - which is focusing on "the Internet of things" - saying that with 50 billion devices connected to the web by 2020, the real world is the next place open for disruption.
We are at the very tip of the iceberg with companies like Airbnb (Hotels), Uber (Taxis) and Fab.com (Designer goods) leading the way in real-world disruption, but the next wave will be companies who target the high street across every possible niche. The best entrepreneurs in the world are taking aim in 2013 and they are being incredibly well funded to do so.
Second Screen Shopping
So pretty much everyone will have a smartphone by the end of 2013 in the western world and there is a good chance that this holiday season will see those of us who don't already have tablets getting one. We tend to use those devices when we are doing other things like watching TV, working, listening to the radio or going to the cinema. It's called the second screen experience and it is going to mean an awful lot more items bought online.
Advertisers are spending an absolute fortune on trying to target us on our second screens and it is this simple change in human behavior that will eat into high street sales the most. If you are a company selling physical CDs, a retail giant selling sports jerseys or a high end fashion designer, you are going to be hit hard by this.
Online shopping was very linear and didn't always have a great experience, which is why so many have not fully embraced it, but the highly visual nature of shopping on our second screens is going to be huge and only getting bigger as the apps and solutions get even better.
If the big movie rental, music shop and book stores weren't already under enough pressure from the ability for consumers to download their products, things are about to get an awful lot worse. Streaming is nothing new, but with the emergence of the cloud, smartphones and tablets, the large high street names will completely crack.
Unlimited streaming packages and movies on demand are going to disrupt the market while digital book downloads have already been exploding and no matter what the book industry tries it is already too late. As the number of tablets increases, book sales will diminish in 2013 at a record level. If you are in any doubt about the speed at which it is increasing, have a look at the following chart from Amazon.
This has been bubbling under the surface for a while now and there are so many factors coming together now that it is absolutely inevitable that 2013 is the year where mobile payments finally start to hit the mainstream. Unlike the other items on this list, this is the one technology shift that we think is actually going to be a bit of a saving grace for retailers. Companies like Square, Google Wallet, Paypal and even banks like Barclays are fighting hard in this space because they all know that the ultimate winner will take home huge profits.
The smart retailers will be the ones that embrace the technology as early as possible because we are going to be seeing a lot less cash in the world and a lot more digital transactions - probably all powered through our phones. The opportunities here for retailers are endless, but the disruption will be savage and brutal as consumers change from using the oldest form of transacting (physical money) in favor of a digital alternative.
Every big technology company in the world from Google and Facebook through to Yahoo and Microsoft have a laser like focus on local at the moment. They all know that the company who gets there first with really good solutions will make a fortune. Forget about Foursquare. That is only a smokescreen about what is to come and that arrived to the game far too early.
The big guys have all the data they need about us and now that we are walking around with our phones telling them where we are, it is inevitable that local is the next big tech advance. Like mobile payments, this could be used especially well by retailers who embrace it, but you fear it will only be the big brands who get their heads around this quickly enough for it to make a difference.
2013 = Armageddon For High Street Retailers
This massive disruption that is about to happen does bring some good news for high street retailers, but for the most part, it spells trouble. The danger is that many laugh it off in the same way that the Internet was dismissed, but the forces are much stronger this time. Sitting in front of your computer shopping still doesn't appeal to a large percentage of the world, myself including, but the convergence of these new technologies is a completely different story.
The real world simply won't be able to keep up and it'll happen a lot quicker than people realize. Many retailers have their eyes pinned on a good holiday season in 2012 followed by the economy picking up again in 2013, but there are stronger market forces than that about to kick in.