Ill informed and agenda compromised mouths are shouting the imminent demise of physical retail from the rooftops with escalating volume and pitch. Not only do their prophecies fly in the face of 3,500 years of retail history and 6 million years of human evolution, but they also ignore the actual trading numbers that are being delivered every single day in physical retail.
If you are a golf tragic like me you probably stayed glued to your television set all weekend to watch the President’s Cup recently. Some of the world’s best individual golfers brought together in team play. And while we in Australia were supporting Greg Norman’s international team, it was ultimately Fred Couple’s United States of America team who took home the honours.
Its an old saying – ‘Necessity is the mother of invention.” And in all areas of human endeavor it has been proven true time after time. World War 2 delivered most of the scientific and engineering breakthroughs that powered the 20th century. The fuel crisis gave us compact cars. The energy crisis lead to solar power. Over-crowding led to miniaturization.
Milton Friedman coined this fundamental theory examining seemingly irrational or indefensible economic behavior. What is unsustainable will not be sustained. Applies beautifully to Europe right now where a mix of oil and water economies are being held together in a bureaucratic blender fueled by debt and borrowing to fund further debt and borrowing which every one knows will never be paid back and will eventually end in tears.
There’s a fantastic 20th century saying that goes something like ‘Just because you can, doesn’t mean you should.’ A saying that has been too easily forgotten in the 21st century, as evidenced by all those people who use Twitter without thinking. It is obvious in retail too.
Imagine for a moment a retail business that has a wonderful halo of prestige around it. A business very focused on top line sales growth that – on the surface at least – it had achieved consistently over a number of years in a boom economy. Increasingly it uses discounting to drive top line sales growth. It establishes a network of clearance outlets. The division that now runs these outlets starts to talk up how profitable they are and the business begins creating stock to fuel these stores beyond merely clearance.
