I recently spent some time looking 25 years into the future of retailing. Coincidentally, I played this game almost 25 years ago, exactly. I think it was July of 1989 when I was an executive at the May Department Stores Company. We were operating 19 department store names, two discounters (Caldor and Venture), 26 shopping centers, and a couple of specialty stores, including Payless ShoeSource, 25 years ago. As we looked at the future then, we certainly missed the rise of online sales and mobile devices. We correctly guessed that there would only be one national name in the department store space, and we even guessed that the name of that store would be Macy’s. We missed that we would not own it.
We correctly guessed that Walmart would own discounting and we divested both Caldor and Venture because of that. (Both subsequently went broke.) We also thought that the discount store was going to own the $10-a-pair shoe business even though we owned that business with Payless ShoeSource in 1989. We divested Payless in 1996. We guessed that Ralph Lauren, Jones New York and Liz Claiborne would be the biggest vendors in the department store world in 2014. But in the reverse order! Only Ralph is still a winner.
We saw the rise of the specialty store, but it was well under way by 1989 and not that hard to see. We missed the success of the off-price sector and the outlets. We thought both were a side show that would have limited success.
On To 2039
So with that disclaimer, here we go into the future. In 2039 designers will be very important…suppliers will not. Every reasonably affluent consumer, i.e., the top 70% of the income structure, will have a device that looks something like today\’s 3D printer in their homes. Others will get the product from a \”store\” that has a printer and carries all the rest of the \”stuff\” that will be in most homes.
That store will be called Costco or Walmart or Amazon, or maybe Coswalzon? You will have your avatar with your exact body dimensions including your specific gravity (muscle mass, etc.) already on file in whatever communications/computing device we are using by then. Everyone will have some sort of holographic system tied to their communication device, so before you place your order for your dress, pants, jacket, tee, etc., (yes, we will still be wearing all of those) you will be able to see exactly how it will fit you on a life-size image that you can spin, walk around, bend, stretch, etc. so you can see how the product looks when you move.
Coswalzon, Baristas and Bartenders
The company making all the money will be Coswalzon who is providing you with your monthly subscription of the \”stuff\” that has to be loaded into your \”printer.\” It will be like the delivery you get for propane and fuel oil today. And, by the way, you won\’t get any of those fuel deliveries going forward since 100% of your energy will come from natural gas, the electric grid, and the solar panels on your house that cleverly look like roof shingles and siding.
You will not have a car, unless you are a collector. When you need one, the Netgoogbay division of Coswalzon will send it over and take you where you need to go. Of course, you will only really need \”going out\” clothes, and “hanging at home” clothes, because the number of people working from home will have skyrocketed. Everyone else will be a barista or a bartender…or both. Why else go out but to eat, drink and play with friends?
Ralph will still be around, or companies like Ralph, but they will merely get a design commission, and the business will be incredibly competitive because every would-be designer or taste-setter will have competing designs. It will be like apps are today. Design will be international, but all production local, including the raw materials you load into your 3D thingamajig.
The Future of the Store
So, what will happen to the regional mall? Most will close or be repurposed. Most food and produce will be delivered directly, not bought at the store. It will come from Coswalzon, like everything that is not produced in your house. Everything that is delivered will be same day or, at worst, next day. It will be delivered by FedUPSEx, and there will no longer be a US Postal service.
So the real money will be made by designers with an interesting or unique design that the consumer will pay for, offering products that cannot be made in your own 3D printer thingamajig. The Coswalzon will have design-driven products that cannot be made in your house, as well as providing 3D printer thingamajig centers for those who cannot afford one.
A 2039 Joint
The reason and desire to go shopping will be provided by complexes where people meet for a drink, dinner, dancing, a psychotropic joint, or a communal joint-viewing in a \”quaint\” atmosphere for some sort of entertainment event. (Since every house will have a holographic movie room, with programing provided by the Netgoogbay division of Coswalzon, entertainment out as a group will be seen as a primary social event.)
A Few Interesting Boutiques
After all, you will not be getting that social interaction on the job except through your entertainment/work/ communication room complex. Nightclubs, restaurants, fitness centers, and sporting venues would thrive as the places for pretty much all social interaction.
There will be a few interesting boutiques selling cool stuff in settings where food and drink is consumed. ?Other than that, there will be virtually no stores…except for the Coswalzon sites, or course. They, too, will have all sorts of places inside for face-to-face social interactions. Today’s retail survivors will be few. The good news is that what manufacturing we need will be back here in the US due to cheap energy and automation. We won\’t manufacture for other countries because almost all of that will sourced locally as well.
Finally, all the clothes and soft home goods and accessories that you are producing in your tech room will be customized by you off of the design platform that you paid a small royalty to use. Nothing will truly be mass produced anymore, and since you will not own a car, your clothes will be your full expression of your personality. So customization will be important.
I cannot believe what a bleak picture I have painted for my industry…but I see little need for the store. The guys that do survive will offer big social interaction venues, which sell products to people who are there for other reasons.
Why should you care? After all, I am talking about 25 years into the future. Only a retailer building a new box does a 25-year discounted cash flow to evaluate the investment. It is rare for an investor to have an investment horizon beyond five years.
Here is why you should care. If you agree with my view of the future, the next question is the rate of change it will take to get there. I believe that the adoption of online by the consumer will be an S-curve function that many tech innovations follow. I think that we are currently on the bottom leg of the S, not the acceleration upper portion of the S. If so, and if we are about to hit the much more vertically upward part of the introduction curve, then the next five years could see very, very rapid change compared to the change we have experienced in the last five years.
Omnichannel retailing, as it is being pioneered by Nordstrom and Macy’s, is just the beginning. As the penetration of online selling rises from 10% of sales to 70%, the retailing landscape will be littered with the dead bodies of brick-and-mortar retailers who were unable to adapt.