The bankruptcy of Woolworths, Jessops and the likely fate of HMV are also early milestones of a disruptive journey that the internet – and its innovative progeny such as Amazon – will have on the high street.
Whilst the recession certainly helped accelerate the demise of these high street names, it wasn’t the cause or the reason. The disruptive power of on-line companies like Amazon will continue to decimate the high street and force a complete rethink of our town centres.
First it’s important to look at innovation not from a product perspective, but from a market perspective; real innovation is about creating a new market, redefining a market or disrupting an existing one.
For example, the apple iPod redefined the market for mp3 players, the iPad created a new market for tablets and iTunes disrupted the existing market for purchasing music.
Amazon and others are creating their own wave of disruption. The power of Amazon isn’t simply about a web front end on a retail operation, but through redefining and enhancing the shopping experience. The net effect of this kind of market disruption will be felt on the high street for many years to come. Indeed it won’t just be shops that face an uncertain future but any transactional or referral based organisation.
Whilst banks try and redefine themselves, they just store your money. Given on-line banking and cash machines, it’s really hard to justify a physical presence and their decline will continue. Many years ago you would visit the bank manager and they would make a judgement about a loan or overdraft based on their knowledge of you, your history and character. Today the Bank Computer makes the decision and the bank manager simply provides the smile or sympathy depending on what decision the computer makes.
Here I also humbly disagree with Richard Branson’s post describing why he wants to make his bank more personal with sofa’s and wifi. Book shops took a similar approach by installing sofa’s and café’s and whilst it may slow the decline, it won’t prevent it.
Other high street transactional businesses such as Estate Agents and Recruitment Agencies will also move to the internet or be destroyed by it. In a sense this is neither good nor bad, but simply the result of consumers voting with their mouse and not their feet.
The challenge will be for town councils to re-invent the town centre away from transactional sites and into social areas that provide interactions and activities that can’t be achieved virtually.
One thing is for sure, this wave of disruption is only just beginning.
17/01/2013: BLOCKBUSTER goes into administration.