The Future of Retail
The Amazon of Entertainment
Backlash over costs of Amazon HQ2 locating to New York, Virginia
Here’s a story I like to tell about retail, followed by a question.
Shortly after the turn of century, America’s largest virtual retailer, famously founded to sell one product, made an extraordinary shift. After years of only mailing goods to home shoppers, it started operating dozens of physical stores throughout the country. A model of operational efficiency, the company was light-years ahead of its peers in both technology and strategy, with a devotion to low prices, unrivaled choice, and customer service. It grew to become a microcosm of the U.S. economy, spanning not only retail but also warehousing and marketing.
Here’s the question: Is the above paragraph about Sears in the 20th century or Amazon in the 21st century?
It’s both. Sears’s playbook both explains and predicts the awe-inspiring strategy of Jeff Bezos and his Seattle juggernaut. But as much as Amazon’s leaders and its competitors can learn about their own company by studying Sears’s incredible rise, they can all learn even more by studying Sears’s steep decline.
People sometimes say: Every tech company is a media company. In the near future, we will say: “Every tech company is a mall—with a clinic.” With Amazon Prime, Bezos sought to bundle the entire economy for an annual subscription fee. But this bundle/subscription model is too delectable for competitors to ignore. Imagine Nike buying Equinox and merging with a healthy-food conglomerate and a hospital owner to become a superior one-stop portal for fitness folks. Or Apple’s wearable division partnering with medical and insurance companies to build a data-doctors-and-devices business that targets health-care spending.
Media mountain has been scaled. Now the largest tech companies aren’t standing at a pinnacle; they’re plotting on a plateau. The challenge of owning the entire life cycle of our spending habits—that’s the real summit. And it’s just up ahead.