Followers of the debate between traditional retail vs. e-commerce have seen two nicely written overviews in recent days, from each side of the argument. Li & Fung analyst Deborah Weinswig contributed a positive essay: “The Reports of Retail’s Death Are Greatly Exaggerated” and journalist Michael Corkery weighed in with a more negative assessment in “Is American Retail at a Historic Tipping Point?”
Both essays are well worth reading and despite my respect for Deborah, I find myself more in sympathy with Michael’s point of view. Rather than tackling the essays point-by-point, let me weigh in on a few thoughts of my own:
- The 90% argument. Some 90% of US retail sales, the argument goes, take place through traditional retail, so how can it be in trouble? What matters is the trend. At one point in US history, horses accounted for 90% of transportation needs, with motorized transport accounting for only 10% – but the trend was clear. Once the telegraph accounted for 90% of communications needs, with the telephone accounting for 10% – but the trend was clear. E-commerce has grown as a share of the U.S. retail market by some .5% a year for the last 10 years, rising from 5% to 10% of the total market. The trend is clear.
- Traditional retail has been driven by scale and speed…