New Book by Harvard Professors Predicts Retail Revolution

Three Harvard Business School professors predict a retail revolution in their new book that explores the strategic options available to brick-and-mortar retailers in the age of eCommerce. 

The book is "Retail Revolution: Will Your Brick-and-Mortar Store Survive," by Harvard Business School faculty members Rajiv Lal and Jose Alvarez and former HBS Research Associate Dan Greenbery. 

“Based on our extensive research,” said Prof. Lal, “there is an urgent need for rethinking the stores and taking immediate action, without which many chains will quickly enter zombie territory.”

The professors present bold predictions for the future of retail:

• End of the one-stop-shopping
• Increasing levels of price transparency coupled with a flattening of overall prices
• Hard times for one-size-fits-all retailers
• Two very different retail futures that will be dictated by whether Walmart or Amazon wins the battle for eCommerce

According to the book, the future of retail will be determined by whether Walmart or Amazon becomes the central online player.  If Amazon wins, the focus of retail will be on convenience. Stores will lose so much volume large numbers of retail operations, including supermarkets, won’t be able to support their store base – to the detriment of low-income consumers.

In a price-focused Walmart.com future, the book predicts, the retailer will use supermarkets and dollar stores as eCommerce pickup points. Retailers can then cluster around these collection points to benefit from cross-traffic when customers arrive to pick up groceries and eCommerce orders.

The authors also identify three challenges eCommerce poses for brick-and-mortar retailers: fundamental shifts in core categories to digital content and distribution; clear advantages in cost, inventory and selection on the part of online retail; and the need to find ways to build more store defenses and leverage online activities to drive more traffic to brick-and-mortar operations.

The authors give operators of physical stores three possible solutions:  

• “Wind Down” in a process that continuously rationalizes the organization and its store base to maximize the generation of cash
• “Shrink and Transform the Box” to cut the costs of overly large stores and focus on the unique values that the store can deliver to customers and brands
• “Enhance the Value of the Box” by providing in-store services and education, merchandising private-label products, bundling products for use in do-it-yourself projects, and using online tools to direct traffic to the more experiential brick-and-mortar channel