Years ago, nervous murmurs began to be heard in the retail landscape in reaction to the relatively new phenomenon of shoppers wandering into stores to physically inspect an object that they were already considering buying online, effectively taking a test drive, before heading home and clicking “buy” and making their purchase through an e-commerce website promising free home delivery and a lower price.
The phenomenon of “showrooming” now sounds decidedly quaint and old-fashioned as retailer after retailer has vanished from the landscape as a result of it, from Future Shop to Jacob to Black’s Photography to Eaton’s.
Businesses, both large and small, have a new set of problems to worry about. Although as the old business mantra, problems are actually opportunities in disguise.
While many of these high-profile closures were just a matter of attrition, weeding out retailers unable to adapt to the mobile digital habits of consumers, a lot of these failures represent a self-inflicted wound that could have been prevented with a little foresight and investment in measures aimed at taking changes in consumer behaviour seriously.
Now all of that panic has shifted its attention away from “showrooming” and towards “disruption”, as people talk about the Uberization of the economy, for better and for worse, as we witness the mass extinction of legacy companies being ploughed under by nimble start-ups.
Or at least that’s the narrative that the start-ups would like you to believe. Like showrooming, the existential threat posed by disruption is exaggerated.
For the start-ups, there’s a danger of enjoying the taste of their own Kool-Aid, which everyone needs to drink in order to believe their own hype and to exist in that bubble.
And for established businesses, there’s fear in the air, with normally staid corporate executives frantically attending start-up friendly conferences and hackathons, trying to look cool among all the beards and dogs and foosball tables.
But the news is not all bad, at least not for businesses that can afford to take a proactive approach to the “threat” posed by disruption.
Even businesses as ancient as Canadian Tire and Deloitte have taken not merely positive steps in reacting to the paradigm shift posed by digital disruptions, they’re widely seen as leaders in the field.
There’s even reason to believe that the “threat” is really no threat at all, but merely the evolution of healthy business trends.
A report released this week by Dell Technologies, conducted by Vanson Bourne, presents results from a survey of 4,000 business leaders in 16 countries and across 12 industries to evaluate where they are on their digital journey.
The Dell survey found that 78% of businesses feel threatened by start-ups, while nearly half (48%) of them don’t know what their own business is going to look like in three years, and 45% fear they may become obsolete less than five years from now.
So that’s a lot of disruption, or at least a lot of threat perception.
The bad news is that of the 16 countries evaluated in the Dell survey, Canada ranks in the bottom three least digitally mature countries, specifically singling out Canada’s insurance industry as a laggard.
Part of that is because Canada’s actual infrastructure for creating disruptive companies is less well developed than the global average, with only 35% of Canadian companies reporting that they’ve experienced significant industry disruption over the last three years, compared to 52% of companies globally, and 48% of Canadian companies reporting that they’re witnessing new competitors emerge, compared to 62% globally.
Naturally, too, the pressure to react doesn’t become an imperative until the threat is actually upon you.
Nearly three-quarters (72%) of Canadian businesses admit to not acting on digital intelligence in real time. Why do anything if there doesn’t seem to be an imminent threat to your business?
However, any business operating today, in any sector, should be paying attention to how their customers behave, or risk a hit to their bottom line.
Businesses like Canadian Tire and Deloitte can be classified as what Dell’s survey refers to as “Digital Leaders”, a mere 5% of respondents.
Keep in mind, though, that more than 40% of Canadian small businesses don’t even have a website, according to the Canadian Internet Registration Authority, so while on the one hand we’re talking about the importance of investing in an IT budget and finding secure e-commerce options and existing at the cutting edge of digital innovation, we’re also talking about the majority of businesses in Canada simply having no useful online presence.
The Dell survey also finds that 73% of respondents confess that digital transformation could be more widespread, and that only 23% of IT budgets will be tied to digital transformation efforts over the next three years.
It’s a sink-or-swim world out there for everyone, never mind businesses trying to compete with hungry, agile digital start-ups.
But for every dozen or so stories of retail failure in Canada, there’s a Canadian Tire or some other example of an establishment company who recognized the need to respond to a changing landscape early and acted appropriately, not responding to a threat but recognizing an opportunity.
Which industries are the most digitally savvy, according to the Dell report? Here they are, ranked: 1. Telecom 2. Technology 3. Media and Entertainment 4. Manufacturing 5. Life Sciences 6. Oil and Gas 7. Automotive 8. Financial Services 9. Retail and Consumer Products 10. Insurance 11. Private Healthcare 12. Public Healthcare