e-Shock 2000: The electronic shopping revolution: strategies for retailers and manufacturers PDF
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e-shock 2000 Also by Michael de Kare-Silver STRATEGY IN CRISIS e-shock 2000 The electronic shopping revolution: strategies for retailers and manufacturers Michael de Kare-Silver ~ MACMILLAN Business ©Michael de Kare-Silver 1998, 2000 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WlP 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First edition of e-shock published 1998 Reprinted four times Revised paperback edition published 2000 as e-shock 2000 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world ISBN 978-0-333-80233-5 ISBN 978-0-230-38967-0 (e Book) DOI 10.1057/9780230389670 A catalogue record for this book is available from the British Library. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 10 9 8 7 6 5 4 09 08 07 06 05 04 03 02 01 00 Copy-edited and typeset by Povey-Edmondson Tavistock and Rochdale, England Contents Preface and acknowledgements vii Preface to the Second Edition ix Introduction 1 Overview: the key conclusions 7 2 Definitions and consumer trends 25 3 Learning from the pioneers in electronic selling 31 4 Future growth of electronic shopping: look out for 2005! 47 5 The ES test: how to tell how much your business is going to be affected 71 6 How can retailers respond? 89 7 Ten strategic options for retailers 103 8 The store of the future 121 9 Rapidly improving technology meets growing consumer demand 131 10 The world is changing: assets to knowledge 153 11 Structural difficulties with the Internet will be overcome 161 12 How can manufacturers respond? 173 13 Manufacturers' ten strategic options 185 14 The new marketing imperatives: marketing in the electronic age 205 15 Setting the strategy and mobilising the organisation 227 16 The next wave in electronic shopping 245 Appendix 1: The retailer dilemma - can shops still be profitable? 261 Appendix 2: Retail banking case study 270 List of figures, tables and plates 277 Bibliography 280 Index 285 v This page intentionally left blank Preface and Acknowledgements The stimulus for writing this book came when I read announcements by Wal-Mart, Home Depot, Tesco and others that they were opening new stores, yet at the same time relaunching their web sites. Was this not a contradiction in terms? Could retailers operate both physically and electronically without one cannibal ising the other? Would not electronic sales (presumably mostly over the Internet) significantly reduce numbers visiting the stores and so the profitability of the physical space? Could retailers just carryon as before investing heavily in land and buildings while the virtual world beckoned ever more eagerly? Would that new route to market eventually dominate? How many consumers were already willing and interested in shopping electronically? When would it all reach critical mass? The purpose of this book is to answer those questions. The aim is to provide a practical guide to the future consumer retailing scene, how electronic commerce will develop, what impacts it will have, pin down when it will happen and suggest a framework to help retailers and manufacturer suppliers determine their optimum response. I have drawn on many years of consulting experience with companies in different sectors, observing and advising on market, customer and channel challenges. Other research and interviews have been carried out, tests and trials observed and evaluated and ideas checked with client companies whose confidentiality I must respect but whose ambitions and intentions are clear. Forecasting future market developments can never be an exact science but I have also been enormously encouraged in my conclusions and convictions by a number of people. First, thanks to my partners at the Kalchas consulting group and to new colleagues at CSc. They have helped create the experiences and opportunities to write this book and have been stimulating in their own thinking and perspectives. Others have acted as important sounding boards, reinforcing some basic premises but steering me clear of unwarranted prejudices. Among this group I would like to thank David Stoddart especially, retail analyst at Henderson Crosthwaite, and intellectual soulmate, Simon Wright of Virgin, Mike Nevin of Dixons, Chris Warmoth of Procter & Gamble, a friend and deep Vll viii Preface and Acknowledgements thinker, and Svea Kordt and Ragnar Nilsson of Karstadt. A few other people have been more generally inspirational in encouraging me to put pen to paper. I am grateful to Robert Heller, whose own writings and teachings constantly challenge the status quo, Lord Peter Walker, whose own achievements continue to set a benchmark, and Walter Goldsmith, a constant fount of energy and ideas. As for the composition of the book, it could not have happened without the vision and support of Stephen Rutt, my publishing editor, and also Elaine Howells and Louise Crawford, whose marketing enthusiasm has been infectious. David Oates, author and writer in his own right, provided a critical role early on helping to organise initial musings and ideas, writing up some early drafts and providing additional context. As for the typescript, especial thanks to Jo Mountford and Lorraine Oliver who in their personal time painstakingly transcribed my physical labours into ordered electronic prose. Finally, but most importantly, a special thanks to my wife, Deborah, whose sound commercial instincts and critical appraisal have helped keep the ideas here firmly rooted in what is practical and achievable. Michael de Kare-Silver Note: The author and publishers are grateful to Netscape Communications Corporation for permission to use material on the jacket of the book. However, Netscape Communications Corporation has not authorised, sponsored, endorsed or approved this publication, and is not responsible for its content. Netscape and the Netscape Communications Corporate Logos are trademarks and trade names of Netscape Communications Corporation. All other product names and/or logos are trademarks of their respective owners. Preface to the Second Edition Since the first edition of this book, the e-commerce revolution has really taken hold. In the course of just twelve months we have seen almost daily new technology innovation, pioneers changing the rules of the game and a rush of companies trying to take advantage. • 'Internet access can now be obtained for free! Dixons Freeserve has turned the Internet world on its head and rivals are rushing to put out free services of their own.' (Wall Street Journal) • 'PCs for free! FreePC.com was first to market and others are following.' (Computer Weekly) • '$1 trillion is the forecast for e-commerce in year 2000.' (John Chambers, CEO, CISCO) • 'By 2002, almost every mobile phone will be web capable.' (New York Times/Yankee Group) • The Internet population will reach nearly 100 million adults in the USA alone in 2000.' (IntelliQuest) No-one now dares to suggest e-commerce will just be a minority interest. Indeed as CBS Market Watch and others have pointed out, there are as many women as men now shopping on-line: 'women dominated the 1998/ 99 holiday period accounting for almost 60% of on-line shoppers'. It's no longer a question of if or when it will happen. It's now a case of: 'how quickly can we get on board, how can we take advantage and how come we let others get ahead of us?' But the real issue is whether sales over the Internet are beginning to affect bricks 'n' mortar stores? Will e-commerce reach a point sometime soon where 'traditional' retailers find their consumers preferring to buy electronically and so visiting stores less? ix
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