Paul Kedrosky is thinking about the most important datapoint of this holiday season as a Schumpeterian moment. Retail data is indeed almost caricatural. Physical retailers are hopelessly fighing for survival while online retailing is accelerating on its trend. Paul adds in another post:
A great WSJ quote driving home how this truly is retail’s Schumpeterian moment:
Analysts estimate that from about 10% to 26% of all retailers are in financial distress and in danger of filing for Chapter 11. AlixPartners LLP, a Michigan-based turnaround consulting firm, estimates that 25.8% of 182 large retailers it tracks are at significant risk of filing for bankruptcy or facing financial distress in 2009 or 2010. In the previous two years, the firm had estimated 4% to 7% of retailers then tracked were at a high risk for filing.
Granted, many retailers are perpetually on the verge of bankruptcy, but these are still unprecedented numbers. Retail, as we know it, is going to look very, very different a decade from now.
This Schumpeterian moment is happening across a wide range of industries. Many commenters have long pointed to the coming end of industrial era actors. Some have forecasted for years the credit and economic crisis as well as its deep impact. What we’re seeing is nothing more than the effectuation of these analyses.
The dynamics are clear and well understood. In the case of retailing for example, mandatory situated (in time and place) shopping at physical retailers for the same price as the effortless, time-saving online shopping, is an economic situation that is and has been obvious for quite a few years now. These deep trends have been deploying their dynamics for a few years, and now they accelerate. Fred is right on with this post:
Clearly the economic downturn is the direct cause of most of these failures but I believe it is the straw that broke the camel’s back in most cases.
The internet, now closing in on 15 years old in its mainstream incarnation as the world wide web, is in many cases the underlying cause of these business failures.
Bits of information flowing over a wire (or through the air) are just more efficient than physical infrastructure.
The effectuation has begun and 2009 is going to be an exciting year.