Are retail shops an endangered species?

Marc Andreessen has predicted the death of traditional retail. That looks ludicrous in 2013, but how will the world look in 2025?

A couple of weeks ago, an e-mail arrived from Martin, head of conference management for NEXT, pointing to a piece by Sarah Lacy for PandoDaily about the death of retail. Marc Andreessen, the man who co-wrote the first web browser, and went on to found Netscape, predicted the death of shops to her:

 “Retail guys are going to go out of business and ecommerce will become the place everyone buys. You are not going to have a choice,” he says. “We’re still pre-death of retail, and we’re already seeing a huge wave of growth. The best in class are going to get better and better. We view this as a long term opportunity.”

“Here be dragons” said Martin, and here be dragons indeed. It looks like an outrageous suggestion – but Andreessen is someone with a record as both an entrepreneur and an investor that you should take his worlds seriously. His argument is that the efficiencies that come with online retail are so compelling that they will eventually drive traditional businesses out by sheer economics. Those retail businesses that trade well now on extremely efficient supply chains are just “transitory” businesses, that will eventually be replaced.

I’ve heard similar arguments in the past. 13 years ago, I was working as a commercial real estate journalist, on one of the UK’s leading property magazines. Then, the industry was full of the idea that the ecommerce boom would bring existing traditional retail to its knees – at least in certain categories of retail. Fashion, they assumed would be safe. Music and DVD sales? in trouble, because the online ordering services were far more efficient (digital downloads weren’t really on people’s radar yet – this is three years before the iTunes store).

And than the dot com crash happened, many web companies crashed out of business, and the threat seemed to recede. People dismissed those predictions as wild flights of fancy, just as many will dismiss what Andreessen had to say. They’d be foolish to do so. There’s a famous saying from Bill Gates:

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.

I was reminded of this by the combination of Martin’s e-mail, and seeing the sign in the window of a photography shop in Brighton you can see above. Jessops was a big photographic chain in the UK, felled earlier this year because it couldn’t compete with the efficiencies of online retail. It’s just one of a number of big brands who have collapsed in recent months, including HMV – which had been around for over nine decades. Those productions from the turn of the century are coming true – and on a bigger scale than many expected. I suspect our high street will look very different indeed in 2025.

Here be dragons. We’re just not very good at telling how far away those dragons are…