Written by David Bell who will be speaking at DSES in October.

Very exciting times of late with June 16th being the day Amazon and Wamart announced acquisitions that preview the future of retail and commerce. Amazon, the online-first behemoth, bought Whole Foods for $13.4b. Walmart, the world’s largest retailer with about $483b in sales, purchased Bonobos for the relatively modest sum of $310m. Bonobos, founded in 2007 as Bonobos.com by two Stanford MBA classmates and initially online-only, has the distinction of being perhaps the first Digitally Native Vertical Brand, or DNVB, for short. The DNVB starts online, then adds offline as appropriate, and often as a “showroom” that is heavy on experience and light on inventory for immediate sale.

All this activity happened against the backdrop of dire predictions by Credit Suisse: 2017 is likely to see 9,000 imminent store closings.

So, offline appears to be “dead and dying” yet “alive and thriving” at the same time!

Understanding this (apparent) paradox is the key to the future of retailing. In my view, the offline world will not disappear, but it will be dramatically reshaped from a “large footprint, selling plus fulfillment environment” to a “small footprint, experience-centric environment.”

Earlier this week while attending Alibaba’s “10th Netrepreneur Conference” in Hangzhou, I heard Daniel Zhang, CEO of Alibaba, express the idea quite eloquently: “offline assets contribute greatly to any online business.”

In fact, the old retail mantra of “location, location, location” is evergreen, but with a digital economy twist. Legacy retail is about location of stores, and e-commerce is about the location of customers. The retail experience of today and the future is about determining the location—online or offline—of appropriate set of retail experiences, products, and elements that will delight customers.  

Getting this “location” decision right will determine the success (or otherwise) of everyone involved in the retail space. Interestingly enough, the world’s most valuable company, Apple, offers a preview of the gains to be had from controlling customer experience. Some of us are old enough to recall Apple as a company with miniscule market share and on the verge of collapse. Among the many things Apple has done right, bold entry (as a manufacturer), into the retail space has proven to be one of the most prescient and beneficial.

I look forward to discussing the new “location” elements of retail and all they entail, with all of you in the fall!

David Bell.