Creative destruction: the changing retail landscape

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// Recent research affirms creative destruction in the retail industry, which is necessary for progress and a growing economy…

A recent independent survey of 1,002 Australian shoppers was commissioned by leading parcel delivery service, CouriersPlease (CP).

To gauge new online shopping behaviours that Aussies formed during the COVID-19 restrictions, respondents were asked when and why they shopped online, how often they shopped, and which items they purchased most.

In short, the survey simply affirmed what most of us already knew: that Aussies were shopping online more than they normally do. But a key point mentioned was that more than half (56%) of respondents will continue to do so after restrictions are lifted.

In summary, here are the key findings of the CP survey, which indicate a shift towards increased preference for online shopping (as well as other findings on general shopping behaviour):

  1. During the shutdowns, under-30s shopped online more than any other age group.
  2. 66% of Aussies shopped online at least three times a month during the shutdowns.
  3. 86% of Aussies increased the frequency of their online shopping to avoid going in store.
  4. 56% of Aussies will continue shopping more online than they did before the shutdowns.
  5. Saturday was the most popular day for online shopping.
  6. 44% of Aussies did most of their online shopping during the evenings or night.
  7. 44% of workers and students used online shopping as a distraction.
  8. 72% of online shoppers made small regular purchases online, instead of bulk-buying.
  9. 60% of households went without essential grocery and household items because they were unavailable.
  10. Consumers shifted their shopping online mostly for fashion, health, beauty and food products

Paul Roper, Chief Commercial Officer at CP, said he saw “an unprecedented spike in delivery volumes across the country during this time; so much so, that we put on extra staff and extended our trading to handle the overflow ensuring customers could receive their orders with minimal delay.”

Paul said that while the period of COVID restrictions formed new customer behaviours, the retail market has changed forever.

“It will be interesting for us to see over the coming months and years, what changes are here to stay and how retailers can rise to the new challenges and era.”

Creative destruction and the entrepreneur

These recent findings (in addition to already established trends within the retail sector) are a clear and pertinent example of creative destruction.

A phrase coined in the 1940s by economist, Joseph Schumpeter, he describes creative destruction as the “process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one.

The ‘Netflix effect‘ provides another modern example of creative destruction, where innovation in faster internet speeds and mobile application technology drove video/DVD rental companies like Blockbuster into extinction.

Entrepreneurs and startups play a crucial role in this process. In fact, they act as the “fundamental impulse that sets the capitalist engine in motion“, to use Schumpeter’s words.

As consumer preferences are subject to change, the entrepreneur must have extensive knowledge of market conditions, act upon market opportunities in pursuit of profit and if successful, ultimately provide a good or service which benefits the consumer, improving their quality of life (after all, the customer rules).

In order to create and make way for new methods of production, the old establishment, now inefficient processes must be destroyed/deliberately dismantled.

In the case of retail, as consumers increasingly prefer doing their shopping online for more convenience, lower prices and greater selection, traditional brick-and-mortar stores will increasingly find it difficult to compete.

Source: Pixabay from Pexels

With COVID seemingly accelerating this transition further, many retailers cannot idly stand by. They are forced to adapt to these changes, or go out of business.

In the short-run, job losses in traditional retailer sectors will result. We may have to accept this as the price to pay for innovation, as in the long-run, there will be new jobs, wealth and technologies that improve our living standards.

There can be no doubt that startups will be at the forefront of this new retail shopping era (KeepSpace is a good local example).

The ones that succeed will act as the engines of economic growth, developing new and innovative solutions to satisfy the most urgent wants of consumers (whether that be what goods and services we shop for, or in this case, how we shop for those goods and services).

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MAIN IMAGE: PhotoMIX Company from Pexels.