Marius Royal

Market Analyst

September 16 2018

The Brick & Mortar shop in the 21st century?

Blockchain technology has established itself as the rising standard for the secure and decentralized spread of data over the last few years. Through cryptography, a blockchain will act as a ledger that will catalog data and establish a record that is timestamped from one record to the next. Over a peer-to-peer network of decentralized nodes, or users, it becomes impossible to breach and manipulate this data. The reason being is at each nodal point, the same data that has been timestamped from node to node allows there to be no centralized point for a data breach – as the breach would have to comprise all of these nodal points, which has never been achieved.
What’s changed is that the industry has been disrupted by a new standard of streaming services, shifting the market to digital distribution. Services that make most brick and mortar entertainment outlets obsolete. To be frank, while I may miss the experience of going to a video store, for nostalgias sake, there is no way that those kinds of stores could ever compete with sites such as Netflix, Hulu, HBOGo, etc. Why on earth would anyone pay an individual price to rent a film, drive there, and then have to drive back to return the film, when, for a few dollars a month I could enjoy thousands of films and never have to leave the house? I think we both know the answer to that.
What makes going to a cinema different from going to a video store is that the experience is something that can justify the cost – which would explain why they still remain profitable, as opposed to video stores. There is something that remains valuable to this day about going to a large theatre to experience a new film, that can’t be experienced at home. The fall of the neighborhood video store is a prime example of where I believe the market is shifting; as the market keeps innovating with an expanding tech-sector, brick and mortar stores will have to capitalize on some unique experience to justify the need for physical distribution.
Looking past entertainment, we’re seeing this more so now with online services replacing what would initially have been a trip to the drug store or grocery store. Through the internet, online channels of distribution have created efficient ways to cut out the need for shipping to retail, which can cut down the cost of the product or service, along with the added perk of delivering to your door. The successful example of this online subscription model has been Dollar Shave Club. DSC have been able to successfully disrupt the razor market because they have been able to bypass the need of going to a store, and done so in a way that adds more value to the consumer by offering a competitively priced product without having to go farther than your front door. We are starting to see similar trends in cuisine with companies like Blue Apron offering meal subscriptions, even in the clothing industry with companies like Meundies offering monthly subscriptions for underwear.
Now, some of these industries are a bit gimmickier than others when it comes to online distribution. On the one hand, online video streaming continues to dominate through digital distribution. However, buying razors, underwear, and food is something that is still consumed through a physical store, for the most part. I don’t believe we are at a point that we should fear the loss of brick and mortar stores outright, but, businesses will have to be more innovative to justify their market value down the road. The format of the video store was fine, and was the most efficient way to distribute home entertainment for decades. It was made obsolete through online streaming, ending its market value, and that trend will continue for many industries.
My view is that over the next few decades the transition we will see is the emergence of stores that provide something experience driven, with necessity driven business being primarily online. Things that are a chore to buy, such as groceries, medical supplies, hygiene products, etc. will find more of a place through online distribution. It stands to reason that experiences that are truly unique, will have more of a role as physical operations.
It’s important to keep in mind this competitive shift from tech in the market has been of astronomical benefit to the consumer. These market disruptions, in established industries, has made it so that as consumers we can utilize products and services cheaper and faster through our phone. It is fair to say that our day to day life has improved with Netflix being the new market standard for entertainment, and why would we go back? As consumers we have more choice than ever, It is only improving, and is easier than ever with more content being streamlined to your phone.
Will all our transactions be done through our phone? I’m doubtful, yet, I would not be surprised if brick and mortar businesses, 20 years from now, would have to offer something unique in order to compete with the ever growing realm of digital distribution.
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