Brick & Mortar Mentality In A Virtual World

By Bill Scott

There’s a scene in the movie OPM with Danny DeVito that is one my favorite scenes among all the movies I have seen. In the movie, DeVito (Larry the Liquidator) makes a speech about getting an increasing share of a shrinking market and how it inevitably leads to a business “going down the tubes.” For those interested, here’s the link.

Are we getting an increasing share of a shrinking market? It’s all in how you look at it. The convenience store industry seems to be growing at an acceptable rate, but the market is being spread over a larger number of mouths to feed. So as more participants enter the market, your market potential may be shrinking, and paying closer attention to costs and making minor improvements may make it appear you are getting a larger share. But there is a limit. You may be trapped in a brick and mortar mentality. This is not sustainable.

Conveniences stores have an advantage, we say. Our customers don’t buy their chips and soft drinks from Amazon (not yet), and as I said in a previous article, “Who walks through a Walmart parking lot to purchase a bag of chips and a Diet Coke?” And then there is the constant need for quick and easy gasoline. Believe me, this is not an advantage. It’s merely a temporary reprieve.

How long will it be before electric cars take over? The experts at M.I.T. are telling us it could start happening after the next 2.5 years. Analytic firm Bloomberg New Energy Finance (BNEF) claims, “Electric vehicles will become a more economical option than internal-combustion cars in most countries by sometime next decade.” If you’re looking at a business calendar that’s like a blink of the eye, and what are we doing about it? Convenience stores are making very little on gas sales as it is… how about nothing?

Then there is the other side of the argument: “But, lithium-ion batteries (the kind being used in Tesla and Nissan), will only give us a couple of hundred miles.” You need to refresh your assumptions. By 2020, it’s been reported that Tesla will have a $35K car than will go a whopping 1,000 miles on a single charge.

Then we hear, “Lithium heats up and expands during charging, causing leaked lithium ions to build up on a battery’s surface and catch fire!” Toyota and Volkswagen are putting their money into a new generation of solid-state batteries that show great promise. Trust me, they’ll figure it out. Internal-combustion technology is reaching its end of life stage.

We are facing a convenience store industry without gasoline, and make no mistake about it. What does that mean for you? Is it the end? Heck no? I lived in Hawaii for three years and most conveniences stores did not sell gasoline. ALL of the money made was within the four walls of the store. Do we need gas sales to survive? Only if we refuse to change.

Labor is going up. If people can’t make a living running cash registers anymore they will most likely just stop working and live off of government handouts. If retailers can’t pay them, they will have no option but to close their businesses or go 100% automation to stay in business. That means robotics.

A recent article suggest that robots could wipe out 6-7.5 Million jobs and that will happen over the next 10 years. That’s 38% of the total workforce. Cashiers are considered one of the most automatable jobs in the economy, and most of these cashiers affected will be women.

Sales jobs will be replaced by in-store smartphones and touchscreen computers to help consumers find what they need. Stocking shelves and inventory control will be run by computers… totally.

The effects are already having an impact. According to Fung Global Retail & Technology, through May of this year alone, there have been in excess of 3,300 store closings, and that’s just the beginning.

What we should be discussing in these forums is how we can join into the rush to automation and not how we can avoid it, because it is unavoidable and thinking otherwise is just wasting more time we don’t have.

We can provide total automation today at a cost far less than operating as we have been for 100 years or more. But for some reason that “brick and mortar wall” seems too strong for our hard heads. Take it from me, it’s an illusion. You’ve been brainwashed into believing that you can’t afford the technology needed to move forward. One supplier and a retailer could get together and figure all of this out, and that’s what I have dedicated my life to make happen. Will your business follow the fate of the internal combustion engine, or do you possess the vision to see past the coming decade and turn it to your advantage?

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