Retail

Is success the thing stopping Aussie retailers from preparing for Amazon?

Emma Koehn /

Every business owner knows failure can sneak up on you, but for some businesses, the better things appear to be, the faster they hurtle towards the brink of collapse.

Writing for The Washington Post, academic and author of innovation tome Big Bang Disruption Larry Downes lays out the key stages in which big retailers have fallen on their swords in the wake of competitors like Amazon.

The problem for these businesses is not just that a new entrant is causing disruption, Downes argues. It turns out that for incumbents, the very fact of their success prevents them from feeling the pain until it’s way too late.

“Incumbent businesses often have enormous stashes of valuable assets to coast on, while benefiting from regulatory and legal barriers that, for a time, can keep technology-based innovations from reaching consumers,” he explains.

When a disruptive new player like Uber or Airbnb arrives, it’s the weaker companies that collapse first, meaning more successful or established businesses might even see a boost while that new entrant tries to establish itself as a dominant player.

However, this only masks a “slow-moving car crash” for companies that aren’t paying attention to their surroundings and pivoting to respond to the new competition.

“By the time the revolutionaries reach the palace gates, the guards have all been fired,” Downes writes.

One of the reasons retailers like Amazon have been so successful isn’t because they were automatically destined for greatness, Downes says; it’s because they “innovated relentlessly”, even while moving on the territory of the old guard.

“Online leaders are even experimenting with brick-and-mortar outlets, showing up the incumbents in their own strip malls,” he says.

Retail experts have previously told SmartCompany that a very similar process is happening in Australian retail, where incumbents have stayed too comfortable with their old offerings and not taken actions to insulate themselves.

“You have to have the balls and the capital to [make a change],” RetailOasis analyst Pippa Kulmar explained earlier this year when discussing the downfall of Marcs and David Lawrence.

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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