Tech 1, retail 0
The tech takeover of our world is almost complete. Interbrand has just released its annual report on the 100 Best Global Brands, judged on financial performance, consumer preference, and ability to command a premium or secure earnings.
Six out of the top 10 are tech brands (Apple, IBM, Google, Microsoft, Intel, and Samsung), and four out of the five top risers are also technology-based (Apple, Samsung, Oracle, and Amazon).
Apple’s estimated brand value has rocketed an astonishing 129 per cent in the last 12 months, while Amazon’s has increased 46 per cent.
Impressive, yes. But how does the performance of the tech brands compare to traditional retailers?
As reported in America’s Stores Magazine this month, two senior retail commentators in the US have just “done the math”.
Lori Schafer from SAS Institute, and Deborah Weinswig from Citi Research, recently matched up the results of what they call the top five “Tech Titans” (Amazon, Apple, eBay, Facebook, and Google), with the top six US retailers (Walmart, The Home Depot, Costco, Target, Kroger and Walgreens). Note: the reason six US retailers were listed is that leadership depends upon the measures used. Walgreens makes the list on market capitalisation, Kroger on sales.
If you add up the annual sales of the retail giants, they blitz the tech titans, three to one. On all the other criteria though, the tech companies wipe the floor with their retail rivals.
And if you take into account growth, there is no comparison. From 2007 to 2011, the six retailers grew a cumulative 20 per cent. The tech businesses soared 232 per cent in that time.
An essay attached to the Interbrand report suggests that traditional bricks and mortar businesses have a lot to learn from technology companies.
Robin D. Rusch sagely writes that in particular “today’s companies need to make innovation a higher priority, or more ingenious minds will capture tomorrow’s wealth”. As Rusch observes, part of the reason for Google’s success is its 20 per cent program.
Google employees are encouraged to use up to 20 per cent of their working week blue-skying ideas for new products and services. The practice has lead to the birth of Google News, Google Reader, Google Trends, and famously, Google Maps.
Tech companies aren’t constrained by traditional boundaries either. Amazon started as an online book retailer, and now counts cloud services and hardware (Kindle) among its many ventures.
Google refused to stay in search – along with all its information offerings today it has blazed a path in mobile commerce with Google Wallet.
Smart retailers are looking to the tech brands for inspiration, as much for how they go about business as what they produce and sell.
J Crew’s Mickey Drexler considers Steve Jobs’ autobiography essential reading – a business bible. And many of the leading fashion brands like Zara and Top Shop are, just like the tech guys, in constant Beta.
Instead of running interminable development cycles until a product is final, they bring out new product every two weeks and see what flies. The idea is that, as a poster on the wall of IdeaWorks offices in Sydney says, “done is better than perfect”. (Mind you, this philosophy doesn’t always work – perhaps Apple Maps should have been just a little more “perfect” before its release!)
Broadly speaking, our category has a lot to gain by thinking not only outside the box, but also within the screen. Perhaps it helps to have a techie’s brain when you’re out to really reinvent retail.
* Jon Bird is CEO of specialist retail marketing agency IdeaWorks (www.ideaworks.com.au), and chairman of Octomedia, publisher of Inside Retail. Email here Blog: www.newretailblog.com Twitter: @thetweetailer
Inside Retail Polls
One-off events deliver a bigger first-half profit for Beacon Lighting in FY20, but the specialty retailer warns tra… https://t.co/FV63K2lnqU16 hours ago