Apr 032017

On the back of last week’s discussion about Amazon’s Australian expansion, I spoke to Sydney community radio station 2SER-FM this morning about the challenges facing suburban shopping strips.

Like the rest of the world, Australia’s suburban and small town retail strips have been doing it hard for a generation. While technology has a lot to do with this, it’s not online commerce that’s the killer.

The decline, recovery and shift of the suburban retail strip really started in the 1960s as people moved to the suburbs and started shopping at supermarkets – the technology driving that shift was affordable motor cars and refrigerators.

Around the developed world, the removal of tram (or streetcar) systems during the 1950s and 60s also hurt the inner city shops as local foot traffic declined. In Sydney it’s striking that fifty years after the removal of the tram system those suburbs that developed around them are still easily recognisable.

Shifting back to the city

In the 1980s another shift happened. Suddenly in the inner city became fashionable again for affluent and young residents and a new generation of shopkeepers sprung up attracted by relatively cheap rents.

The shift we’re now discussing is that generation of the 1980s and 90s has been dispersed as rents become increased or shops are demolished for apartment blocks that cater for the populations moving back into the inner cities now suburbia isn’t so fashionable.

Like all shifts this has consequences – just as the corner grocery store and local butcher was forced out of business by supermarkets in the 1960s and 70s, today the indy fashion store or old fashioned immigrant run cafe is being displaced by high priced gelato shops and restaurants catering for whatever the current food fad is.

The push against consumerism

With increasing rents, tenants increasingly become upmarket brands although the upper end of the market though is not what it was as the middle classes – particularly in cities like Sydney, San Francisco, Singapore and London – find soaring property prices make it harder to indulge in luxury items.

So high rents are driving shopkeepers out of business and in Australia at least, the perverse incentives in taxation laws and investment regulations means that landlords have a positive disincentive to drop their asking prices, which means vacancies increase.

Renew Newcastle successfully skirted landlords’ reluctance by ‘licensing’ space rather than leasing it from landlords. This allowed land banking property developers and valuation conscious commercial owners to let out space without formal leases that created legal or financial issues.

Regional challenges

It will be interesting to see how Newcastle will perform as that land banked buildings are being developed into apartments and, the developers hope, high rent shops.

For other regional areas the news isn’t as great with technology in everything from mining to agriculture automating more jobs out of existence. Much of the decline in country towns and regions during the Twentieth Century was due to the mechanisation of farming.

Pervasive broadband promises some hope for regional communities but at present both jobs and wealth are being increasingly concentrated into major population centres. This however may be a transition effect exacerbated by governments propping up financial sectors after the 2008 economic crisis.

It’s interesting too that the financial sector now is undergoing an automation revolution not dissimilar to that of the twentieth century agriculture industries, something that’s bad news for cities and governments staking their future on those sectors.

Technology driving change

A lesson from the last hundred years is how technology changes our communities, the arrival of refrigeration and the motor car allowed suburbs and supermarkets to develop. While tractors and trucks radically changed the structure of rural communities.

With the rise of new technologies in everything from agriculture to transport and manufacturing, we’ll see similar changes to our societies and businesses in coming years.

The changes faced by today’s retail business are part of an evolving economy, just as the horse and tram dependent city of hundred years ago looked very different from car dependent suburbias of the late 20th Century, tomorrow’s cities will look very different from today’s.

Mar 232017

What happens when a vehicle manufacturer locks down their products’ software? John Deere’s customers are finding out as American farmers turn to Ukrainian software vendors for software to maintain their tractors.

John Deere’s behaviour is extreme as almost every component of a modern tractor has a software component which leaves farmers at the mercy of the company’s dealers and authorised mechanics.

So understandably the farmers are finding ways to hack their equipment to reduce downtime and costs, something permitted in the US after an exemption to the Digital Millennium Copyright Act (DCMA) was granted to vehicle software.

Vendor control over connected vehicles is a bigger problem for consumers than just maintaining the software, as the information collected from these devices becomes more valuable who controls that data becomes more important.

With global supply chains, increased regulatory requirements and demanding markets, the agricultural industries are probably leading the world in applying the Internet of Things and Big Data, so the challenges faced by farmers are things which will affect us all.

As everything from toasters to motor cars become connected and dependent upon code, the conflict between proprietary software, open markets and user rights is going to grow.

Consumers and the free market can only do so much to control the flows of data and who owns them. It’s hard to see how governments can’t become involved in how information is owned, traded and stored.

Jan 092016

Just what do people think about the on-demand, or gig, economy? A survey by public relations company Burston-Marsteller looked at those who use and provide services for companies like Uber, AirBnB and Instagram.

Unsurprisingly the majority of users are have positive experiences with on-demand services which allows them to access product they couldn’t afford otherwise.

More important are the views of the contractors, and those who are doing these jobs for the flexibility are matched by those who’d rather have full time employment but can’t find a role.

Strikingly, the longer a contractor has worked for one of these services the more likely they are to find the company’s practices exploitative and more than half believe the platforms are gaming the regulations.

Overall, it shows participants in the ‘sharing economy’ have no illusions about the caring aspects of the services that employ them, unlike many of those touting the benefits from the sidelines.

Dec 272015
Single person operation of the connected garbage truck

The defining technology of the Twentieth Century was the automobile. While there were many advancements – antibiotics, mains electricity and mass communications to name just three – nothing changed society to the same extent as the motor car.

A hundred years ago it was impossible for a pundit to appreciate how the motor car was about to change communities, the population’s increased mobility saw the suburbanisation of cities, the creation of the consumerist society and the rise of industries such as supermarkets and drive in theatres, none of which were foreseeable fifty years earlier.

Change didn’t happen in isolation, those new industries were the result of a number of changes in technology alongside the motor car, for instance the supermarket couldn’t have happened without refrigerators becoming household items along with radio and television developing new markets through the advertising industry.

Economic drivers

The biggest driving force was economic, once motor cars became affordable for the typical worker – just before World War II in the US and in the mid 1950s in most of rest of the Western world – the cost of travelling fell dramatically.

With the cost of moving around falling, workers had the opportunity to move out of the dirty, grimy inner city to new and clean suburbs where they could commute to their jobs in offices and factories. At the same time it also meant families could travel further to buy their groceries, forcing the end of the cornershop and the milkman.

Autonomous vehicles change those economics again, as Uber founder Travis Kalanick pointed out last year, the most expensive item in a taxi or Uber fare is the driver.

During his interview at the Code Conference Kalanick went on to describe how eliminating the driver changes the economics.

“When there’s no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle. So the magic there is, you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away.”

Changing ownership

The assumption in today’s discussions about autonomous vehicles is that car ownership will become and thing of the past, something that fits into Travis Kalanick’s view.

Should that be the case then a whole range of new industries open up. Who owns the cars, who dispatches the cars, who plans for peak and normal usage are just a few questions and opportunities that open for savvy entrepreneurs.

A changing concept of ownership doesn’t come without problems, not least who owns the code controlling the vehicles and the data being generated which in turn raises privacy issues.

Loss of jobs

The obvious other question with driverless vehicles is what happens to all the taxi drivers, couriers and long haul truckers as automobiles no longer require operators.

With truck driving being the dominant occupation in most US states, employing 1.8 million workers according to the Bureau of Labor Studies, this is a serious question. Interestingly the BLS forecasts employment to grow five percent per annum over the rest of the decade.

That scale of  job losses hasn’t been unusual over the last century. The agricultural industry itself has seen a massive fall in employment in that time period with the proportion of Americans working in agriculture falling from half the population to a tenth of that.

Creating new industries

Obviously half the US working population didn’t end up being unemployed, with the many of those displaced by the motor vehicle – either in the agricultural sector or in those fields catering for the pre-motor car market – finding work in other fields.

That the economy adapted to the loss of jobs in what were traditional fields in 1915 gives us a clue to where the jobs and industries of the future are going to come from as the changing nature of the economy means new businesses are created.

As the economics of these industries change, we see the need for workers move further up the value chain. We also see those reduced costs open opportunities for new ideas, just as the supermarket concept took hold in the 1950s as the economics of household shopping changed.

This is where the greatest opportunity lies for today’s entrepreneurs lies, in figuring out how those reduced costs will change the way consumers and society use transportation. In turn that will drive the next wave of employment growth.

Oct 312015

The US smartwatch market in not yet ready for prime time says Kantar Worldpanel finding most consumers are saying the devices are too expensive and don’t add enough value.

Kantar’s findings are underscored by Apple’s giving discounts to buyers of its smartwatch, something the company is certainly known for.

For all the hype, it appears the smartwatch may well have been the classic tech solution looking for a problem.

Sep 282015

“No business or brand has a divine right to succeed,” said McDonald’s CEO Steve Easterbrook last May.

As McDonalds’ management desperately try to adapt to a changed marketplace, Bloomberg Business spoke to some of those bearing the greatest risks – the fast food chain’s franchisees.

The expansion of menu items and the shift to more custom produced burgers is creating problems for franchisees and store managers as equipment and procedures designed for simpler times struggles with varying demands.

McDonalds is in a terrible bind as the company faces a society-wide shift in consumption that leaves its business model stranded at the same time that the market is wanting more customised products.

The latter is an aspect that many businesses whose success and profitability is based on mass production are now facing as customised products become easier and cheaper to produce.

While McDonalds isn’t likely to go out of business soon, the broader trends aren’t running in its favour. That’s bad news for both the company and its franchisees.

Sep 032014
mobile payments through smartphones and other devices are changing business

This post is the second in a series of four sponsored stories brought to you by Nuffnang.

During the recent switch over to chip and pin payments, many in the restaurant industry feared that tips would fall and waitstaff would lose jobs, the reality is somewhat different claims PayPal.

Last week I had the opportunity to tour the PayPal Innovation Centre in San Jose where they showed off the work they are doing in the retail and hospitality industries to change payment systems.

One of the products they showed was their Pay At Table app that integrates into a café or restaurant’s point of sale system and allows customers to pay their bills immediately.

The immediate reaction to this has been resistance from restaurant managers who were worried customers to skip without paying. For waitstaff, the worry was they could be replaced by an app.

It turns out the technology has had a different effect, the productivity of floor staff in the establishments where the app has been trialled has improved substantially.

“In a typical café it takes around ten minutes to get the check,” says the lead demonstrator of the Innovation Center, Michael Chaplin. “We find that freeing waitstaff up to help customers and letting them pay their bills faster means everybody is happier.”

With that ten minute per table improvement, management have found customers’ satisfaction has improved and the waitstaff have seen tips improve – partly because diners are happy and also because the tipping is integrated into the payment, calculating an appropriate gratuity is always a hassle in the United States.

That ease of payment from mobile phone and table apps is rolling across industries, it’s not just limited to the hospitality sector. Increasingly these technologies are being used by tradespeople, retailers and across the service industries

Increased productivity is more than just saving money and reducing staff numbers, it’s about giving the customer a more seamless and easy experience.

All business need to think carefully about how they can use technology to improve their service and increase revenues.