Emerging markets’ lagging technology adoption is considered an advantage. They are less inhibited by entrenched intermediate technology and can leapfrog to a state-of-the-art technology. For example, in India, mobile phones have substituted traditional fixed networks. Orissa electrified approximately 2,000 villages using decentralized solar power, biomass, wind power and a variety of small-scale hydropower projects. Why has retail commerce lagged behind?
Before the internet, malls offered the convenience of having a whole bunch of shops in one place. People can drive to a mall, park their cars, take breaks during shopping, probably even have a meal and then drive back home. What sounds like a typical American suburban ideal is a nightmare in the Indian context. Drive, park, deal with pesky salesmen, have junk for lunch, and then drive back? No thanks!
Decline of malls in America
During the past few years, foot traffic in retail shopping malls has been declining. More American consumers are busier than ever and have less free time to shop in stores. Smartphones, tablets, conference calls, email, social networking, and video streaming all help to provide more efficient communication, but at the same time contribute to the limited capacity of the U.S. consumer for other endeavors. More and more, consumer preferences are shifting toward what can be done quickly and efficiently, and, ideally, what can be done from home or on the road when it comes to shopping.
Source: Have you been to the mall lately?
“Within ten to fifteen years, the typical U.S. mall, unless it is completely reinvented, will be a historical anachronism—a sixty-year aberration that no longer meets the public’s needs, the retailers’ needs, or the community’s needs.”
Source: Are Malls Over?
Is Costco losing the millennials?
A member of the millennial generation is highly unlikely to be a Costco customer. A car is all but a necessity for the typical “stock up” visit to Costco, and compared to older generations, millennials tend to not own cars and don’t seem to want to own cars. Most Costco stores are in suburban locations, while millennials tend to prefer urban living, and even if they are among the relatively few of their peers who could afford to buy a home, home ownership is less important to them than it was to their parents and grandparents as young adults. So … if you don’t have a car, and you don’t have the money or interest to stock up on two years’ worth of paper towels or mustard, and you wouldn’t have the space in your apartment to store this kind of stuff even if you wanted to, then there’s not much sense in shopping at Costco.
Source: Will millennials kill Costco?
e-commerce > malls?
An estimated 120 new malls have come up in the country over the last two years, of which 30-40 have either shut down or became non-functional due to poor footfalls and poor management. Meanwhile, capital continues to pour into e-commerce companies. Since Jan 2013, e-tailers have raised about Rs. 5,190cr.
Source: Over two dozen failed malls up for sale in metro cities
Will India leapfrog malls to e-commerce? We already give a puzzled look when people give us land-line numbers, will malls soon become a similar anachronism?