Archive for the “The Equity Kicker” Category

Nic Brisbourne’s view from London on venture capital and exploiting change in technology and media.

Last night at FPLive I was chatting with an entrepreneur called Nick who has just closed his startup. He talked impressively about what he’d learnt and has an interesting idea for his next company which I am keen to investigate.

There’s an important point lurking in there. He has just failed with his first company but that isn’t putting us off looking at his second. In fact, the lessons he’s learned help his case.

It doesn’t happen as much as it used to but people still talk about the ‘fear of failure’ as being a much more acute problem here in the UK than it is in America, and how that dissuades people from starting companies and holds our startup ecosystem back. That talk gets my back up a bit, partly because fear of failure is rational (it hurts), but mostly because it becomes a self fulfilling prophecy – would be entrepreneurs hear that fear of failure holds our startup ecosystem back which makes them think that failure is more likely and deters them from starting their company.

Returning to my conversation with Nick. He has been working with a large corporate innovation lab and we were talking about what large companies can do to hold onto the entrepreneurs in their ranks and harness their creative power. Getting the incentives right is a big topic, covering 1) how much money they should be allowed to make, 2) how much control they should have and3) what should happen if they fail.

As an investor who’s worked with lots of entrepreneurs I know that if the aim is to retain the best talent the answer to the first two parts of this have to be 1) they can make an awful lot of money and 2) they need to be given control of their startup.

Prior to last night my view on the third point was that companies should make it easier for their employees to be internal entrepreneurs by guaranteeing their jobs in the event of failure. Now I’m not so sure. Nick pointed out that fear of failing is often highly motivating. When your back is up against the wall you are more likely to be out of bed at 6am fixing things, morel likely to burn the midnight oil, and generally more likely to keep battling when the odds start to look impossible. What he has seen is that when people can walk back to their old jobs they are less afraid of failing, that they work fewer hours, and that they give up on the startup idea more easily.

So my emerging view is that fear of failure is not really the problem here. Rather I think we should be working on the other side of the equation – courage. More specifically – how do we help people muster the courage to start companies, even when they understand that painful failure is a possibility.



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I first came across the phrase “strong convictions, weakly held” through Marc Andreessen, but a bit of Googling showed me it was originally coined by Paul Saffo, then Director of the Palo Alto Institute for the Future. According to this post he advised his people to think this way for three reasons:

  • It is the only way to deal with an uncertain future and still move forward
  • Because weak opinions don’t inspire confidence or action, or even the energy required to test them
  • Because becoming too attached to opinions undermines your ability to see and hear evidence that clashes with your opinion (confirmation bias)

Saffo came up with this logic almost 15 years ago, and as change happens faster and faster it has become increasingly compelling, to the extent that the importance of having “strong convictions, weakly held” is starting to become somewhat of a cliche amongst many of the best investors I know.

However, it applies to the whole startup world, not just investing. In fact it applies to anyone who is (or should be) searching for the truth, or more properly the closest approximation we can get to it. Much of the time in startups we have to make decisions based on minimal information in an environment that is fast moving and where there is no objectively ‘right’ answer. The best we can do is form an opinion based on the facts in front of us and then have the courage to act on that opinion. Then, and this is often the most difficult bit, we must find the courage to change our opinion if new information suggests we were wrong.

When investing as a VC that means quickly deciding which companies make attractive prospects, having the courage to divert time from other prospects to dive in and investigate them thoroughly, then having the courage to advocate them to our partners, then continuing to be courageous by continuing to search for reasons why a deal might not make sense, and then (if necessary) having the courage to say “I was wrong about this, I don’t think we should invest in this company after all”. This last part is tricky because it requires us to park our ego on the side of the road at a time when we’re already feeling bad about our wasted work and the lost opportunity. What makes it particularly hard is that often the reasons we find for not investing are ones that in hindsight should have been obvious earlier on.

I chose investing as an example because that’s the world I know best, but I could equally have chosen startup product decisions, marketing strategy, choice of tech stack, or hiring decisions. These are all areas where the best people have an ability to form strong opinions quickly and then remain open minded.

Note how this process is about a disciplined search for the best truth that we can find. That search is undermined when ego gets in the way and opinions get entrenched, which is the more natural human behaviour. Our confirmation bias makes us look for supporting data and makes us blind to counter arguments. In the best case this path leads to poorer decisions and in the worst case it results in conflict where protagonists read different sources of information and quote orthogonal facts at each other.

Ultimately it’s the job of founders, CEOs and leaders at every level to build a culture where people have the self confidence and courage to put themselves out there by forming strong opinions quickly and where it’s ok to change your mind later. Leading by example is crucial (as ever) but it’s also important to foster an environment where everyone’s opinions are respected and given space. We make ourselves vulnerable when we express an opinion, especially a strong one, and if we get shut down or dismissed it’s harder to find the courage to do it again the next time.



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As the world becomes increasingly mobile centric, we still don’t have a great solution for long tail e-commerce. Smartphones now work amazingly well for Amazon and categories where we buy regularly enough to be bothered to download an app – but that’s fairly limited. In my case it’s limited to Uber, Hailo, Netflix, Spotify, Fy (one of our partner companies) and an app that lets me pay for parking on the streets of Islington where I live. You could maybe include the British Airways app as well, although I use that for checking in rather than buying flights. The point is, that’s a short list, and two of them are subscription services rather than e-commerce apps.

That leaves huge categories that don’t yet have a mobile solution for the mass market – fashion, travel, homewares, non-supermarket food etc. There are apps in all these categories, but they don’t get downloaded that often because we don’t want to clutter our phones up with apps we only use occasionally.

So if native apps aren’t the solution for long tail mobile commerce then we are left with a few other possibilities:

  • mobile browsers
  • bots
  • an instant app experience which gives us app functionality without downloading anything

The second and third categories are where everybody is pinning their hopes right now (and it’s WeChat’s recent announcement about their small programmes that got me thinking about this again), but the challenge with these are search, discovery and UI. It’s long tail ecommerce we’re talking about here, so we need a search experience that’s open to any retailer in the way that Google is, and then when you get to their site the purchase experience must be smooth – it’s not clear how that will work. The promise of bots and WeChat’s small programmes is that they will hold our personal information enabling efficient checkout. That makes a lot of sense, but most of the solutions we have seen so far require the user to learn a set of commands and I can’t see that working for many people.

Meanwhile anecdotally it seems that mobile browsers are slowly offering a stronger buying experience. Retailers sites are increasingly better optimised for mobile and browsers’ auto-fill and credit card storage features are working better, and that’s before Apple pay really gets going.

Moreover, as you can see from the chart below, m-commerce is growing much faster than e-commerce. Much of that growth is within apps, but not all (I couldn’t find stats that broke out browser based m-commerce and app based m-commerce) and that suggests to me that the humble mobile browser might be the final answer for long tail ecommerce merchants after all.

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I just read a New York Times article that led with the sentence “Deep inside a Silicon Valley unicorn lurks a time bomb”. It turns out that ‘time bomb’ is the much maligned and, I suspect, little understood, liquidation preference.
To be clear, liquidation preferences are sometimes used badly and founders should generally turn away from investors who ask for multiple liquidation preferences. Additionally, they introduce a small amount of complexity and an element of misalignment between the investor and the common stock holder (usually the founder).
For these reasons our investments at Forward Partners are always in ordinary shares.
However, most of the later rounds or companies raise feature simple 1x liquidation preferences and we’re fine with that. To explain why I’m going to look at the role liquidation preferences play in getting deals done.
In any negotiation it’s helpful to look for ways in which the counterparties see things differently to reach other. These differences create the space for win-win solutions and without them negotiations are a zero sum game.
Liquidation preferences are a useful tool because they exploit a difference in the way investors and management see the future. Generally speaking management teams have more confidence in their success than investors do. Not by much, but by enough that it makes sense for them to accept a liquidation preference in exchange for a higher valuation. That trade gives them less dilution and therefore more cash in upside scenarios but less cash (and potentially nothing) in extreme downside scenarios.
This trade off is now so entrenched that it’s become a market standard that most investors and founders make unconsciously, but they are all aware of the implications. Moreover, in the rare situation where investors offer a choice management almost always go for the higher valuation.
Furthermore, provided the instrument is kept simple (i.e. a 1x non-participating preference share) and the company is successful enough to raise a couple of million or more the complexity and misalignment are more than manageable. Then as companies get towards unicorn status management and investors get increasingly sophisticated and their ability to exploit more complex instruments increases.
None of this is to say that some companies haven’t been overvalued and that liquidation preferences haven’t contributed, but it doesn’t sound like a ‘time bomb’ to me.



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According to the IAB, US digital advertising revenues grew 19% from H1 2015 to H1 2016. That’s very healthy growth for what is now a $32.7bn market. However, when you look at the numbers in more detail it’s clear that this strong headline performance masks a tonne of turmoil underneath.

Display continues to crater and the growth areas are mobile and video, but the surprising thing to me is how much Facebook and Google are now dominating. As you can see in the embedded tweet below Jason Kint analysed Google and Facebook revenues in the context of this market and found that revenues for all the other digital ad players went down over the last year.

.@iab it does seem relevant to note when you back out Facebook and Google, the digital ad industry actually shrunk in 1st half. #unhealthy pic.twitter.com/x0gRXWz6XT

— Jason Kint (@jason_kint) November 1, 2016

This bears out what we’re seeing in practice, which is that startup founders who want to pay to acquire customers on the internet do so on Facebook and Google. These are the channels that our partner companies have been using recently (in rough order of significance, results skewed towards the companies we know best):

  • Facebook – all properties
  • Google (paid)
  • Google (SEO)
  • Partnerships
  • Content
  • PR
  • Direct Mail
  • Flyering

There are a couple of obvious implications of all this. Firstly, evaluating whether a company can get off to a fast start means analysing whether these channels will work (especially the top two), and secondly startups with advertising based business models will increasingly need some super-special secret sauce.

Then there is the non-obvious implication which Benedict Evans of A16Z has been tweeting about recently, which is that as advertising becomes less effective (at least outside Facebook and Google), innovative companies will find new discovery models that reduce reliance on media spend. Amazon has pulled this trick off in a huge way for their core products and there will be big rewards for those that crack it in other areas.

 



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The charts above are both from the new KPMP/CB Insights Venture Pulse Report.

There’s a lot more data contained within, but my read from these is that VC investment is down significantly since the highs we saw in 2015, but is now holding steady at it’s new level, both globally and in the UK. (The last bar in top chart on global investment might suggest a different interpretation, but Q3 is often quiet for venture investment.)

Moreover, overall investment is holding roughly flat despite a big drop in mega-rounds, buoyed up by activity at the earlier stages. Only one new unicorn has been created in Europe this year (11 in the US).

 



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McKinsey have just released a report which predicts:

that the global revenue pool from car data monetization could be as high as $750 billion by 2030

That caught my attention for two reasons. Firstly $750bn is a truly huge market to come out on nowhere. For context Gartner predicts the wearables market will be $29bn this year (including Fitbit and smart watches). Secondly, in my experience it’s hard to make money out of data that’s produced as a by-product of another service, at least directly. Lots of startups have ‘sale of data’ lines in their business plans and they very rarely come to much. Rather, the way most companies make money out of the data their service produces is to use it to build better products – the way Google uses our search data to sell better advertising (and build a better search product).

The excitement is coming because cars, particularly electric cars, are increasingly connected and will generate huge amounts of data. To their credit McKinsey developed 30 use cases for automotive data. Most of the aforementioned startups don’t go that far. They just assert that their data will be worth something to somebody.

However, the excitement doesn’t make it much beyond that. Some of the use cases McKinsey lists out are interesting (predictive maintenance, usage based insurance), some a bit so-so from a revenue perspective (emergency call service, over the air software add-ins) and some are merely enabled by internet in the car (car pooling, in-car hot spots).

There isn’t much in the report on how they get from these use cases to a $450-750bn market. There are around 1.2bn cars on the road now so that would be $375-625 per car – which is quite a lot. The most obvious way that will happen is if a chunk of the maintenance and insurance markets start to become counted as part of this total.

That’s already starting to happen, particularly on the insurance side. Overall, I haven’t found the new opportunities I hoped I might when I read the report’s $750bn headline figure.

 



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The European Investment Fund (EIF) is an EU institution that exists to stimulate the startup ecosystem by investing in venture capital funds. They have made a huge contribution to the UK scene, backing 37% of UK based venture funds between 2011 and 2015. Moreover, they are often the first investor to commit to these funds making their role even more important than the headline figure suggests. Back in July Bloomberg wrote:

It is an open secret among British venture capitalists that many of their funds would have never gotten off the ground without a hefty check from the European Investment Fund

To state the obvious, if the venture funds hadn’t gotten off the ground, the startups they back would also still be on the drawing board. So the EIF has had a huge positive impact on the UK. It’s a big deal.

And post Brexit there’s a chance we will no longer have their support. That would be very bad news, and might happen as soon as Article 50 is invoked. The EIF hasn’t invested in our fund to date, but they might in the future, so there’s an element of self interest at play here, but this is bigger than Forward Partners and I would still be writing this post if that wasn’t the case.

It’s therefore imperative that maintaining the role of the EIF in the UK is part of our Brexit negotiations. In the medium to long term we could well manage our our own programme for supporting UK venture funds, and the programmes of the British Business Bank augur well in this regard, but replacing the EIF’s programmes would take time and a short term hit to venture funds raised of around 40% would inflict damage on our ecosystem that would take years to repair.

I often get asked about whether the EIF has pulled back from investing in the UK already. There are all sorts of rumours swirling around but the best intelligence I’ve heard, including comments directly from the EIF, tell me that they are carrying on with business as usual. Additionally, I know for sure that one UK fund which closed after the June 23rd referendum has the EIF as an LP.

Earlier this week, David Kelnar of MMC Ventures wrote an interesting blog post setting out the implications of Brexit for UK startups. He included the following passage which describes in detail what we will have to do to keep the EIF investing in the UK. As he mentions, we will need the consent of 33% of EU governments, so this is not something we can take for granted.

The UK’s formal influence over the EIF is limited. The EIF is 60% owned by the European Investment Bank (EIB), 28% by the EU and 12% by 30 individual financial institutions in member countries, with votes cast proportionally. Decisions by the EIB’s Board of Directors require the agreement of one third of EU members. Post-Brexit, therefore, extending the EIF’s core activity to the UK will require at least one third or more of EU members to be supportive. Given the extent to which UK VCs invest across Europe, the attractive returns available from UK funds and the UK’s informal influence, they may well be. Alternatively, other countries may assert their interests to the detriment of the UK.

Other important points are that if the EIF is to keep investing in the UK, the UK will have to keep paying into the EIB, for which a mechanism will need to be established. The good news is that there are precedents, as David notes Israel has a deal which allows the EIF to invest in their country and Norway has something similar.

As with all things Brexit, there is much to do if we are to make the best of our situation. Our task in the startup community is to make sure our agenda doesn’t get forgotten.



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Every company has to strike a balance between focusing on being great at what they do and telling the world about it. Some very successful companies lead with hype and have their people permanently scrabbling to keep up. You might call that the Elon Musk school of entrepreneurship. Other successful companies focus on delivering value rather than making promises – Google and Facebook spring to mind as examples here.

There are pros and cons to both approaches. Leading with lots of ‘noise’ and hype can maximise interest in a business, helping to gain attention from investors (thus paving the way for fundraising) and can also ultimately drive growth. However, chaos behind the scenes kills many companies that take this path. Focusing on delivering value first is a safer approach to building companies of substance, but unfortunately this often results in slower growth and can mean that a business is left trailing behind hype-charged competitors.

Here at Forward Partners we’ve focused on delivery first and have prioritised telling our story second. That’s our natural predisposition anyway, but it always seemed that the most important component in our mission was to deliver value to the founders we back and to our investors, rather than telling the world about our work.

Since I founded the business three years ago, we’ve concentrated on building a well-oiled machine which can supercharge our partner companies, providing not only the funding but also the operational help needed to achieve rapid growth. However, as we now enter the next phase of our own growth, we are beginning to focus on telling our story a little more. This is largely in the hope that we can speak to more of the next generation of entrepreneurs and more founders at the earliest stages will understand our unique approach to VC.

A big effort for us recently has been redesigning our website. It has become clear to us over the last year or so that the primary benefits founders get from working with us are speed and certainty of execution, and that comes because when we invest founders gain immense leverage from using our team. We wanted to communicate that message front and centre and also to have a more approachable look and feel. The homepage image you see above provides a flavour but please check the site out for yourself!

As well as working on our marketing materials, we’ve also been building out our press and storytelling function, for both Forward Partners and for some of our partner companies. Last week, we were pleased to be profiled in The Times alongside our partner company Live Better With – a really exciting step forward for our brand and incredible to share it with Tamara Rajah, one of our inspirational entrepreneurs.

 



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Regular readers will know that for me the rising pace of change is one of the defining features of the early 21st century. Things are now changing so quickly that traditional structures are breaking down. Within a decade or so we will have adjusted to rapid change as the new normal, but in the short to medium term expect more disruption rather than less.

One example of traditional structures breaking down is that large companies are increasingly unable to keep up via internal innovation. Instead they are looking to partner with the startup ecosystem. Corporate sponsored accelerator programmes are one of the most visible aspects of that partnership, but whilst they command a lot of column inches they are small beer in terms of dollars committed.

The chart above (courtesy of Pitchbook) shows another aspect – direct investment by corporates into startups. Most striking is the rapid growth since 2009, but the dollars involved are also significant. The $26bn so far this year is the total deal value including the contribution from corporates, rather than the contribution itself, but I would guess that the actual corporate contribution will easily top $10bn this year.



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I was talking with an old friend on Friday about the fundraising pitch for his startup and how his conversations with VCs were progressing. He’s got a great business and I think he will get his round away, but he felt that he was losing some potential investors because they weren’t buying into the upside of his story.

We discussed how he could add a slide making a better link from his impressive recent results to his vision of the endgame and I hope that will make a difference. We also talked about his personal style. He’s low-key and likes to present plans he feels sure he can deliver, and he has a tendency to caveat the upside. The danger with this approach is that investors are used to a punchier presentation style and assume that if the entrepreneur isn’t punchy, the upside is less likely to be realised. As an investor I feel the same way. I know that there are some founders who successfully under-promise and over-deliver, but the majority of successful founders are the other way around – they have a tendency to over-promise.

Since then I’ve been thinking about how aggressive founders should make their business plans. Here are some guidelines:

  • VCs want to back aggressive plans. That means your growth should be as rapid as possible.
  • The plan must be believable – you must believe it is deliverable.
  • Investors expect most of their investments to fail, and that nearly all under-achieve initial plans. If when you look at it objectively you have a 30-50% chance of hitting yours that’s more than enough – although you should believe in your gut that it’s much more certain than that.
  • You should believe more strongly in the first couple of years than in the out years. If you deliver over 24 months opportunities will almost certainly open up.
  • It’s important to show the path from today to the big upside. A series of big steps with no risky big leaps works best.
  • Increasing your financial projections in the expectation that investors will discount them falls foul of the earlier points, and undermines trust.

It’s common for entrepreneurs to start with a big endgame that they think will work for VCs and then work backwards to build a plan that gets there. If you’re going to take that approach then make sure the plan is credible, as per the advice above. If not think about a smaller goal and perhaps different types of investors.

 



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I’ve been asked how to analyse cohorts by a couple of companies recently, so I thought I’d distill my thinking here into a blog post.

Most companies show their cohort analysis in the form of a table like the one below. This is the format that comes from most popular analytics packages.

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Whilst these tables are helpful (and believe me, I’ve read a lot of them) they are a lot more useful if combined with margin data and shown in a chart like the one below:

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CM1 in the chart title stands for Contribution Margin 1 – i.e. the contribution from the average customer in the cohort to covering the cost of marketing and the central overheads of the business. For marketplaces and ecommerce companies that means revenues (net of VAT) less any discounts or rebates, the cost of the physical item, delivery costs and the cost of returns.

This view is useful for a few reasons:

  • It’s easy to see that even the oldest cohorts are still improving over time and that the new ones are more valuable than the old ones (you can see this from the table too, but it’s harder).
  • You can see the lifetime value (LTV) of each cohort – the more mature cohorts are nearing £80, whilst the newest is nearer £70. Young companies can extrapolate these lines to estimate the ultimate LTV.
  • You can work out how long it will take to pay back varying customer acquisition costs (CAC). The dotted red line shows that all cohorts would have paid back a £60 CAC after three months, but that the most recent cohort would have paid back a £72 CAC in the same period. CAC and payback period are key inputs into the financial model which works out how much cash a company will burn each month at a given growth rate, and therefore whether a company can get past key revenue milestones before they need to raise their next round.

This chart is most useful for companies like ecommerce businesses and marketplaces where customers make repeat purchases on irregular schedules. You can also use it for with subscription businesses (including SaaS) but in these situations calculations based on churn rate might be simpler and more effective.



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I love it when complicated things are made simple and this Guardian animation does exactly that for Stephen Hawking’s theory of black holes. In 163 seconds we learn that the force of gravity in black holes sucks in everything, including light, that there is infinite gravity at the centre of black holes, that black-holes reduce in mass over time, eventually exploding with immense power, and that our universe was created in such an explosion.

Simplicity is hard to find, hence the old adage ‘if I had more time I would write you a shorter letter’, but, as this video shows, simplicity is also immensely powerful. There’s a lesson here for companies as well as scientists.

 



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I just read a review of a new Wiley book Design a better business which argues that:

better businesses are ones that approach problems in a new, systematic way, focusing more on doing rather than on planning and prediction

For them, of course, the point is that design thinking is that ‘new, systematic way’, but this sentence made me think of startups, where the emphasis is very much on doing rather than planning. Since Eric Ries wrote The Lean Startup in 2011 smart founders have understood that the best way to progress is to get onto the ‘build-measure-learn’ loop and iterate to success. That’s doing rather than planning.

Whilst doing rather than planning has been a hugely successful tactic for entrepreneurs and their investors, before I go any further I want to note that as with everything you can take it too far. To get the best chance of achieving huge success, and avoid getting stuck at a local maxima, a certain amount of thinking should be done before building starts. There’s a balance to be struck and whilst best practice is definitely to maintain a bias towards action in our experience an increasing number of f0unders are starting to build product before they’ve done enough thinking, sometimes encouraged by investors who want to play with product before they invest. Many of these founders end up failing when with a little more customer research they might have built a slightly different product which would have resonated much better and allowed them to iterate to success.

The reason that Design a better business advocates doing rather than planning is that the world is becoming increasingly uncertain. Consumer habits, technologies, and other trends are uprooting once-thriving businesses and disrupting entire markets with an ever increasing cadence. In this environment every year gets more difficult for those who like to plan, whilst it gets easier for those with a bias to action.

The increasing engagement of big business engagement with the startup ecosystem through accelerator programmes, incubators and acqui-hires is a reaction to this trend. However, these small-scale programmes don’t solve the fundamental challenge of every business leader, which is deciding which actions to endorse. At good startups it’s easy (or easier..), all action is directed towards achieving their vision. Larger companies have a much more difficult challenge. They need to launch new products, attack new markets, or take radical steps to defend existing revenues, they can only put significant resources behind a small number of projects, and anything that won’t reach the scale to impact their financial statements isn’t worth doing. Historically planning has been the tool they used to figure out which projects have the best chance of moving the needle for them, but as planning is becoming less effective they have increasingly less confidence that putting resources to work will generate the scale of returns required.

That’s a problem startups don’t have. At least not to the same degree. Most founders want their companies to be huge successes, but if it turns out to be a medium sized success that’s still a worthwhile endeavour. A business that grows to £10m in revenues over five years and sells for 1-3x that amount can still be a life changing event. For large companies that’s not the case. If a £200m turnover business goes after a new market and it only adds £10m to the top-line after five years the project will not have been worth the effort.

 

This is one of the reasons why companies are increasingly buying back shares instead of re-investing profits.

In summary, increasing uncertainty is an unfair advantage for startups. And it’s an advantage that gets stronger every year.



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When I read in David Kelnar’s ‘Respect your elders’ and five other powerful trends shaping consumer retail that in the US retailers suffered a 48% decline in shop visits between 2010 and 2013 I did a massive double take.

If that rate of decline has been continuing visits this year will be roughly 75% down on 2010. Physical retail is a high fixed cost business and given that it’s fair to say sales correlate with footfall these levels of decline will put many retailers out of business.

So I double checked the statistic, and the original source was a solid PWC report, and this report has found a similar trend in grocery retail.

The upshot can only be that the growth of online sales will accelerate. As per the PWC report the main reason that people shop online is for better prices and the more sales that go online the more they online retailers will be able to discount, whilst physical retail is suffering the reverse logic and can only get more expensive. The main reason people shop offline is to be able to see and touch product and to try it on, and those factors aren’t going away. So we’re not looking at the end of physical retail, but we are looking at some pretty dramatic changes.

In most scenarios I’m a fan of creative destruction, but this decline in retail traffic is exceptionally fast and I worry that the adjustment period will be rough, especially for some of the more vulnerable portions of society.



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