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Are Bricks and Mortar Going to Survive the Internet Era?

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Are Bricks and Mortar going to Survive the Internet Era?

 

During the past fifty years, most of my work life in this Industry, one of the most significant

‘barriers to entry” in the equipment industry, and in fact, capital goods industries has been the ownership and control of proprietary information. For instance, where to buy a part. A specific part, a bearing, for example, was purchased from an authorized dealer typically because the consumer did not know of any other source. Repairs and Maintenance were the exclusive domain of the authorized dealer for a similar reason. There was no availability for the independent mechanic to service manuals and technical literature. There clearly has been a radical change here hasn’t there? Just ask Google or another search engine whatever you want and they will typically have an answer. Even Alexa or Siri or Bixby will give you an answer on your cellular telephone.

Let’s start with some facts. In the US the standard in the retail sales Industry used to be 10 square feet of store space for every person in the country. In 1998, after a substantial increase in the square foot assigned to retail sales, the retail sales per square foot had dropped from $200.00/ft2 to $150.00/ft2. In 1999 the International Journal of Retail and Distribution Management reported that consumers’ shopping time was down 31% and monthly mall visits were down 47% with stores visited per mall visit down 57%. Clearly something was going on here.

While this was going on Amazon came onto the scene. They started business on July 5, 1994. From that launch date the impact that Amazon has had on retail sales has been nothing short of amazing. In 2019 Amazon had a market share of e-commerce in the USA of 52.4%, Non-US was 5.7% for a worldwide market share of 13.7%. In that same year, 2019, e-retail sales accounted for 14.1 percent of all retail sales worldwide. This figure is expected to reach 22 percent in 2023.

I first used the internet in 1973 through a Service Bureau in Canada via a business called I.P. Sharp Associates. Ian had direct real time access, on line, to all financial data worldwide through the stock markets. He also provided international associations, such as the World Bank, direct access to financial information. He later sold his business to Reuters who kept the news piece and sold the financial piece to what is now provided by Bloomberg. At that time there was no AOL. The general public was not on line yet. That is only forty-five years ago.

Today many business systems offer online “portals” for the public to search through for a part or information on a repair or maintenance for equipment. Today there are a multitude of businesses from whom you can purchase just about any part you need from an alternate source to the authorized dealer. In automotive Genuine parts through their NAPA stores is a direct competitor to the authorized car dealers. In many cases, as Forbes once called it “at a price that will make you weep.” In maintenance and repairs we have seen Mr. Muffler and Midas Muffler forcing the dealers into providing their off brand technical services like Mr. Goodwrench. In the construction equipment world in North America surveys are conducted nearly every five years and that data tells us that maintenance has been completely moved away from the authorized dealers. In fact, labor market share, depending on market area ranges from 8% to 15% of the total labor available. Of course, there are outliers in both directions. The parts market share is not more than 40% any more when in the late seventies it was in the range of 80%.

In 1980 one of the first internet-based buying options was brought out to the market. That parts ordering portal never achieved a portion of the dealer parts business in excess of 10%. Notice the difference between the Amazon model and our model. Amazon started with books and sold their books at a lower price than the local book stores. Even Borders, a major book store retailer was a victim of Amazon. They are no longer in business. What did Amazon do that the authorized equipment parts suppliers didn’t do. They lowered the prices. Their logic was when the customer is the coproducer of the work, they deserve to get a better deal. No one has as yet tried that approach as an authorized dealer. The aftermarket suppliers have already lower prices at their disposal.

So, there is the dilemma. I hope you can see it coming. It is that light in the tunnel of the train roaring down the track. Are you going to sit back and let the internet-based businesses penetrate even more into your parts and labor business or are you going to do something about it?

The Time is Now. If not now, when?

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Internet Learning

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Internet Learning

Over the past ninety days the planet has been suffering under a serious virus. Nearly everyone has been affected. Some of the results to the economy and societies are starting to come in with analysis on the longer-term impacts.

  • The Congressional Budget Office forecasts that the US will see $7.9 Trillion in lost economic growth through the rest of the decade.
  • The World Bank predicts global domestic growth will shrink by 5.2% in 2020.
  • The World Bank expects 70 – 100 million people will be pushed to extreme poverty.

There are many statistics and forecasts being made now about the longer-term impact of this virus and shutting down the world’s economy.

And then we come to education.

There will be a wide variety of forecasts and statistics made here as there are some serious competing self-interests at play. Research conducted by McKinsey & Company shows that the shift to remote learning could set the average student back seven months academically. I suspect there are many reasons for that conclusion and many ways to overcome that difference.

Students and teachers alike struggled with the switch to remote learning after schools were shut down. By their midlife, people who graduate during a recession are also less likely to be married, more likely to be childless and face a higher chance of death than those who did not.

However, what this indicates is that we have to develop better tools for this new wave virtual teaching and schooling – from pre-school to high school. The Khan Academy programs, processes and courses are a good model to consider. They have provided free world-class education to 90 million learners since 2008.

Similarly, EdX, a non-profit created by Harvard and MIT, offers MOOC’s (massive open online courses) and interactive classes in law, history, science, engineering, business, social sciences, computer science, public health, and artificial intelligence. During this economic shutdown “Every faculty member is going to be delivering education online. Every student is going to be receiving education on line. And the resistance to online education is going to go away as a practical matter.” James N Bradley, chief information officer at Texas’s Trinity University. Goldie Blumenstyk, from “The Chronicle of Higher Education” suggests this is more than a Black Swan moment it is “more of a catalyst for online education and other ed-tech tools than decades of punditry and self-serving corporate exhortations.” Going further she says “It seems safe to say that this will be not only enormously disruptive but also paradigm changing. The “Black Swan”, that unforeseen event that changes everything is upon us.

Unfortunately, this will not all be good news. A lot of professors will simply video-conference lectures supplemented by emailed assessments. In truth it will be some time before we can draw any conclusions on what forms of learning the education elite will adopt. Will this rapid disruption produce better results? Only time will tell.

In the Industries, I serve dealers who have not been strong advocates of employee development. They have typically believed that they hired the skills and that was all that was needed. That ship has sailed. With the rapid advances in all aspects of engineering and manufacturing, of materials and ceramics, and computerization and telematics it has become very evident that the skills required to stay current have expanded and changed rapidly. That means adult education is something that equipment dealers are going to have to embrace going forward. The Associated Equipment Distributors Foundation published a goal for the Industry of 80 hours of training for each employee each year. Very few dealers meet that goal. I believe it should be 160 hours.

In an earlier blog, I wrote about how to assign your time each day at work. I started from a position put forward by Dirk Beveridge, he was presented to a sales meeting at a client of mine and he got my attention in simplifying my life in how I manage time. Time was, is now and will be forever, the enemy. The older I get the more this becomes true.

I look at time in blocks – to be precise five blocks.

  • Review Results
  • Working with people to improve performance
  • Communications
  • Process reviews
  • Personal growth.

The personal growth item is the one that I have to fight with every day. There is always something that I view to be more important that self-improvement. It is not that I don’t need improvement, I really do, it is that that other thing always seems more important. It is like exercise. How many of us actually invest our daily time on our health and self-improvement? We all know the answer. So, what are you going to do about it? This “shutdown” has allowed a lot more introspection than normal times. I hope this is a subject that you are thinking about. Your employees need the same push to improve themselves. That is where Learning Without Scars fits in to the employee’s life. It is at the time of their choosing, it can take as little as two and a half hours, and you can measure the improvement in their skills. And on top of that it is $125.00/course or assessment. If you don’t invest in your own personal development and you don’t encourage your employees to improve theirs, how long do you think it will take before your customers notice.

The Time is Now. If not now when?

Teaching on the Internet

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Teaching on the Internet

Early in my career I taught education classes at McGill University in the Physical education Faculty. I was teaching potential coaches and teachers on how to teach. Obviously, it was about teaching to a curriculum but in my mind, teaching people has always been about helping people understand how to teach themselves. That is a lifelong activity and one that I believe we could all learn to do better.

In classrooms, teaching working adults around the world over the past forty plus years has been a true joy. I love seeing the lights go on in people’s eyes when they “get it.” But it is extremely difficult to be able to constantly understand where each student is on the understanding scale.

In the past decade “learning management software” systems have come a long way. With good course design and careful learning path development we can understand the level of learning for each individual student with a high degree of confidence. This makes the learning programs much more effective that at any time in the past.

At Learning Without Scars, we have created learning paths which cover preparatory reading, pre-tests, multiple video segments with assessments at the end of each, a final assessment and a student survey. This is our Learning On Demand products – our LOD’s. We have designed them to be able to earn Continuous Education Units – CEU’s. However, the primary objective is to be able to provide education and learning to our client students. In our recent blogs we have touched on the Science of Learning which proves how to create lasting knowledge from learning events. Our learning is based on a safe assumption. It is that one only has to go on collecting more and more information for it to be able to sort itself into useful ideas.

Employee development: assisting with personal growth is our driving compassion. I hope it is yours as well.

The Time is Now.