Disruptive Tech is Transforming Retail | J.P. Morgan

The internet has
opened up new frontiers in nearly
every aspect of business. It’s creating more
opportunities for efficiency and
consumers are enthusiastically
embracing new ways to shop, bank,
and travel. Naturally, this is
disrupting the way the economy works,
including the way we measure economic
activity. Disruptive can mean
better but it also brings social
challenges that are connected to the
labor skills gap, and in the last
couple of decades widening income
distribution, as innovation in the
digital economy displaces routine
human work with automated processes. In just the last
decade, innovative enterprises have
transformed the landscape across
retail, financial services, and
transportation, capturing large
market shares by being quick
and clever. Although so-called
superstar firms have dominated the
story to date – particularly in the
retail space – time will bring
more balance as new startups find
innovative ways to compete. In 2018, Black
Friday in-person sales dropped by
nearly 2% from the year
before. Online sales,
however, have reached
a record high. As consumers make
their preference for online shopping
clear, innovation is transforming the
retail sector. Startups and
emerging companies are finding success
by migrating to a direct-to-consumer
model, building a following on social
media, and bypassing standard methods
of distribution by selling products and
services directly on their website. In that way, social
media has become a powerful advertising
outlet – similar to more traditional
TV commercials. Because of social
media’s global reach, popular
brands in the U.S. quickly cross
borders to become popular brands
across the globe. Companies can
deliver anywhere so they aren’t confined
to a single market. National borders
don’t exist. Everything
is linked. Startups in today’s
economy are also facing unique
challenges. The need to scale
quickly, especially for consumer-based
companies, feels like it’s never been
greater, and social media has largely
driven that shift.

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