2008–Anything but business as usual
If there’s one resolution I actually plan to keep in 2008, it’s the promise to learn from past mistakes. I know, easier said than done, right? But as we turn the collective page on yet another year, we all get a fresh start. And that means we’re afforded the chance to look back on past bad habits and pledge to rectify the errors of our ways. If that sounds suspiciously like soul searching, maybe it is. But who among us can’t look back on 2007 and say they wish they had done a few things differently? It’s for this very reason that I’ve tried to look at the transition to this New Year through a different lens. What can we learn from the developments of the last year? And what do those lessons tell us about the next 12 months?
The very first lesson I think we can all benefit from is that there doesn’t always need to be a winner in every battle. As much as the mere utterance of these words must grate on the ears of all free-market advocates, consider the battles that played out over the past 12 months, especially ones like the high-definition DVD war. In 2007, the two camps vying to dominate the landscape of next-generation video proved, despite themselves, that there might be room for both formats to coexist. Against all boisterous predictions, no one has emerged as a clear winner in the high-def DVD battle. And so, maybe having two competing systems with more options for consumers isn’t such a bad thing after all.
I also can’t help but laugh every time I think about the arrival in 2007 of Tesco’s new Fresh & Easy stores. Wasn’t it supposed to be common knowledge that European grocers didn’t dare challenge the American market for fear of getting their lunch eaten by U.S. supermarkets with the home court advantage?
Another big sea change story from 2007 is the iPod effect. Only this time, instead of talking about the proliferation of Apple hardware (which was the big news this time two years ago) I’m talking about the greater Apple effect on the portable audio market. Where Apple has reigned supreme until now, there’s ample evidence to suggest that the future of portable audio may soon take the shape of subscription-based content, on a PC-free Wi-Fi device—a development that could render the notion of content ‘ownership’ a thing of the past.
Of course other stories are likely to grab their share of headlines in the year ahead. Sears Holdings’ Eddie Lampert looks to be on track to pull another rabbit out of his hat in 2008; Wal-Mart, for its part, will stay at the center of attention, perhaps with an answer to Tesco on the domestic front and new market entries (maybe Russia?) on the international front; the Big Three supermarkets will face even bigger battles with the UFCW; and more designer labels (a la Vera Wang) will migrate to the mass market.
As predictable as many of these developments are, one huge unknown looming on the horizon for 2008 is the effect that the election will have on the consumer psyche. As it stands, 2007 ended with mixed consumer sentiment. Now we’re heading into an election that many predict will result in a shift of power into the hands of the Democrats. Whether that happens or not, the mere prospect of such change will force the consumer to adopt a wait-and-see mentality, as issues such as health care, education, foreign trade and income tax hang in the balance.
Like every year, 2008 will certainly have its share of new products, new players and new people. But as we peer into the crystal ball of retail and look toward the year ahead, the images that will start to appear are of companies who have already resolved to learn from past mistakes and approach the New Year as anything but business as usual.