What´s New: The brief new video, Changing Times Call for Winning Moves, features Phyllis Ezop introducing her website and blog. The video points out how Ezop´s material can help companies make the right moves when times change. Click here to link to the Winning Moves® Blog to watch the video.

The digital revolution has had a major impact. Some industries were hit particularly hard. For example, businesses related to paper and publishing have been upended by the tremendous shift toward digital. And, e-commerce has threatened bricks and mortar stores.

But, an interesting trend is unfolding. Sectors that were written off as dying say five years ago are actually exhibiting some signs of resurgence.

Sales of hard copy print books are a good example. According to the article, “Spread Your Wings and Fly, Penguin,” in the January 30-February 5, 2017 issue of Bloomberg Businessweek, “the shift away from physical books is reversing as e-book prices rise. U.S. e-book sales fell 20% in the first half of last year, while paperbacks and hardcovers jumped 4.8% to $2 billion, according to the Association of American Publishers.” Also in that article, Liberum Capital analyst Ian Whittaker said, “the book market is in much better shape than people predicted five years ago.”

As I see it, the book market reblossoming, rather than facing dinosaur-like extinction, is a good example of how predictions can easily suggest panic that is not really there. In my January 2014 newsletter, I pointed out that as long as the old technology still has benefits, it can continue to exist along with newer technologies. This applies to printed books, since people still enjoy reading physical copies and, as a result, sales have been driven upward.

The key lesson here is that downturns, even those occurring as a new disruptive technology takes hold, may be short lived. Thus, companies should not be too quick to give up on industries where they have strengths just because growth has slowed.

Many independent bookstores that stuck with bricks and mortar have been doing quite well despite the inroads made by e-commerce. Even e-commerce powerhouse Amazon has been opening physical stores, however, Amazon stores integrate on-line ways with bricks and mortar bookselling. And, Amazon is not the only e-tailer to open physical stores. Furthermore, recognizing the value of order on-line with pick up at the store, traditional bricks and mortar retailers are combining their on-line business with the benefits of a physical location. And, some retailers such as Ulta Beauty and T.J. Maxx, have been thriving in bricks and mortar, although they are not ignoring e-commerce.

A really good point related to this appears in the December 15, 2016 (2017 Investor´s Guide) issue of Fortune in the article “Reinventing the American Mall” by Phil Wahba. The article features a pull quote by David Simon, CEO of Simon Property Group, a company that “generated $5.3 billion in revenue in 2015 with an enviable 37% profit margin” and “dominates the so called A-malls, those with the highest sales per square foot.” David Simon´s pull quote says “[Retailers] chased the holy grail of internet sales, to the detriment of their physical product.” According to Fortune, “Simon says traffic isn´t declining at the A-malls, and independent statistics back him up.”

As I see it, as someone who has been researching business success and failure patterns for 25+ years, Simon´s pull quote has important implications. A downturn that occurs when new technologies are taking hold should not be immediately viewed as inevitable disruption. It´s important to evaluate the downturn and make adjustments to the business as appropriate. Simon did this. As Fortune reported, Simon concentrated on A-malls while shedding less productive ones, changed the mix of tenants, and added some higher tech pursuits.

To this I´ll add that Simon´s higher tech pursuits were generally mall related and were not done to the extent of neglecting the core business. That´s an important point to remember when a downturn hits. Of course, that approach will work for some companies better than for others. But, it should be examined for viability by businesses facing declines or slower growth.

Ezop and Associates
La Grange Park, IL
(708) 579-1711
https://www.ezopandassociates.com