What company in the tabletop industry has invested in a tech company? I don't know of one. I believe our industry should be doing what UPS does and investing in tech--and I'll explain why.
As today's WSJ shares, UPS has a venture capital arm and it has this because smart businesses know that most businesses are becoming more like: software businesses. Therefore, businesses have to ‘buy’ that know-how by investing in a tech company. UPS knows that it doesn't have the internal tech know-how to build self-driving truck software. Companies have to 'buy their tomorrow' or risk a tech-based competitor taking their market share. As an example, see how tech companies such as Airbnb, Uber, Facebook, and Spotify have changed their industries. For examples closer to home, please see Amazon, Faire, and Zola.
You may say that you already invest in your business. But I'm talking about tech. You have to spend more than you traditionally would because tech costs more and the world is moving to tech so quickly. In some way, you can look at it this way: tomorrow has gotten more expensive. Tech companies are spending heavily to own tomorrow, thereby driving up the price for it. For you to stay in business, it's going to cost more. To continue with the metaphors, tomorrow is a beach front estate, and you're not the only bidder. Big tech just showed up with boat loads of money.
Let's look at some recent examples of where industry leaders are investing. A year ago Macy’s bought...wait for it....drum roll: traditional retailer Story. Story, which had just a handful of stores at the time of the purchase, is a retailer that is known for in-store shopping experiences. It has little or no tech foundation. I believe that Story would not have been bought by Amazon, UPS, or any other industry leader as it fails most or all criteria for investing in 2019.
If you wish to know how Macy's purchase of Story has turned out, here's a summary: in the last year Macy’s stock is down 40%.
I believe that Macy's would've been better off buying a tech company that, for example, crawls web pages and helps Macy's always have the lowest price. If this sounds like an idea out of the blue, please keep in mind that crawling websites is VERY much how Amazon wins. It crawls millions of web pages a day looking for prices--including Macy's web pages. What does Amazon do with this data? It ensures that its site has the lowest prices. In fact, crawling pages is such a big part of Amazon's business that it penalizes its third-party sellers that don't offer the lowest price on Amazon. Please see this article on Gizmodo about this practice: https://gizmodo.com/amazon-appears-to-have-an-innovative-approach-to-price-1836980831
Our industry's failure to 'buy its tomorrow' is going to produce: a dire tomorrow. This will result in more Gumps and Barneys. This failure will also help fuel the rise of new tech-based players like Faire and Zola.
Meanwhile, Walmart is investing heavily in tech and specifically in its website and building an online marketplace for third-party sellers. How is that working? Walmart's sales are up and its stock is up 21% year to date. (Year to date, Walmart's stock is even up more than Amazon's stock.) Walmart beating Macy's by a 60% stock spread is a clear sign that Macy's investments are misguided and that Walmart is on the right track. I believe it's likely that Macy's needs new leadership. Based on what our industry has done thus far, I'd recommend that the Macy's board look outside of our tabletop industry. Call UPS ...or Walmart.
ps - When I started writing this post, it felt like deja vu. Then I remembered I had written a post about retailers being in the software business. Here is that post:https://marketplace.bridgecatalog.com/news.cfm?id=15150