This is actually a good news/PR piece about online shopping versus brick and mortar stores, from last year. Physical stores aren't all going to disappear, as online shopping keeps growing. But a huge percentage of traditional brick and mortar stores will close down. This is The Toffler's Third Wave concept in action, in the retail sector.
This post is a tiny piece of a real big network of ideas, and that's what this blog is for, to flesh out little bits and pieces of my concept of The Phoenix Great Depression, as it happens, in real time. I put "recession" in quotation marks in the title, because I believe this current recession will ultimately be a true depression, and a "functional" great depression. I think we will very likely see a 10% drop in GDP growth for Q2 2020, thanks, of course, to the Covid-19 Shutdown. A 10% drop in GDP makes this recession a "depression," like it or not. But those numbers won't be out until July 30-31, about three weeks form now. GDP will bounce back to some extent, but I believe we're basically in a 5 to 7 year economic mess as a country (and world). That's a "functional" great depression, even if it is not a textbook one.
Now, on to the point of this post. In 1980, futurist Alvin Toffler published a book called The Third Wave. The basic idea was that the onslaught of new technologies emerging then, like the weird concept of everyone owning a personal computer and other gadgets, were going to fundamentally change how society functions at a deep level. This had only twice before, in 10,000 years. Roughly 10,000 years ago, the agricultural revolution began, most likely in Turkey, and humans slowly changed from hunter/gatherers to farming based people. That changed how nearly every human on Earth lived, over a couple of thousand years. The agricultural revolution was the First Wave, as Alvin, and wife Heidi, saw it. People went from wandering tribal groups to farming communities settled permanently in one area. That was a huge shift.
About 350 years ago, the Second Wave began. That was the shift from agricultural-based society to an industrial-based society. That wave happened quicker, over 200 years or so, as most people stopped being farmers, and moved to cities and got jobs in factories. Again, another fundamental shift in how people lived on a day to day basis, based on new technology, like the steam engine, mechanical inventions, and later, electricity. The Greatest Generation, The Baby Boomers, and my peeps, Generation X, were all born into the late stage of the Industrial Age. That's our "normal."
But the Third Wave, as the Tofflers saw it, was emerging, with computers, new medical technologies, new communications technologies, and advanced robotics, among other ideas, gaining steam and turning into functional products. The Third Wave is the shift from an industrial-based society to an information-based society. It's a long, sticky transition from the Industrial Age to the Informaiton Age. Alvin and Heidi Toffler saw this as fundamentally changing how human beings would live and interact. Except this huge shift was happening much faster, basically in a single human lifetime. They put the beginning of the Information (or Digital) Age at 1956. That was the first year that "white collar" office workers outnumbered "blue collar" factory workers in the United States. So in 1980, Alvin's book, The Third Wave came out, and it had a great influence on many influential people.
But then other books, other notions, other ideas came along, and the Toffler's Third Wave idea faded from most people's consciousness. I began reading Toffler's work in the 1990's, and the Third Wave idea stuck in my head. As I watched society begin to change more and more rapidly, and see things like Napster disrupt the entire music industry with a click of a mouse, I began to think the Third Wave was still playing out. As the internet rose in popularity and widespread use, and as car phones turned to cell phones, and now into smartphones with photo, video, text, and wifi capabilities, The Toffler Thirs Wave concept, and other ideas, explained a lot of what I saw happening.
So what is The Retail Apocalypse, which the news story above is about? The Retail Apocalypse is the breakdown of the Industrial Age goods distribution system, and the building of an Information Age goods distribution system. It's as simple as that. Officially, 9,300 retail stores closed in 2019 alone, and about 20,000 in 2017-2019 combined. Coresight now estimates that about 25,000 retail stores will close in 2020 alone, due largely to the pandemic-induced shutdowns. Not ALL retail stores will close down, as the news clip above explains. But tens of thousands of them will. Amazon DID NOT cause this. Jeff Bezos at Amazon, and other visionaries like him, at eBay, Shopify, Wish.com, Etsy, and other online retail sites and platforms, saw the potential future, and built something for the Information Age retail world. Sears, J.C. Penney's, and many others, DIDNOT see the future potential of online shopping, largely because they were the 800 pound gorillas of retail at the time. They laughed, how could a few tech geeks with a website threaten their behemoths? And then the paradigm began to shift. Remember, Blockbuster video had the chance to buy Netflix for $20 million, once. When's the last time you went to a Blockbuster store to get a movie on VHS?
The Phoenix Great Depression is not about retail sales in particular. I believe EVERY industry and human institution, that hasn't had a "Napster-level," Big "D" Disruption, will see one. Period. No one gets "spared." The Retail Apocalypse is Disruption in the retail world. The populist movements which brought Trump and Berrnie Sanders into the limelight, are Disruption happening in the political parties. The next phase of real estate Disruption is happening. Look at commercial real estate before the pandemic. Now try to imagine it after Covid-19, if you can.
We're about to see the College Apocalypse begin in a big way, it has already put dozens of small schools out of business. EVERYTHING, every business model, every institution, every human system still left from the Industrial Age, from the criminal justice world to manufacturing furniture, to how non-profits work, to how hospitals run, to basic things like the toilet industry, they will all see massive Disruption. The old, Industrial Age way of doing things will continue to break down, and a new, Information Age version will be built, probably by a different group of people.
This isn't something that can be stopped, most of us (me included, I used to be a serious Luddite) will not like this messy transition. But it's going to happen anyway. Period. You can surf the wave, or get pummeled by it, to use a California metaphor. It will happen because of all the new technologies in our world, and those still being developed, make an entire new way of life possible. Visionaries in many areas will build new models for different aspects of society, business, non-profit, and social.
Now... what does this current recession (eventually a depression), have to do with this Third Wave transition? As I was blogging about aspects of these ideas over the last three years, and saw a pretty serious recession coming soon, I realized that the speed of change was constantly increasing, and that this coming recession (the one we're in now) would amplify the speed of change. In effect, the converging of the Third Wave's Disruption with a major recession, was going to shift the speed of change into 5th gear. The parts of our society that were already changing, like retail, would change even faster. An the parts of society that had not yet changed (like K-12 and higher education, for example), would be forced into rapid change, BECAUSE OF the serious economic downturn. We WILL see a visible College Apocalypse appear in 2021, as well as other major changes. This convergence of a serious recession/depression would force parts of society to change very rapidly. That's what I saw as coming at us, as of last year.
And then, in February and March, the Covid-19 pandemic hit American shores. Unfortunately, with the pandemic came a completely horrible response to it from the White House and the national leadership here in America. So the pandemic has become much worse that it had to be. This pandemic has shifted the rate of change from 5th gear to light speed. I imagine most of you know the scene in the original Star Wars movie, where Han solo first shifts the Millenium Falcon into light speed. That's what just happened to the rate of change of every business model in the U.S., and the advanced world. There will be changes in business models, but also in social systems and models. Black Lives Matter is just the beginning on the social change front. There will be much more along those lines, from many different groups of people.
Simply put, there is no way we can make all the changes needed, in an 18 month, "normal" recession. This will take years. If that isn't enough, we've all seen the unprecedented response by The Fed and other central banks. What did they do? They created enormous sums of money and threw it at Wall Street and corporate America. By "adding liquidity," to the tune of several trillion dollars, they are literally propping up the largest Industrial Age businesses, keeping them on life support, hoping this "recession" will end quick. It won't. Because it's not just a recession, there are several long term trends and transitions, like the Toffler's Third Wave, playing out as well. Many of the major corporations being bailed out right now won't live through this decade. And propping them up will literally make the "recession" last much longer than it really needs to. The bailouts will be part of what makes a needed depression turn into a functional great depression. Propping up "zombie companies" delays Schumpeter's "creative destruction," which is necessary. I'm not saying these companies components will disappear, but they will likely be part of different, Information Age companies, a decade from now. Maybe an Elon Musk-type person will be running GE's jet engine business, or something like that. Capitalism lets inferior businesses fail, it's a necessary part of the process, and we've said "goodbye" to capitalism,at this point.
So in very simple terms, this current economic downturn will speed up the rate of change, in many industries and institutions. The pandemic will dramatically increase the speed of that speeded up change. This is going to hurt. But the upside is the "phoenix" part of The Phoenix Great Depression. If you understand what's really happening, and see this Big Picture myself, and some others are looking at, then you can pick a part of the world and begin building a new model, part of the Information Age that will live on for decades to come. Are you up for that?
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