In a meeting yesterday at work (in England) where I am a Risk Manager, we were talking a bit about the future and the risks of technological, demographic and political changes to Financial Services, but also to other industries.
As I write, there is a news article about Argos sales on the BBC. Argos had a shop floor which had some items out on display, but most of the products were only shown in a catalogue. When you chose something to buy, you wrote its item number down and took it to the checkout. As the internet has replaced mail order, and then surpassed mail order, Argos’s raison d’etre becomes less and less obvious.
And Argos’s management seem completely unaware of the changing world around them. Their chief, John Walden’s comments should sound warning bells:
“The performance at Argos in the quarter was broadly in line with both our expectations and previous guidance, with sales being adversely impacted by market declines in key electrical and seasonal product categories,”
“We continue to expect that sales will be challenging during the first half [of the financial year] at Argos, but we look forward to a stronger second half.”
Companies are always at risk from changing demographic and technology as companies such as Kodak, Woolworths, Microsoft and Raleigh have discovered. Other industries that are obviously at risk include:
- Movie companies that are selling their Google Play, iTunes and Amazon electronic versions at a higher, or similar price to their DVD/Blu Ray brethren.
- Companies that are in direct competition with Amazon – as soon as the cost of delivery reduces a little more, the advantage for Tesco (in the UK) or Walmart or Target (in the US) is gone. I predict it is only a matter of time before Amazon Lockers are enlarged and become places where Amazon will pick up an item for delivery for a much reduced or zero cost.
- Delivery and logistics companies. Companies employing people just to drive freight from Poland to England must expect automated trucks and lorries within a few years. These will never need their drivers to take a break and can reduce costs to lower than rail / shipping. In fact shipping may also be reduced for shorter distances as the costs associated with running a truck from England to Israel starts to reduce toward the level of a shipping container. This will be especially true for non-time-critical deliveries.
- If we can make automated cars on the unpredictable roads, then trains must be an obvious place for automation.
The point I am making is that companies need to consider the future and they need to do it continually. Financial Services companies in Europe employ Risk functions because they see a regulatory need, as well as because it’s common sense. But all companies need a young, bright and data-rich strategy or strategic risk department.
There are many other impacts that people need to prepare for, and I intend to write more about those in the future.