Technology and how it continues to impact on our lives

By Dr Steven McCabe on Dec 4, 12 08:29 PM in General

Monday was 'mega' or 'cyber' which is a key day in online shopping.

The origins of this day, like 'Black Friday' lie in the United States - where else -was to create events immediately following Thanksgiving which enabled retailers to offer promotions intended to get shoppers thinking about Christmas.

There are various stories of what the term black means but the most persuasive is that if the day is successful it becomes the point at which retailers go from being in the red to the black; profit.

The advent of the internet has, of course, made retailing far more competitive and as anyone who shops online will attest, prices tend to be lower than found in the high street (see last week's blog).

So, according to some estimates there value of transactions yesterday was something like £10,000 per second.

And as noted last week, there are concerns about the effects that online retailing is having on the ability of businesses that sell through premises or shops where immediate contact is made with the customer.

There is a question of morality of how online retailers are able to offer goods at process that others cannot match; especially if they are able base their business in other countries that have much lower rates of taxation.

Whatever noises may be made this is the reality of contemporary trade. The internet is just the latest tool by which businesses are able to reduce costs.

Let's not forget that many high street shops complained about the huge out-of-town shopping centres, with their much lower rental costs and free car parking, which were built in the 1980s.

Indeed, for much of business the objective has always been about cost reduction.
Take for instance car production. Until Henry Ford adopted the principles of scientific management cars were a luxury item that only the very rich could afford.

He used technology to reduce the unit price and made car ownership available to the masses.

If you go into a modern car plant you will see the use of pretty much the same principles. There will be fewer people and the way the components are delivered and fitted is much slicker using techniques such as 'just in time' and 'lean' but Ford would recognise the production line in action nonetheless.

So any business that is not able to embrace technological change is always likely to be a loser.

There are many who believe that we are going through a technological revolution and that information technology in all its incarnations is impacting on us in ways that we are only just beginning to appreciate.

Internet retailing is just one manifestation of this revolution and is creating new ways of doing things and alternative language.

And so we now have the term 'dark store' which is used by supermarkets.

A dark store is used to denote the use of premises which to all intents and purposes are, on the inside at least, are laid out to seem like an ordinary store.

Often located in nondescript promises such as ex-warehouses or factories, the dark store offers customers the ability to shop for groceries on their behalf.

In the past when online shopping was in its infancy, it was simply a matter of getting someone to pick out the items in the closest store from which deliveries would be collected and delivered to customers who will have selected their preferred slot.

Dark shops have been considered necessary by all of the major supermarket retailers to cope with vast in increase in online shopping for groceries.

Online groceries are a part of the retailing sector that has potentially great growth.

Whilst it currently accounts for 3.4% of overall grocery shopping (last year some £5.6 billion out of a total of £156.8 billion), according to retail analysts at IGD consultancy, it is believed that this will double over the next five years.

And as noted last week, groceries are a part of the retail trade that is attracting interest from Amazon.

As anyone who has seen the way that a typical Amazon distribution warehouse works (see youtube), both the scale and apparent complexity has to be marvelled at.

Amazon currently has eight what they call them 'fulfilment centres', the largest of which is Dunfermline and is the size of 14 football pitches.

It employs an additional 10,000 workers in the period leading up to Christmas and undoubtedly keeps couriers and The Royal Mail busy in delivering the millions of orders that are standardly received.

Importantly what happens in the fulfilment centre is the key to success.

Each member of staff downloads the order made through Amazon's website they are directed to where they are available which given that a fulfilment centre has millions of items in stock is no mean feat.

Once the items have seen selected they are sent down a conveyor belt to be dealt with by a 'packing associate' who puts them into an appropriate sized box or envelope which has a computer generated label and then sent to a delivery vehicle.

Whatever people may say about Amazon its use of IT to become the biggest and both efficient and cheapest online retailer is to be marvelled at.

Not that long ago Tesco was being accused of being so cheap that other supermarkets and retailers of books and music CDs and DVDs have found it hard to compete.

For example, HMV still survives selling CDs and DVDs (16.% of the market compared to Amazon's 20.3%) though many others such as Borders, Zavvi, Game have not.

As I noted last week, Amazon claims that it has no immediate plans to sell groceries.

Given its expertise and proven ability to successfully compete in other aspects of online retailing it could easily open its own dark stores.

Given the projected rise in online grocery shopping by those of us who are too busy to do our own and the fact that it can now be done from handheld smartphones and tablets, I wouldn't want to put a lot of money on Amazon not wanting to get into that market.

Technology changes our lives in ways our ancestors would have found incredible.

So finally it is really fascinating to report on the fact that Google (another name in the news recently) has launched and autonomous car that drives without the need for human intervention.

The fact that the prototypes are Toyota Prius cars with $250,000 of sensors and computers currently makes them something of an expensive novelty.

However, what is significant is that in testing these vehicles on congested roads over half a million miles they have been accident free demonstrates the old joke that the most dangerous component is the 'nut' behind the wheel.

Whether we will ever see driverless cars is an interesting thought to ponder on.

It would seem that they would, ironically, make driving safer and cheaper in terms of reduced insurance.

What is does show is the advancement of technology is inexorable and that it will potentially be used in ways that we might think is fantastic in contemporary terms.

As I tell my students, they are the people who will be responsible for having the imagination to create inventions and use new technology to radically alter the future.

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Dr Steven McCabe

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