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Excellent piece in the Financial Times by opinion columnist Brooke Masters entitled, "The Revenge of the Incumbents," in which she talks about how bricks-and-mortar stores appear to have stolen momentum from e-commerce companies.

"For years, start-ups and other digitally focused groups enjoyed a massive advantage in the form of cheap funding," she writes. "Investors, who had few other options, looked to them for growth and were willing to tolerate early losses in hope of eventual profits. The disrupters competed for and won top talent with not just high salaries but also the promise of future equity riches. Tech’s ascendancy grew even more pronounced during the early days of the pandemic when e-everything boomed while everyone else struggled with shutdowns and supply chain woes. Now we are seeing a rebalancing," as technology companies see their businesses slow, valuations decline, and have to engage in sometimes significant layoffs.

Masters writes:  "This is not the first time that incumbent companies have had an opportunity to regain ground: the downturns that followed the dotcom crash and the 2008 financial crisis also prompted investors and workers to rethink their choices. But this tech pullback comes at a time when at least some groups are much better positioned to seize the advantage.

"That’s partly because the nature of the opportunities has changed. During the Covid lockdowns, ecommerce, streaming and cloud based software profited, but those sectors are now suffering as consumers turn elsewhere. Success in areas like decarbonisation, electric cars and healthcare means more than designing a good product. The ability to scale up requires building factories, supply chains and customer bases, skills that strong incumbents already have."

Masters points to Amazon's decision to hit the pause button on physical store growth as indicative of the larger moment:

"The Amazon store experience shows that it is what comes next that will be crucial. Coming up with innovative ideas — in this case fully wired convenience stores and shopping carts that let customers skip checkout lines — is just the first step. Making sure the offering can be rolled out in a profitable way is equally if not more important.

"For Amazon, sales in physical stores have stagnated since the company bought the Whole Foods grocery chain in 2017. Amazon’s problem, (CEO Andy) Jassy says, has been finding a format that 'resonates with customers'; successful incumbents in the sector already have one."

KC's View:

The piece makes some excellent points, but for me the bottom line is this - ubiquity and incumbency only will get you so far.  One of the ways in which legacy bricks-and-mortar businesses can extend their advantage is by continuing to innovate, to give their companies' engines of invention plenty of gas, to find new ways to be relevant and resonant to their shoppers.

I've said it before and I'll say it again … There is no such thing as an unassailable advantage.   That goes for incumbents as well as disruptors.  If you get complacent, you end up getting compromised.