How Adobe Streamlined Tax to Scale Its Business: Dramatic shift in online purchasing has ripple effect.

Author:Graham, Andrew

Some of the statistics about consumption in the United States are truly jarring.

There are more than three shopping centers for every high school, according to industry data and the Department of Education. For each person, forty-eight square feet of retail capacity exists, CNBC reported earlier this year. The average home contained more than 300,000 items in 2014, according to a professional organizer quoted in the Los Angeles Times. And, Psychology Today reports, in 2012 Americans spent more money on shoes, jewelry, and watches than on higher education.

More recently, society is pushing back against some of this excess, a pushback that is one driver of the current transformation of the retail industry. The traditional, enclosed shopping mall is on its way out, giving way to the open-air communal spaces with no traditional anchor tenants that shoppers now prefer. The consumers that many retailers covet most--young people with active social networks and disposable income--increasingly prefer independent merchants, craft coffee, and curated experiences over brand familiarity. Houses are becoming smaller, and decluttering is no longer a niche lifestyle choice.

This shift is causing the wealthy to turn away from the practice of using expensive goods and comically large homes to signal their wealth. "[T]he democratisation of consumer goods has made them far less useful as a means of displaying status," Elizabeth Currid-Halkett, a professor of public policy at the Price School, University of Southern California, recently wrote in an essay for Aeon. Parsing government data on consumer consumption, she argues that the "new elite cements its status through prizing knowledge and building cultural capital, not to mention the spending habits that go with it--preferring to spend on services, education and human-capital investments over purely material goods."'

Changing Shape of Retail

The changing shape of retail means that substantial changes to business models, supply chains, distribution strategies, and, at a macro level, entire brands are happening with increased urgency. It is quicker and cheaper for retailers to bring new products to market, but this ironically adds up to more complexities, not fewer, for everyone involved. While opportunities are plentiful in retail today, competition is fierce and margins are low.

For an example of retail disruption, look to the direct-to-consumer business model, which has become significantly more popular in the past five...

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