Inflection Point in Retail: Definition & Model

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

An inflection point in retail means that change is on its way! In this lesson, you'll learn more about what an inflection point is and how accelerators and disruptors play a critical role in inviting or forcing change.

Inflection Point: Movie Version

Are you old enough to remember going to a video store and renting a tape or DVD of the latest movie release? If so, you'll remember Blockbuster locations that sprung up on every corner in every community in the United States. Blockbuster had a good thing going until another company you may have heard of came along - Netflix.

Netflix allowed movie lovers to access their favorite flicks digitally without the late fees or pesky visits to video stores, and the emergence of this business model caught Blockbuster off guard. By the time Blockbuster tried to change its own business model, the damage had already been done. Netflix's way of doing things was the new standard in movie rentals.

At this point, Netflix was a disruptor in the movie rental space. A few years later it became an accelerator, bypassing its mail-order movie concept in favor of an online streaming service. (We'll talk about disruptors and accelerators in a minute.)

Netflix gave birth to something known as an inflection point in movie retailing, and things in that industry have never been the same.

Inflection Point Primer

An inflection point in business is an occurrence in the competitive environment that changes the way things are done forever. Looking at the Blockbuster/Netflix example and numerous others, we can see that an inflection point is basically a crossroads, where something has come along that alters the entire course of a business or even a whole industry.

Inflection points can be reached for a number of reasons. You've already seen how the entry of a new competitor changed the face of movie rentals. What about the way technology has advanced and changed the nature of shopping? Thanks to companies like Amazon, eBay and other online retailers, we can now shop any store all over the world from the comfort of our couches wearing our favorite pajamas. Or, think about how grocery stores are changing, incorporating both easy pick-up outside the store and, in some communities, delivery straight to your front door. This is due in part to a shift in demographics as younger, more tech-savvy shoppers become too busy to frequent the grocery store and the aging population finds it increasingly difficult to travel to the store and walk its aisles.

Accelerators and Disruptors

So, what happens at this inflection point that causes such a seismic shift in business and industry? Well, two things. Accelerators in the inflection point model are factors that invite change. These include factors like changing demographics, such as the combination of younger and older shoppers who need new alternatives at the grocery store. Retailers leverage accelerators, literally inviting the change and using those changes to innovate and become industry leaders.

Netflix is another good example of an accelerator. They anticipated the shifts from in-store video rentals to mail-order video rentals to online streaming, pioneering change in the movie industry.

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