In August 2016, the US iconic retailer Macy’s announced that they were closing 100 stores (15% of the total departmental stores) in the US by early 2017.

It is unprecedented for a business like Macy’s to have 15% of its business locations shut down in less than a year. On the other hand, Wal-Mart announced in January 2016 that the No 1 fortune 500 corporation will shutdown 269 stores in 2016. There other damaging shut down such as Sport Authority which was the US largest sporting retailer filing for bankruptcy and some others that have bowed to low turnover, high cost of doing business, year on year loses and have closed most of their business outlets all across the globe.

There is a war of wit between the activities of Amazon and FEDEX, UPS and DHL as the latter three global corporations are experiencing business share issues in their line of business because of technology drift which all the old corporations are kneeling to.

All around the world now, many jobs have been and are being lost, many businesses are closing and many investments are crashing down. It is obvious therefore, that the world will continue to experience this until an equilibrium level is reached. This equilibrium is expected to present to the world a new era of business transactions in all sectors that will be entirely technology driven.

Recently, some American drone operators or pilots applied for licencing from FAA to operate in a certain degree - this is the beginning of such a technology driven business. Amazon has been testing drone delivery to customers’ locations; Domino’s has made an interesting and successful drone test in New Zealand. Courier and delivery channels will reduce manual jobs very soon and so rapidly because of such unmanned delivery opportunities that will be available.

The Macy’s Effect by my definition is the business risk associated with not keeping track of changes in business trends to the end that the changes throw a going concern threat. This is what happens to Macy’s, when Amazon was developing channels and innovation on online platform and Alibaba was re-inventing the global market, Macy’s was not keeping track and not making adapting changes to its iconic bricks and mortals business. Wal-Mart has suddenly realized Amazon.com as a threat to its existence and it’s bidding for Jet.com for $3.3B in order to remain competitive else you will sleep and wake up one morning and alas, Wal-Mart will be gone, the legacy of Sam Walton will buried in the sand for lack of vision and foresight.

Macy’s effect is the deficiency associated with not seeing into the future and positioning your business to be trendy with time. It is the risk of not being sufficiently innovative and adapting your business and skills to blend the global changes especially in technology. Historically, technology is ruling the industrialized world where market share in a line of business will only be taken by most of the innovative corporations. Amazon has become a threat to FEDEX, UPS and DHL because it is venturing into delivery business with its Prime Air and Amazon Flex even with the development of Drone delivery. At the incubating period of Amazon’s delivery initiatives, the trio of global courier companies were watching, winking and doubting if Amazon can make it happen and now that it has become real, their stability and eventual existence is threatened.

The greatest threat and the most profound opportunities to businesses all around the globe is innovation. There has been a growing concern on machines replacing human which some school of thoughts have opined will create massive unemployment all around the globe. This argument is real and intimidating that artificial intelligence is becoming more effective than human efforts but job loss will abound in this new generation for those that have refused to be innovative. The global inequality will shrink further and only the few innovative people will reign and rule in the world. Currently, about 1% of the world population controls about 50% of the global wealth and looking at the Forbes list of billionaires and the Fortune list of 500 largest corporations in the world, you will agree this insinuation is sacrosanct and if SMEs do not get on-board of innovative thinking, the rate of business failure will become high; the difference between the rich and the poor will be an ocean wide. If individuals do not sign up to innovative thinking in work places that will make them indispensable, they will be replaced by machines or computer systems.

In Africa, companies are on the verge of Macy’s effect. Shoprite is not learning from Macy's yet but waiting for Jumia and Konga in Nigeria to penetrate the market, change the consumers' behaviour and slump its market share. Globalization is a pad of success for innovative companies as they have the whole wide world within their reach, Alibaba sales in Africa from China is in amazing figures. At the same time, innovation is a threat to companies that deal with product and services who will not adapt quickly to market and technology trends. There is a new shift in commerce and African businesses must become innovative else a California or China company without offices in Africa might liquidate their activities. Experts have talked about Amazon building unmanned ships and technology driven courier services that will make it incredibly easy for them to export goods and services to Africa.​​

Imagine many years ago that Kodak was the emperor of photography but the advent of digital cameras and smart phones have almost crippled the company until December 2014 that Kodak announced the release of its first Android smart phone, Kodak is trying to come back to stream.

The mitigant to the Macy’s effect is to be innovative, to be quick to adapting to new technologies and always be one of the first to test and run such technology in order to remain relevant and competitive in business.

The major advantage of the shift in the global business is the cheap opportunities to consumers. Most African IT entrepreneurs now prefer Amazon cloud rather than investing in gigantic server equipment that will shrink their capital but with monthly subscription and based on your capacity requirement, you can be better with cloud technology.

The new era is threatening but only innovation will make the difference.

-‘Tope Oladele