Saying that driverless cars will have a huge impact on the automotive industry in the next decade is a truism. Saying that driverless cars could also have an equal impact on retail, however, is not.
Driverless technology will not only make the driver redundant, it will eliminate many of the inconveniences of owning and using a car. For example, instead of searching for parking, the car could Uber itself out for a while, or if it’s a pool car it could service another customer. Eliminating downsides like this could make a lot of behaviors that are currently niche, such as car sharing, become mainstream. In car sharing, you need to pick up a car from a designated location and return it there at a set time when you’re done. You have a car, but you’re hardly less tied to pickup and drop-off points and timetables than if you were using public transportation. A car that could turn up at your door, drive you where you want, drop you back at your door and return itself to the car pool would give a huge boost to car sharing, and significantly compromise the attraction of the suburbs—and the success of suburban malls.
Indeed, widespread adoption of car sharing and self-driving cars could lead to notable shifts in urban populations, to the benefit of city centers and at the expense of suburbs. It would also mean that the large areas of city centers currently set aside for parking will become available for other things, including retail—another blow to the space advantage the suburbs offer to retailers.
Smart self-driving cars—cars that coordinate their activity to maximize traffic flow—will ease congestion. Suburban malls and out-of-town large-format stores are currently attractive not just because of convenient parking, but because you don’t have to fight your way through city traffic to get to them. If smart self-driving cars improve city traffic flows and you no longer need to park your car in the city center, the appeal of out-of-town shopping, already under pressure from e-commerce, may ultimately disappear.
Driverless cars also seem like a more practical solution to automated delivery than the drones that many e-commerce retailers are investigating. As an alternative to Uber-ing themselves out, unused cars could be filled with deliveries and drive around the city making drop-offs.
Driverless cars can also function as mini data centers (with access to massive amounts of data and processing power) and mobile, panoptic cameras, and it will be interesting to see how these capabilities play out. Will cars swarm, pooling their data and processing power to solve big-data problems? Or will they collaborate to create a real-time Google street view? We haven’t even begun to scratch the surface of this potential.
In the near future, we’ll see widespread adoption of technologies that break paradigms (such as “cars need drivers” and “cars must be owned”) that have shaped business for several decades.
If there is good news for retail here, it’s that Ben Evans of Andreessen Horowitz thinks autonomous cars will create more billionaires in real estate and retail than in tech or manufacturing, just as cars did (1). But they will probably be based on city rather than suburban property empires. Retailers should be updating their city-vs.-suburb strategies in line with projections of driverless car adoption—and getting ready to act.
For additional insights, download Perspectives on Retail Technology Vol. 2 Issue 2.