In 1993, Encyclopedia Britannica had the most profitable year in the company’s history. Two years later, the company was nearly bankrupt and was sold for below book value. What happened in those two years?
Most folks would say that Britannica was done in by Microsoft Encarta. In 1993, Microsoft purchased rights to the Funk & Wagnalls Encyclopedia, created an electronic version, changed the name to Encarta, and began bundling Encarta with new computers. Encarta could be purchased off-the-shelf for around $50. Britannica sold for around $1,200. Competition from Encarta killed Britannica.
Or, did it?
Did the fact that Encarta was faster, more accessible and cheaper kill Britannica or was something greater at work here? My contention is that there was something greater at work: a paradigm shift. By paradigm shift, I mean a complete change in thinking or belief system that allows the creation of a new condition previously thought impossible.
Britannica was approached by Microsoft in the late 1980s regarding the Encarta project, but Britannica declined to become involved. Britannica felt that involvement in an electronic encyclopedia would hurt print sales. It never occurred to Britannica that Encarta could wipe out their print sales entirely. The public experienced a complete change in thinking about encyclopedias. For slightly more than the cost of a set of encyclopedias, a family could buy a computer with an encyclopedia. The world was moving away from the library and into the den. Britannica didn’t see the paradigm shift in their industry.
In America today, there is a paradigm shift occurring that will completely restructure the antiques business. What are the main drivers of the new paradigm? There are two: a soon-to-be crushing overabundance of supply and universal distribution.
Let’s start by examining the supply issue.
Currently, there are seven generational cohorts in America. For our purposes, a cohort can be defined as a group that wields economic power. The largest cohort is the Baby Boomers. Currently, Boomers are acting as caregivers and executors for their parents’ generation, the Builders. Builders, for the most part, did not collect antiques; consequently, Boomers inherited the household goods of their grandparents and parents. Boomers were avid collectors of everything. Having grown up on stories of the Great Depression and Wartime Sacrifice, Boomers as a generation took great pride in their material possessions. There are more antiques and collectibles in private collections than in all the antique stores in America.
As a result of population shift, there is a tsunami of supply on the way. In 1995, the death rate in America was about 8 per 1,000. These are the Builders being laid to rest.
Most of their antiques and collectibles went to their children, the Boomers. But, by 2016, the death rate in America is predicted to be 26 per 1,000. The death rate will triple and this time it will be the Boomers being laid to rest. It is the Boomers that have been hoarding the antiques of three generations. Antiques and collectibles will be dumped on the market at an alarming rate.
Who will buy these antiques and collectibles and where will they buy them? The generations following the Boomers, Generations X and Y (Millennials) simply aren’t as interested in antiques as their parents were. These generations have observed their parents get the rewards of hard work: houses, cars, and material wealth. Yet they have seen the costs of their parents’ success in terms of broken marriages, absentee parenting and an epidemic of stress related illnesses. Studies have shown that Gen X and Y are more concerned with personal relationships and lifestyle than money and material goods.
For those who do collect, don’t expect them to come to your store unless your store becomes a social gathering place. Gens X and Y may love the idea of an antique store but they no longer need antique stores to make a purchase. Their purchases will be made online, from the privacy of their homes. Like the Britannica model, the paradigm is moving from Main Street to one’s den.
Today, in the age of super abundance, and 24/7 access, no one is waiting anxiously for the next big auction or sale catalog.
In his book Paradigms, the Business of Discovering the Future, author Joel Barker claims that in a paradigm shift, everyone goes back to zero.
Great big dealers, itty bitty dealers, auctioneers — everyone. The playing field is leveled. Opportunity abounds for those dealers that comprehend shift and go with the flow. A brand-new thought process is required.
Antique Dealer, are you moving ahead, or falling behind?
Previously published in Antique Trader Magazine