To quote Nietzsche, “If a temple is to be erected, a temple must be destroyed.”
Such is the reality of economic innovation. As the world of business competes for innovation in terms of product, process, market and organization, we are surrounded by more and more ruins as a result of creative destruction. Even in a small city like Macao with an almost monolithic gaming-based economy, the effect of technological innovation has started to push traditional firms into a “join or die” situation.
One such innovation is the rise of food recommendation apps such as iFood and Aomi, which provide discounts for thousands of restaurants in Macao. These apps have greatly contributed to the convenience of consumers, especially when more and more people in modern society claim to have “analysis paralysis” due to the plethora of available choices.
These apps provide a very good platform on which to make informed decisions. When one has to decide where to go for dinner, one need only open the app and look for the restaurant offering the highest discount that day.
In a way, these apps have revolutionized restaurant promotion as well. In the past, most shops depended on the flow of human traffic in the area, and putting out an eye-catching signboard was all that was needed to bring in customers. Later, when the number of restaurants increased, some would put in an occasional newspaper ad.
Nowadays, I rarely notice anyone paying attention to restaurant ads in traditional media. Discussion about restaurants lately circulates around which restaurant is offering discounts on iFood, or the deadline for group purchases of food discount coupons on Aomi. Even though these food app companies charge quite a high fee for inclusion in the app, small restaurants still have to participate if they want to survive. Otherwise, they will slowly be forgotten.
Moreover, the delivery services provided by these food apps present opportunities and challenges for traditional small restaurants. For couch-potato consumers who have no problem making choices but have difficulty leaving the house, like myself, a delivery service is a day-to-day godsend.
On one hand, manpower-lean restaurants, which cannot otherwise offer delivery service, can reach a larger group of customers through food delivery apps. On the other hand, restaurants that used to have a group of regulars ordering food delivery are now faced with customer loyalty issues. Also, as payment is made online, there is no need to worry about not having enough cash at home for the delivery. Who needs to leave home for food anymore?
I’m not just talking about going to restaurants for food. Even grocery stores are affected. With the increasing convenience and efficiency of food delivery services, grocery stores face competition with restaurants. In China, sales of instant noodles are reported to have dropped 17% from 2013 to 2016. One of the reasons was the creation of food delivery apps, which caused an overall decline in the purchase of instant food.
Although the online shops and apps have not yet affected local retailers that much, I have started to notice retail shops closing down. Even a supermarket in my neighborhood shut down due to insufficient business.
More small retail shops are turning into click-and- brick businesses, whereby most of their sales are generated from online customers rather than in-store sales. As consumers are increasingly spoiled by modern technology, small businesses need to catch up to survive.
Yes, Macao is very small, and it takes only ten minutes to walk to one of my favorite noodle shops, but why walk if I can just click and have noodles delivered to my door?