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Industries Primed for Disruption

Technology advancements can have life-changing impacts around the world. It has already affected the way we interact (social media), get around (electric cars), or even the way we buy a pair of jeans (e-commerce). The last three decades, in particular, have seen new technologies emerge that have changed our lives in dramatic fashion.

Technology not only affects the consumer, but also disrupts industries as a whole and affects the companies within them.

One good example is the proliferation of the smartphone. One of the first features to develop on smartphones was the camera, which brought about a massive disruption to the traditional camera industry.

Many people opted to use the phone to take and store pictures digitally instead of buying a camera. Companies in the camera industry like Kodak that relied on camera and film sales either could not or refused to change with the new business climate. Kodak had to file for bankruptcy in 2012 after having been in business for 128 years.

In the coming years, we could see further disruptive technologies emerge that could change the way we live. Here are two industries that are primed for disruption.

The oil and coal industry

In the last few years, global warming and its threat to humanity as a whole have been major talking points worldwide. Global warming can have major effects on the environment, such as raising sea levels, disrupting food supplies, and causing extreme weather conditions. This has led to countries coming together with the aim to reduce their carbon footprint in a bid to slow down climate change.

One of the major international agreements was the Paris climate accord signed in late 2016 whereby 97 countries agreed to reduce their carbon footprint in the hopes of achieving net zero emissions by the second half of this decade. This is a good first step in humanity’s bid to protect our Earth.

Currently, most of the world’s energy needs are still supplied from traditional energy sources such as coal, oil, and gas. But this may soon change. Companies specializing in solar panels have found ways to reduce the cost of installation and are constantly improving to maximize the cost effectiveness of the panels so that they can be price-competitive against fossil fuels.

Many companies have also realized the long-term benefits of turning to renewable, cleaner sources of energy – and they are willing to fork out the initial heavy capital outlay. For example, Google has already stated that it plans to have 100% of its energy coming from wind and solar power by as early as 2018. With some of the major companies of the world taking the lead, and with government support, the path ahead for renewable energy looks rosy. Meanwhile, traditional energy players may need to be prepared for changing demand.

The retail industry

The disruption of the retail industry has already well and truly taken place in countries such as China and the US.

Traditional retail companies in the United States have struggled in recent years, as consumers turn online to meet their daily shopping needs. With technology and last mile logistics improving, customers in some parts of the world can enjoy same day delivery, or even delivery  within a couple of hours. Furthermore, customers get to browse items on their mobile and compare with other products near effortlessly.

South East Asia, however, has not fully realized the potential of e-commerce yet. The total e-commerce market in South East Asia was only US$6 billion in 2015. Compare this to the US, which had total e-commerce sales of over US$300 billion in 2015 despite having a population half the size of South East Asia.

However, this is set to change as (1) the affluent middle-class population in the region is projected to grow, and (2) the percentage of people owning a smartphone is also set to rise. The e-commerce industry will naturally benefit from this. Traditional retail brands currently relying mostly on brick and mortar shops in South East Asia that have not been as harshly hit as their US and Chinese counterparts need to take heed of the warning and prepare themselves.

The Foolish bottom line

Disruptive technologies can improve the lives of people around the world. We have seen this from the innovation of computers, cars, and more recently, the internet and the smartphone. Companies which operate in the industries being disrupted by these emerging technologies need to continuously innovate and improve themselves to stay competitive. If not, they may end up in the same sorry state as Kodak.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.