Who will be the discount stores, warehouse clubs, and category killers?
Those rejoicing in a decade of record profits at banks, brokers, insurers, and mutual fund sellers are in for a shock. Despite their outstanding performance, these institutions now face unprecedented challenges from a completely new breed of competitor, leaving them with the daunting task of having to remake themselves around the needs of customers. It will not be an easy process. Yet there are models for this remaking and they can be found in an industry that has recently suffered some of the same structural upheaval that financial services is about to suffer: retailing. Take department stores in the late 1980s and 1990s. After long years of prosperity, these broad-line retailers, with high cost structures and little-to-no product differentiation, were targeted by a series of focused competitors with “bare bones” cost structures, including warehouse clubs, category killers, and specialty chains. History was much kinder to those that anticipated this trend and adapted, improving the qu
