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Blockbuster, HMV, Jessops and Comet – let’s call them the big four.  I’m not sure you can actually say any of these companies are victims of the economic downturn. It may be more appropriate to say they are victims of technology. Where will the rot end? I can see an opportunity, and I call it the big three.


Truth be told there was something fundamentally wrong with the big four.

Comet was largely outcompeted. Demand for consumer electronics is massive. Tablets were surely amongst the most popular Christmas presents last year, but was Comet the place to go? I don’t think it has been for some time. Anecdotal evidence talks about a poor level of customer service. It had no real niche, no real advantage. For capitalism to work effectively, companies must be allowed to go bust. For workers who lost their jobs, the demise of Comet was tragic. But I am not sure you can read much more into its fall other than that.

As for Jessops, the key is the mobile phone. I wonder how many people reading this use their phone as a camera. I have to say, I have never been such an enthusiastic photographer since I have had an IPhone. Jessops, just like Kodak, was a victim of technology and changing tastes.

The reasons for the downfall of HMV and Blockbuster were even more obvious. Although, I do find it interesting to note that every time I have looked, my local HMV store has been teeming with customers. It is just that DVDs are low margin, cheap products. The demise of HMV is a classic example of retailers falling to the might of Amazon, and iTunes. There is something sad about the demise of music retailing. There was a time when every High Street had a record shop. They were pleasant places to visit, and you could listen to records before you bought them, which was a good promotional tool for the music industry.

The music industry itself didn’t want to see HMV fail. They were understandably worried about a world in which two customers – Amazon and iTunes – had a virtual monopoly. As such, the industry tried to support the retailer, but there are limits. And HMV went beyond those limits. But frankly, if you are worried about the future of the music business, I would be more concerned about the damage being done by the TV show ‘The XFactor’ than the demise of music stores.

As for Blockbuster, the reasons for its demise are even more obvious. What is clear is that Blockbuster’s end had very little to do with recession, and a good deal to do with the Internet, and competitive offerings such as Love Film.

I am worried about the future of book shops. I think Waterstones are great, but can they have a future? I seriously doubt it. I can’t help but feel that the public will be the losers, however. Book shops don’t only promote specific books, they promote the very idea of reading; they promote variety. At face value, the Amazon service looks superior. It tells us what other people who share our liking for a certain book also enjoy. That seems very powerful. Now Facebook is entering the search business, and we can find out what our Facebook friends enjoy. But I think there is a danger in this that is not totally understood. Crowds tend to follow each other. I think that if the main criteria for our buying decision is what other people do, rather than buying books we suddenly uncover while browsing a bookstore, then the book industry will lose its variety. We will all end up reading the same books.

I think there is a danger that the Internet, dominated as it is by the views of the crowd, may actually promote less, not more variety. Network theory supports my argument. As I say, I don’t think this danger is fully appreciated.

But, setting aside book stores, who will be next?

Frankly, the problems at Marks and Spencer are not dissimilar to some of the problems listed above. Its woes are not, in my opinion, down to the economic climate; rather they are down to awful buying and dreadful presentation. Excuse the pun, but Marks has lost its sparks. I’m not saying the retailer is going to go bust anytime soon, but the company really has to change in order to survive medium term.

The High Street is a good shop window. For fashion it does provide a good glimpse into what’s popular. But even the fashion retailers are increasingly promoting the Internet. More and more customers are looking in store, and buying online. John Lewis has successfully managed to convert traffic in its stores into online sales.

And that’s what retailers who wish to survive must do: use the High Street as a promotion tool for their online presence.

And in an Internet dominated retail world, Facebook, Google and Amazon – that’s who the big three are – will be the winners. If you want to invest in retail, invest in stores that have their Internet strategy right, but also invest in the big three.

 

These views and comments are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees


Showing 1 comment

  1. Garry Hawkins

    Michael,

    I’d add that we’re also seeing the zombified banks finally giving up on zombified businesses – mainly those loaded up with debt in the first decade of the 21st Century.

    From the ashes, the phoenix arises – what form this will take is anyone’s guess. It’s rumoured in the press that the likes of Morrisons WM and Tesco are looking at some of these retail sites. Is this progress?

    It might be better if some niche service businesses arise… perhaps driven by the legions of the new self-employed entrepreneurs…

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