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Death by 1000 Clicks: Goodbye High Street Tech

Gordon Kelly

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Death by 1000 Clicks: Goodbye High Street Tech

meBetween them they had amassed 938 stores, 9,760 employees and 198 years of high street trading, but it took just eight days for it all to come crashing down. On the 9th, 16th and 17th of January Jessops, HMV and Blockbuster respectively entered administration. They had no financial, executive or historic connections other than their co-existence in selling media and technology primarily through retail stores. The Mayans may have been wrong about the world ending on 21 December 2012, but it seems they predicted within near pinpoint accuracy the demise of tech on the high street.

HMV share price

Graceless Falls

The trio's fall from grace has been spectacular. Just 3 1/2 years ago HMV's stock price peaked at 149 pence per share, but it had crashed to around 10p a little over 12 months later then flat-lined until the day receivers were called in. Poor Christmas sales were deemed the final straw after record labels admitted to propping it up with stock and loans for months.

Jessops fight for survival has been more drawn out. The widespread adoption of digital cameras hit the company's core photographic film business hard, but it successfully repositioned as a digital camera retailer for a period before seeking refinancing in 2009. On the back of this its share price collapsed and was deemed "worthless". Stocks were suspended in 2010 and a painfully slow death has followed.

As for Blockbuster, it struggles on for now. Its dive into administration currently affects only UK outlets, but the overall outlook is bleak. Once purchased for $8.4bn in 1994 the company was worth a mere $320m when it was sold again in 2011 - $87m of the asking price came from assumed liabilities. It has had plans to pull out of Europe since 2010 and current owner Dish admitted just days before its UK operations went into administration that significant store closures will soon begin in the US.

More to the point however Jessops, HMV and Blockbuster are just the latest in a long line of tech or tech-impacted stores to have disappeared from the high street in recent years. Other significant casualties include retail exits for Woolworths (January 2009), Zavvi (February 2009), Borders (2009) and Comet (December 2012).

Death by 1,000 Clicks

Needless to say the blame from their demise is being pinned firmly on online retailers. On paper this makes perfect sense. Online stores have far fewer overheads with no retail presence, a fraction of the staff and stock is held in less costly warehouses or ordered on-demand. Their virtual existence makes it easier for them to redesign and evolve their business models too.

As one Jessops store (above) and countless news stories have made abundantly clear the abilities of governments to effectively tax online businesses is far more difficult as well. All these savings result in prices the high street cannot match and a buying experience which can be completed from the sofa. No travel, no parking, no queues.

So who put HMV, Blockbuster and Jessops to the sword? It would be easier to list who didn't, but iTunes, Spotify, Netflix, Lovefilm and Amazon were the main protagonists while innumerable 'etailers' wielded painful blows.

Apple Store

Let's Meet IRL

The conclusion would therefore seem clear cut - online beats offline - except for one giant anomaly: Apple. Going against perceived wisdom Apple walked into retail in 2001 and has opened over 400 stores worldwide in the subsequent 12 years gathering greatest pace in the last five years. Averaging sales of $4 032 per square foot in its US stores during 2012, Apple stores were not only the most profitable among US retailers but close to doubling the $2,666 per square foot earned by Tiffany & Co. in second place. How has Apple done this? Desirability of its wares cannot be underplayed, but one-to-one tech support, warranty claims and free access to the Internet to attract passers' by are also crucial. Apple Stores are seen to supplement the Apple experience, not carry it.

Then on a smaller scale there is Game. It seemed a familiar story: the Basingstoke-founded video games retailer went into administration in March 2012 blaming online competition, but this week it admitted interest in purchasing 40-45 of HMV's closed stores to expand its retail presence. "We will constantly review our property portfolio based on what is available," said Game CEO Martyn Gibbs speaking about the potential deals while stating sales have improved and the recent Christmas period was strong.

Quite how Game has turned things around - or whether it even fully has given the short timescale - remains a mystery the owners have yet to reveal.

Exercises in Nostalgia

The problem is these exceptions tend to prove the rule and there is a bigger question to be asked in any case: does technology belong on the high street in 2013? In the sense of improving other industries where the Internet remains cack-handed or not directly comparable (restaurants, cinemas, gyms, medical practices...) absolutely. In the future I want to order off a holographic menu floating over my table, take in IMAX films in Ultra High Definition and have gyms automatically scan me and point out the most relevant exercises for each session, but it should give up trying to keep electronics on shop shelves.

Think about it. The benefit high street stores bring to today's tech purchases is negligible and beyond redemption. What do we gain from trying to judge a TV's quality when it is set to a display mode and sat under fluorescent lights? What do we learn about the quality of an audio system fighting against the hustle and bustle of a store's customers and its wide open spaces? What do we discover about a product's long term durability in the few minutes a shop assistant lets us hold it while they stare at us intensely making sure we don't run out the door? Even if we did value these aspects it isn't enough... we thank the assistant, say we'll think about it, wish them well then go home and put another nail in their coffin by ordering it for less online.

Ultimately, sad as it is to see the brands and shopping experiences of our youth shrivel and die, it is little more than emotion brought on through nostalgia. Mary Schmich famously advised "[nostalgia] is a way of fishing the past from the disposal, wiping it off, painting over the ugly parts and recycling it for more than it’s worth." The Mayans were wrong, the world is still here and it has moved on. It is time our sentiment did too...

Mark Colit

January 21, 2013, 2:08 pm

There's more to this story than merely the internet being responsible for the loss of some prominent high street chains. Yes, it's been a major factor, but we're currently in a world depression caused by unimaginable debt and currency wars, that's going to get a lot worse, and which will eventually begin to affect the big High Street players, such as Currys, as well as untouchables such as Apple.

Borkr

January 22, 2013, 12:28 am

The High Street is in an obvious transitional phase. The rise and supremacy of the internet has long been a threat (and thereby, opportunity) for retailers to adapt to a greatly changed world: ordering from the comfort of your own home with pictures and everything.

Being completely up to date price-wise, having full descriptions with customer comment/review about both the outlet's performance and importantly, the product. The web offers rapid comparison of both price and product: are you getting the right thing for your needs and is there someplace else that sells it more *competitively*? It's no good Jessops staff bemoaning the likes of Amazon. The presence of the internet for the past two decades has called for a sea change in commercial strategy. Indeed, the writing was on the wall a long time ago if companies but opened their eyes.

I find it an odd strategy to accumulate and expand physical stores on the high street when selling the kind of products sold by the likes of HMV, Game or Blockbusters and co. So Game's apparent desire to expand their 'property portfolio' seems completely at odds with the way things are going in the commercial 'selling' direct to the consumer world. The successful companies are not tied down by such 'assets' as high street property. Indeed, it seems they are not assets at all in some lines of business but huge big liabilities. The old ways of measuring business strength through its sheer monolithic presence and high street dominance are surely (and presently) outdated and it's those stores who are able to quickly adapt and who have less of a property portfolio weighing them down, that will remain competitive in the longer term.

On the subject of photography outlets, there are plenty of survivors - they are much smaller and successfully trading. You only need to use price comparison websites to see who they are. The internet brings these traditional camera shops opportunities they did not have before and it's up to them where they go from there. There is something to be said about staying small for some: being trusted, personal service and trading in secondhand gear. It's a shame Jacobs collapsed as a chain of outlets, they had something the likes of Jessops did not have or lost as they became more of a bigmac/dixons type store, which was knowledgeable engaged and personable staff.

Anyway, I wonder who's next? Boots? Superdrugs? I dunno. It seems there are certain types of product people are less willing to spend time researching on the web where the convenience remains in being able to not have to think too hard about what you're getting and being able to just pop in to a largish chain and get a product that you assume is better value than it would be from your local cornershop. Plus, Amazon's not just Amazon: there are a multitude of different marketplace sellers who trade independently - in some ways the internet is more about democratising the marketplace, traditional media-sphere, entertainment and news space and everything else. 3D printing, forums for this and that. Wikipedia, howstuffworks etc. The Global Store is the internet! No use in bemoaning the end of one civilisation in the presence of a brave new one that is healthy and has an appetite to grow much, much more.

Gordon Kelly

January 22, 2013, 2:47 am

Well said.

Gordon Kelly

January 22, 2013, 2:53 am

I certainly agree that the recession is a major factor BUT recessions also are most harmful to those who are most vulnerable and they have a habit of exposing weak business models as people start to economise.

As such I would say the recession is merely the catalyst for what has happened here, not that it would not have happened long term without it.

Spotify, Amazon, iTunes, Netflix and many more are actually benefiting from peoples' new found willingness to shop online as they economise.

rene

January 22, 2013, 10:15 am

'things' go through the cycle: when its 'hot', its high street, when its not (standardised, homogenitised, commoditised) its Internet. Unfortunately, CE/Media are 50 year old industries, and eventhough they regularly 'warm-up', they are standardised and commoditised.

'Fashion' succeeds in beating that, but a large market contraction (recession) will drive 20-odd% customers to buy these things on-line as well. They'll stay there, i reckon.
Food, drinks, bars, restaurants, thats your new high street, sir.

mothergoose85

January 22, 2013, 10:53 am

It's interesting to note that the rise of online shopping has also seen the rise of review sites as well - I often look around to see what pro's and other consumers have said about a product before I purchase it because it's not always possible to find the product in the high street (or requires a visit to an out of town shopping centre).

Which is why it saddens me that Trusted Reviews produces a lot more speculative content now as opposed to hard and fast reviews. I get it, traffic is required as you get money from Ad impressions, but this is a reviews site primarily, not a new site. I use engadget and slashgear for that - and whenever they review something I come back to TR to see if you've done a review as I tend to value your opinion more.

I suspect the fall of high street retails will work in your favour, just don't sell yourselves out!

Beaky69

January 22, 2013, 12:20 pm

An interesting article, for sure. Your points regarding Apple are and their high-street presence is valid, although you could have mentioned another retailer that has managed to successfully counter the online threat: John Lewis. They've managed to maintain their stores despite the threat from internet retailers, all the while selling the very same white goods, cameras & other tech products that Comet & Jessops used to sell. I believe their success is partly down to their diversification, but also their partnership model, and their emphasis on customer care & the training it necessitates. Other factors like their 'never knowingly undersold' policy, & their free 5 year warranties on TVs certainly don't hurt, either. It is possible to succeed in selling tech goods on the high-street, you just have to be better at it than anyone else.

Gordon Kelly

January 22, 2013, 4:14 pm

That is a fair point, but they were omitted because electronics is just one small part of its business and as such it is much harder to quantify. Certainly the focus on building a brand identity with a reputation of a high level of customer service and significant warranties is a major help though and it suggests the only way to compete with online retailers is not to compete but offer difference.

Gordon Kelly

January 22, 2013, 4:18 pm

Yes review sites (including ourselves) certainly contribute to the boom of online retailers as detailed reviews reassure readers they don't need to see an item first hand before buying it. Then again we do stress this is a good idea with certain products on occasion.

Your point about speculative content is valid, but it is important as a guide to educate readers about what is coming rather than what is simply here. Knowing the latest timescale for impending products and being talked through their leaked or most likely features can be as important in shaping a buying decision as a real world products

mothergoose85

January 22, 2013, 4:34 pm

Yep, the problem I have is probably the UX behind the way it is displayed - I'm not sure I have any suggestions that are commercially viable either which doesn't help.

I'd say ideally the homepage main body would be void of advertising (MPU's are fine, and background/border ads are too), you could then use the full width you have available to display review/news/round up content - probably not displaying more content but having it laid out with a bit more whitespace. Personally I think that'd help split the content out a bit better and then possibly feel like the page isn't overwhelmed...does that make sense?)

Obviously this is an issue as you probably get most page impressions on your homepage I imagine?

Giles Morgans

January 22, 2013, 9:53 pm

And the staff at Jessops would NEVER shop at Amazon. Yeh, right.

Gordon Kelly

January 23, 2013, 3:59 pm

You're right and it is purely a layout issue at present which I know the team is looking to fix. Fingers crossed!

Gordon Kelly

January 23, 2013, 3:59 pm

Of course not ;)

Bugblatter

January 24, 2013, 11:40 am

High street retailers that don't add value will go under. Most chains joined in with the race to the bottom; it tends to be indie shops that have helpful experts on hand. Those are the shops where I'll pay extra.

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