Death by 1000 Clicks: Goodbye High Street Tech

January 22, 2013 by  
Filed under Features & Editorials

The collapse of Jessops, HMV and Blockbuster was both inevitable and overdue.

Between 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-sharesGraceless 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.

Jessops

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).

Jessops-blames-amazon

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.

AppleStore (1)

Let’s Meet IRL
The conclusion would therefore seem clear cut – online beats offline – except for one giant anomaly… This is a sample, to read about the remarkable success of Apple’s retail stores with mindblowing earnings per square foot, why this changes nothing for most retailers and why we shouldn’t feel sorry for them read the full article @ TrustedReviews

 


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