Jessops is back in the news, and believe it or not, this time the news ins’t bad at all. Jessops’ online store will be back in business as of Friday and six retail stores will reopen shortly. The plan is to open more than 30 shops next month.
Retail chains in Britain closed an average of 20 stores a day over the past year. According to a report by the Local Data Company and PwC, the number of shop closures in 2012 soared tenfold on the year before.
It makes for some depressing reading to say the least. The survey found that 1,779 stores were closed in 2012, compared to just 174 in 2011.
The downturn seems to be affecting every sector, from travel agents and sports goods shops, to banks, computer game shops and jewellers. However, some businesses seem to have bucked the trend, including charity shops, pawnbrokers, pound shops, betting shops and payday loan companies, basically all the services people are likely to use when they are broke like Greece and out of work like Spanish youths.
It gets worse. The number of closures is predicted to rise and the rate of closures in December, January and February is up and could hit 28 a day. Many companies are falling into administration, including former heavyweights like HMV. Blockbuster, Jessops and Comet are down and out as well.
Mike Jervis, insolvency partner and retail specialist at PwC believes the downward trend is getting even worse in 2013.
“2012 saw more retail chains go into insolvency than ever before. The failed chains generally shared two problems- too many stores and too little multi-channel activity,” he said. “A number of them had failed to deal with their underlying issues by hiding behind light touch restructuring processes, especially Company Voluntary Arrangements.”
Christine Cross, chief retail adviser to PwC, said the figures are more disappointing than many had hoped, but she pointed out that several major chains were forced to resort to closures and this was anticipated for a long time.
“What is surprising is the speed at which stores have been picked up by value and grocery retailers in particular. Good businesses with good operating models and good people don’t fail,” she said.
Although closures are up across the board, some regions have taken a bigger hit than others. The South East leads the way with 376 closures, 265 shops closed their doors in West Midlands and the North West saw 215 closures. The North East, Scotland, Yorkshire and the Humber stayed in double digits.
HMV’s pooch has been put down. Staring into a rifle rather than a gramophone, Nipper’s one of the latest goners in the struggling high street. The question is just why exactly he and the chain have taken this long to croak.
His Master’s Voice had been shouting – with a sickly sore throat – for quite some time about how it is still relevant. HMV tried to launch a digital on-demand service, it committed more of its shelf space to electronics, and attempted to lift itself out of an inevitable quagmire. All the nostalgia is fair enough considering the brand’s longstanding legacy (though this Telegraph article makes a compelling case otherwise) – what doesn’t make sense is the illogical idea that Britain’s high street is integral to its national character or even its larger economy. Britain went through the luddite movement once already. Haven’t we learned our lesson? Once the technology is out there, you can’t turn back the clock, and trying to do so is understandable, but stupid.
Shopping online makes sense. This is why it is so successful. Given the choice between getting on a bus, standing in a queue, paying more, and with a limited selection – compared to one click ordering in under a minute, cheap, for exactly what you want or need – is it any surprise the consumer has largely chosen the web? It is possible that a retailer will figure out a hybrid model at some point in the future, and bargain or pound shops are unlikely to have many problems in a recession, but for the sort of commodities that don’t need to be tried on, the internet is a better option.
Any sympathies in wake of the bust must be directed toward the thousands of staff that lost their jobs because management refused to innovate in an age where taking risks and doing so is the only way to succeed. Consistently playing catch-up, and thoroughly outpaced, it is a miracle HMV managed to hold on as long as it did. As for the unfortunate staff: let the demise of HMV, and all the others, work as a warning that in a permanently connected society it’s now nearly impossible to rest on your laurels and run a successful operation. HMV, of course, is only one of the most recent. Jessops (which previously shared the same chief executive as HMV’s last) was another casualty, before it, Comet, and before that, more. It has just been announced that Blockbuster will go into administration – South Park aired an episode about the inevitability of this outcome in October 2012.
Britain’s high street hasn’t been about some vague and nostalgic notion of community for a long time. Its steady transformation from local merchants and butchers to identikit hubs of big brand shops, that look the same in every British suburb, was complete years ago.
Adam Smith described Britain as a nation of shopkeepers, and that – first published in 1776 – is still true today. But it is something that must change. The high street’s death rattle has only just begun. An economy committed to hiring people to sell products – let alone barely producing – is bound to fail, and we can only expect more casualties to come.
According to some critics, the blame is solely in the hands of management. Speaking with ChannelEye, Luke Ireland, business strategy adviser and non-executive director, said: “It is no surprise that we see three more major retailers succumb to the power of the internet.
“Don’t blame tax avoidance or government policy blame the management for not embracing the internet.
“It’s not going away and unless you fundamentally build it into everything you do your business will fail. I feel for the staff but if you work for a retail business which ignores the internet I’d look for another job.”
The once popular music store, which was a haven for 90s teens buying their first singles and albums, has become the latest casualty on the high street, announcing earlier this week that it was to go into administration.
The company, which has around 250 stores nationwide, made the announcement claiming that like-for-like sales were down 10.2 percent for the half year to 27 October and the Christmas period had not helped push profits up.
Trevor Moore, the former Jessops boss who took over as HMV CEO in August, said in a statement that the company had held discussions with its banks over the weekend but failed to agree on new terms for its debt.
“The board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect,” he said.
Michael Perry, a retail analyst at Verdict, said the chain had been “fighting a losing battle for some time,” pointing out that it hadn’t been able to compete with the likes of Amazon on either price or range, while grocers had also been slowly claiming market share.
“Illegal downloading has also had a part to play, particularly over the last few years as consumers look to save money. To many, the monetary benefits of downloading outweigh the risk of being caught, resulting in online piracy continuing fairly unabated,” he told ChannelEye.
“The same can also be said for legal streaming services such as Spotify or Netflix, which have largely negated the need to purchase physical media for many consumers.”
And the public are also suffering. Not only are there around 4,500 jobs at risk, but customers are left with vouchers that they can’t use.
Our advice, then, to anyone who got vouchers as part of a Christmas present is, to spend, spend, spend.
One source told ChannelEye that her twin boys could not redeem HMV vouchers yesterday. So a net loss and a disappointment, for the kids, by and large.
If you have a “voucher”, redeem it. And redeem it fast. Who knows which company is going to go down the tube, next?
There is somethimg very dodgy about this, and ChannelEye is watching it closely.