Prova’s St John White thinks more retailers will go the way of HMV in 2013…
While I would never purport to be a massive fan of Bob Dylan, his 1964 song sums up where UK retailing is right now. The recent demise of HMV has been a sobering moment for all music lovers, whether your tastes include Chopin, The Beatles, Count Basie or Girls Aloud. The point is, the way we consume music – and other products for that matter – is changing fundamentally. And such radical change is having a huge effect on the high street, which continues to bear the brunt of painful ‘retail realignment’.
In the past few weeks alone, big retail brands such as Comet, Jessops, HMV and now Blockbuster have all called in the corporate undertakers. The sad fact is that their inherited infrastructures are just no longer fit for purpose; their business models have been overtaken by the pace of technology and our adoption of the ‘click to buy’ culture. While musos like me still can’t resist the lure of an hour browsing through albums in a record shop, there are evidently not enough of us to sustain a network as big as HMV’s. Despite the business’s efforts to diversify into DVDs, games and gaming kits, it was too little too late. There was simply not enough trade to maintain a network of over 200 shops.
Now, I know hindsight is a wonderful thing. And while I’m no logistics expert, I do share cups of tea with plenty of people who do know a thing or two about moving things from A to B. They all agree on one thing; there are still a lot of big name retailers out there who are struggling to remain profitable under a yoke of too many shops. Ask retailers about their sales networks and most will quietly agree that if they could, they’d lose a significant proportion of their physical estate. But too many are in a zombie-like state, whereby they’re waiting for trading to improve or planning a quiet dilution of their network size. The trouble is; trading isn’t getting better and no-one wants to buy retail units right now!
To put it another way, using expensive high street retail locations to ‘warehouse’ tonnes of CDs, DVDs and other products no longer seems to work. The business model needs to change.
Savvy retailers saw the writing on the wall years ago and adopted a multi-channel strategy – setting up slick e-commerce routes to market while still maintaining a presence on the high street. I have a horrible feeling there are still a lot more well-loved brands that will go to the wall before we see double digit retail growth again.
However, there are bright spots on the horizon. Look at John Lewis, who posted strong Christmas results recently. That business has focused on great customer service for years, but has also managed to combine this with an online ‘click and collect’ service. While the insatiable domination of Amazon and its ilk seems unstoppable, there is a place where face to face service and technology meet for the benefit of customers; it’s a question of getting that delicate balance right. Likewise, I am sure there is a future for HMV – but it will need to embrace that which has caused its downfall; e commerce.