Blockbusted

Did I say two high street names in that last post?  It seems it was three as Blockbuster hit the buffers yesterday.

No doubt there will be more. Blockbuster is slightly different, however, as the puzzle is not that it went bust, but how it was managing to trade at all. There really could not be a better example of a market leading trader failing to respond to new technology and literally frittering a good business away.

Video streaming and low cost DVD sales in supermarkets and from Internet traders did not come out of the sun. This has been a growing trend over several years now and no doubt it has nibbled away at the Blockbuster business. As with so many similar businesses when they had the money and the market dominance they didn’t act and when they did decide they should do something, the market position had faded and the finance was gone.

Often the reason for delay goes something like this: “we don’t want to launch new online services because it will undermine our shop business”. This of course ignores the case that it is better to undermine your own business with another business of your own than leave it to someone else to undermine you.

Completeley away from the internet, James Dyson hit this problem with his first bagless vacuum cleaner. Other vacuum cleaner manufacturers turned away from his technology because it undermined their bag sales, so he went off and manufactured it himself. Dyson is now the market leading brand and the others just follow with their bagless clones, the bag sales are now gone.

If the technology is brand new, hits the market like a storm and chops the legs from under the business virtually overnight, then there is a good excuse for having done nothing. When it has been signposted for months and years, you cannot use a poor retail market as an excuse, management must take responsibility for a lack of action.

Incidentally the rise in online retail figures is still strong and was around 14% in the last quarter. High street retailers can continue to ignore this as long as they will like, but reality will hit sooner, or later. In so doing they do themselves, their employees and ultimately their customers a severe disfavour.