We are barely two weeks into the new year and already we have seen two major high street shopping chains go to the wall. The writing has been on the wall for both Jessop’s and HMV for sometime of course, but still it is always a little shocking to see such well known names finally bite the dust.
As with other such failures the name of Amazon inevitably crops up in the postmortem, but is this entirely fair? It is true to say that that Amazon is fantastically aggressive and that their business model overall is finely tuned to the online sales environment of today. However, we live in a free market capitalist society and all retailers can expect tough competition – in any form. That is the name of the game after all.
Online retail has now been with us for quite some time, the fiercely aggressive pricing and overall sales model of Amazon did not appear out of the blue. As Amazon and other online offerings have grown, the stark truth is that these failing high street names have not responded effectively in either what they sell, or how they sell it. Having left it too late, and saddled with debt, they have finally succumbed.
What a shame this is for all of us when they could have such a powerful selling advantage when dealing online. The difference between the Amazons of this world and businesses with a high street presence is that when you are browsing online for that product, buying from Amazon means a wait of at least 24 hours, but buying from someone with a high street presence could mean you can collect it yourself and have it right now. Couple that with the possibility of additional opportunity sales when you pop into the shop and this should mean the shops have a clear selling advantage.
Yes the key driver is often price and having a high street presence is undoubtedly more expensive than pure online retail . Plus the issue of browsing in the shop then buying online from someone else online is now a fact of life for everyone in retail. However physical retail really should be turning this to their advantage with in-store discounts and other location based incentives.
The demise of HMV marks an interesting tipping point, as in most towns there is no longer a credible high street alternative for the physical purchases of music. If you want to buy a music disc now you pretty much have to buy it online, especially if it is anything even slightly unusual.
This is very bad news for all last minute birthday and Christmas shoppers. It may also be bad news for everyone, if certain online sales options become too dominant and quietly wind up the prices now that the competition is diminishing.
However, it is also a stark wake-up call to all high street traders that the internet, like so many things, is both a threat and an opportunity. It is time to tap into the opportunity before it is too late and realise that online retail and the high street can work very well together.