Is this the end of multichannel retail?

Jessops went into administration late last week at the cost of hundreds of jobs. According to administrator PWC on 11th January Jessops will close all 190 stores after discussions with suppliers made it clear that support for ongoing trading wasn’t there. This week there was similar news for HMV although it is hoped that a buyer can be found.Jessops appomts administrators

I have written before about Jessops, using them as an example of multichannel retail to question whether the model has a future. I hoped that it would have but wonder whether the failure of Jessops and HMV is a problem waiting to happen for other, niche retailers and in the longer term even more diverse retailers.

Let’s deal with the financials first. Jessops had its problems but last June reported rising revenues up 1.3% and earnings up nearly 30% on 2010. Online sales had risen nearly 80% and accounted for 32% of the business with 70% of online customers choosing to collect their purchases in store.

The problem is that despite agreeing a debt for equity swap with HSBC in 2009 (who at the time wrote off £34m and were still owed £30m at time of collapse) the company still serviced significant debt, estimated to be £80 million. In the last published accounts to 1st January 2012 the company recorded a loss of £909,000 and paid interest of £411,000. Interestingly, the profit before interest, non-recurring items, reversal of intercompany impairments and taxation for the period was £0.2 compaired with a loss in the previous period.

It also paid its 5 or 6 Directors £1,478,000 with the highest paid earning £408,000. This seems a lot given the profitability of the firm and even its relative size – just 190 stores and £236 million. Perhaps it is indicative of the market and Jessops needed to attract good people and in fact couldn’t hold on to Trevor Moore who resigned as CEO to join HMV in August 2012. (HMV also had huge debts as a result of private equity transactions and they were servicing an estimated £176.1m)

So, I could argue that if Jessops wasn’t saddled with debt, had a management team that it could afford and a little more time they could start to deliver a regular profit. But I’m not going to do that.

The music and film industry is particularly vulnerable and HMV’s own estimates were that by 2015 over 90% of music and film sales will be online. They were late to go online and diversification with acquisitions of online brands didn’t pay off. Much of their strategy was driven around getting out of the music and film business and with good reason.

Music and film are not products in the same way that a camera or washing machine is. The tire kicking part of the buying process doesn’t take place with the physical product and is driven by trailers, adverts and recommendations. As soon as broadband speeds reach the stage when they support streaming high-definition video everywhere, people will no longer need physical media at all – assuming the licensing rules are sorted out. So HMV faced a very different problem to Jessops and simply didn’t react quick enough.

Jessops sell a physical product and one sufficiently technical and complex that quite a lot of people want to look at it, pick it up, try it, touch it, literally get to grips with it. They need somewhere to do this but are not tied to purchase from the same place. In fact with the rise of mobile commerce price checking is taking place online often whilst in store. It places retailers with physical stores and the associated overheads at a huge disadvantage.

This is a challenge facing all retailers and I suspect most won’t know how much it is impacting them. They will know that sales are going online and that footfall or sales in store is reducing but trying to understand the relationship between the two is very difficult. Click and collect is all well and good but at some tipping point in the not too distant future online will outstrip retail by a sufficiently large margin that the store will in reality be a glorified warehouse and showroom.

What can retailers do about it? Here are a few suggestions:

  • Change the way they think about products: Jessops could have looked to the mobile phone industry and created propositions that built-in customer loyalty. Why couldn’t a camera be sold on contract over two years and bundled with tech support, a number of prints each month, storage for photo’s online and other parts of the proposition? Niche market shops should think differently about how they differentiate.
  • Brands to pay: Get brands to pay them for displaying their goods to offset the cost of the retail space. Not all brands are going to want to open showrooms and it will be inefficient for them to do so.
  • Measurement: Implement better multichannel measurement techniques so they can understand how hard the store asset is working for them.
  • Differentiate on experience: Retailers have the opportunity to create an experience because of their stores. This is rarely exploited to its fullest potential.

I think multichannel retail, and by this I mean online and offline as the main distinction, will survive but in the future the supply chain will be completely different. If retailers are going to survive they will need to look further ahead or suffer the same fate as HMV, Jessops and all the others that have closed.

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Sainsbury’s moves away from HR and customer service

Back in July 2010, Sainsbury’s announced that it was scrapping the HR Director role and creating instead a single role that would encapsulate HR and Customer services. The new Customer Services & Colleague Director, in addition to having one of the longest business cards, would take responsibility for HR, customer services, sponsorship, corporate responsibility, and both corporate and internal communications. A huge role then, and massive undertaking that was described by Gwyn Burr, who was promoted from the role of customer service director, as “an opportunity for HR to become much more focused on strategic delivery”.

So, fast forward 30 months to the announcement that Burr will leave Sainsburys in March 2013 and that Angie Risley, current Lloyds Bank Group HRD will take over as Sainsbury’s Group HRD. It was clear from this announcement that this also signifies a demerger of the customer service and HR roles so should we conclude that the initiative failed?

It was only in 2004 that Sainsbury’s first created the position of Customer Service Director with Justin King, then and still CEO, bringing in ex-Asda colleague Gwyn Burr to the role. At the time he felt the customer service needed to be improved dramatically and although Burr sat on the Board she remained a contractor. She also held, and continues to hold, a number of non-Executive Director roles and whilst this isn’t unusual for board members perhaps in this case it indicates that the move was always temporary.

Certainly Sainsbury’s customer service has improved and they have now moved ahead of their rivals. With various initiatives over the past few years the retailer has tackled the causes of poor customer service with training and technology initiatives as well as better use of the web and the introduction of Click-and-Collect, which has been rolled out to more than 900 stores.

The evidence would suggest that we shouldn’t read into this latest announcement that the HR/Customer Service mash-up initiative has failed. Perhaps the greater focus on strategic delivery has worked and now Sainsbury’s is simply putting in place an organization structure that will keep it moving. We will certainly be watching with interest.

 

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Sport and social media – west coast perspective

Brendon Kensell, Managing Partner of Kensell & Co, an M&A and corporate growth consultancy, has just posted a piece on sports and social media.  Some of the stats Kensell quotes are astounding with 460 million fans who ‘like’ sports teams on Facebook and almost 100 million fans ‘follow’ teams on Twitter. But he suggests fans are getting frustrated with the one-way nature of Twitter and that the time is right for new sports social media start-up – JockTalk.

JockTalk provides fans and athletes with far richer engagement opportunities than are currently available through existing social media platforms. Because JockTalk publishes to Twitter and Facebook fans who are not interested in richer engagement can still listen to what the athletes they follow have to say. But, for those fans who want a proper, two-way conversation JockTalk provides the ideal platform.

JockTalk fills a number of the holes that exist in Twitter. It allows for 300 characters instead of 140 available in Twitter and the different is incredible. I wonder who decided 140 characters was enough? It is hard to even ask the question in 140 characters and whilst it does avoid waffle for athletes and fans they seem to need and want more.

Sports social media is changing and whilst existing platforms like Twitter and Facebook are trying to keep up, the time is right for a new player.

 

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James Bond: 6 seconds premature

I can’t remember seeing James Bond wearing two timepieces but presumably he has too since being equipped with an Omega Seamaster. Encouraged as a fan of the films and in the market for a ‘watch for life’ type purchase I succumbed and invested most of my savings in a shiny new James Bond Seamaster Omega watch. I am not proud of being so easily swayed by the marketing people but as they say, I am what I am.

However, my suspicions about the Omega Seamaster’s timekeeping ability were first raised when I was popping champagne corks at a New Year’s even party nearly 5 minutes ahead of everyone else. That has its advantages of course, but was slightly concerning considering the size of my recent investment. I reset the watch and checked it regularly through January but it was gaining time at an alarming rate (would be funnier if it had an alarm) so I took it back to the shop.

The watch was sent back to Omega who kept it ‘extra long’ to make sure it worked perfectly, or at least that is how the 9 and not 6 week turnaround time was explained and I picked it back up in April. The watch continued to gain time and so I wrote to Omega and shared my disappointment and my concern that I didn’t know what to do next. Here is the letter they sent back:

first page of letter received from Omega

Omega, at least the arrival of the letter was timely

The letter goes on to page 2:page 2 of letter from Omega

As it happens, I haven’t been contacted in ‘short’ by Mr Mike Webb but no matter. I can’t see how any explanation that an Omega watch is ‘OK’ if it has a tolerance of -1 to +6 seconds is going to help me. However, if he does call I will suggest he gives James a ring. For him it could be the difference between life and death.

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Rooney and Wilshere’s Nike advertising on Twitter banned

The future of Twitter advertising was thrown into turmoil today by the ASA’s action banning the campaign by Nike. The BBC covered the story earlier today and explained that the ASA were unhappy that Rooney and Wilshere had promoted Nike without it being explicit that it was advertising. http://www.bbc.co.uk/news/technology-18517668

I think you have to be a pretty stupid sports fan given the state of sports media advertising and sponsorship to believe that Rooney and Wilshere love Nike so much that they are going to mention them on Twitter without it being part of a sponsorship agreement. It was hardly a sophisticated ploy to dupe the public and I have heard far worse. For example, bogus fan accounts being set up to ask a player what boots he wears and thereby allowing the athlete to reply subtly promoting his sponsor.

The pace of change in sports social media and social media advertising is such that authorities will struggle to keep up. Without a sophisticated knowledge of social media advertising they stand little chance understanding the way it is being used for promotional purposes and run the risk of driving it underground. Perhaps the solution is from new social media platforms that focus on the specific vertical markets such as sports which is the domain of JockTalk.

JockTalk is a sports social media platform for true fans and athletes that publishes to Twitter, Facebook and other social sites and enables athletes to monetise the content they are creating in a legitimate way. For many, they share all or part of the advertising revenue they earn with the good causes they support as the platform is set up to do this as a direct request from athletes – they’re not all bad!

That said, athletes can still promote sponsors and brands through the content they publish on JockTalk and you only have to look at Spanish footballer Iniesta to see that this is the way sports social is going. Iniesta has million’s of followers and promotes to them all the time but often no more subtly that Rooney and Wilshere. New rules are needed for a new world where sports social media is breaking down previously unknown boundaries.

 

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Mashable offers favourable view on JockTalk

With JockTalk appearing at Demo12 at the same time as Beta launch there is an opportunity for the great and the good of the digerati to get their hands on the concept and offer some feedback.
First out of the blocks is Mashable with an insightful and very positive review of the platform. Their analysis is spot on and it is comforting to know that the simplicity and power of JockTalk can be communicated so effectively in a world that is becoming increasingly complex as a result of digital explosion. I am now really looking forward to the reviews that will follow the presentation later today.

Posted in Brands, Mobile, New websites, Social Networking, User Experience, Web, Websites I admire | Tagged , , , , | Leave a comment

The evolution of Sports Social Media

I was recently invited to get involved with a social media start-up called JockTalk (www.jocktalk.com). I am a bit of a cynic when it comes to new social media ventures because I am the type of person who likes the ones I use and use the ones I like and that keeps the paying field small – mainly LinkedIn, Twitter and Facebook (a bit and mainly for the kids). However, the more I heard about JockTalk the more convinced I became that this is the future of sports social media.

Photo of stage at DEMO12

There are a number of social media plays trying to fix the “monetisation of Twitter” problem and JockTalk certainly addresses this opportunity. A revenue share with athletes means that the content created can be monetised through ad revenue. However, what is really great about JockTalk is the level of fan engagement built-in. It is obvious when you get under the hood, that athletes have been involved in scoping it because each feature fulfils a flaw in the way Twitter supports fan:athlete engagement. There is a Q&A section, athletes can rank top fans and the platform publishes to Twitter and Facebook so it doesn’t require a massive behavioural change for athletes and fans to get involved.

What I most like about JockTalk is that it is designed to deal with all sports. As a fan this is crucial because like many fans, I enjoy multiple sports. I don’t want to go to a different social media platform for each set of athletes (soccer, Rugby, Baseball, Cricket etc.) I want to be able to put all my sport in one place. As a Twitter user with two profiles – one work and one social I already have compartmentalised my business Tweeting from my sports Tweeting and so JockTalk allows me to enhance this even further. The site is in Beta but you can take a peek here: https://beta.jocktalk.com

The team is presenting at DEMO12 this week and I can’t wait to see the feedback. It is often said that the simplest things are the most effective and JockTalk’s simplicity and power are sure to be a hit.

Posted in Brands, Economy, General Comments, Mobile, new website, New websites, Social Networking, User Experience, Websites I admire | Tagged , , , , , | 1 Comment