It's been a sad, but inevitable, week for British retail
This week, two former staples of the UK High Street hit their bottom, calling in administrators: HMV; and Blockbuster.
Added to Comet’s demise at the end of last year, the British consumer has seen a lot of household names fail recently.
Both HMV and Blockbuster failed because of three simple reasons:
The companies, and their leadership, failed to recognise the importance of online and how it would affect their business. New technology was not adopted and business plans were not adapted to fight against a changing landscape and new competitive threats. This started happening 15 years ago.
The banks and financiers supporting these companies kept ploughing in new investment and debt support because of greed, potentially protecting an existing £500m position by risking £50m seemed sensible, for a long time. This has been happening for at least the last 10 years.
Finally, the brands’ consumers stopped doing the one thing they needed to do: consuming. Brand advocacy is all very well, and the public laments for the losses have been loud this week, but advocacy without purchase won’t save anyone. This became critical in the last five years.
Part of HMV Group until recently, I think the DEFCON status for the retailer is level one: ‘imminent meltdown’. To explain why I believe this, I’m simply going to share three experiences of the brand and its operation.