Internet Killed the High Street Store
In 1979 The Buggles sang “Video Killed the Radio Star” and so it came to pass, although it turned out to be YouTube not MTV that actually made the fatal blow. Back to the present day it’s the high street that is taking a beating and again it seems the internet is packing all the punches.
In the last few years the UK has seen Woolworths, MFI, Comet, Jessops, HMV and now Blockbuster all going into administration. The obvious culprit would seem to be the internet but is that really the case? Let’s look at the evidence:
Once a UK institution, Woolworths was famous for selling pick ‘n’ mix, 7 inch singles and loads of other cheap but cheerful tat for your home.
VERDICT: Not guilty – Certainly its sales of music, DVD’s and games would have been hit hard by the rise of online traders (Amazon, Play etc) but supermarkets were probably the real culprit, as they started to sell just about everything Woolies stocked but cheaper and without the need to desperately search and then pay for a car park space.
Since 1963 the MFI brand had battled it out with DFS to become the top acronym in home furnishings, but in 2009 the retailer went into administration. Subsequently snapped up for a pittance by a private equity group, MFI was resurrected in 2011 as an online only furniture retailer.
VERDICT: Not guilty – Ikea and a glut of other retailers entering the home furnishing market (Next and M&S to name a few) were actually responsible. The internet has given MFI a second lease of life.
Dixons, Currys and Comet were just about the only places the British went shopping for electrical goods until around 1990. The rise of the internet certainly didn’t help Comet as more and more people researched purchases in their stores before returning home and scouring the internet for the cheapest online price.
VERDICT: Not guilty – A downturn in the economy and an increase in competition on the high street was the more likely culprit. Online competition could have played a part but Comet were selling online as well.
The rise of digital camera in the early 90’s boosted Jeesop’s fortunes for a while but it didn’t last. Jessops specialised in mid-range instant cameras but this sector of the market has been decimated as everyone started to us the cameras built into the smart phones. Jessops also suffered as people stopped buying film and associated equipment.
VERDICT: Guilty – Online retailers priced Jessops out of the market especially for high end SLR’s. Ultimately the camera on your smart phone (and people sharing their images online) coupled with a massive change in photographic technology was Jessops undoing.
With roots that trace back to the 1890’s HMV have been selling us records for longer than most people can remember. It was all going so well until a general downturn in record sales coupled with napster, bit-torrent, iTunes/iPod and supermarkets selling CD’s (I could go on, but you know the rest.)
Verdict: Guilty. Despite a general drop in record sales all over the world, HMV would still be okay today if it wasn’t for the pesky internet. The internet (and the MP3) facilitated a move away from selling music in a physical format, HMV could never recover.
Every Friday and Saturday night the ritual of renting a video was practiced en mass across the UK. It all seems so ridiculous today in the age of iTunes, Netflix and iPlayer.
VERDICT: Guilty. – Blockbuster did try and diversify into renting video games but even this sector is moving towards the download on demand model. Did Blockbuster ever stand a chance against the mighty internet? Their only chance was to adopt the Netflix model in the UK before Netflix launched in the UK, which they failed to do.
It’s clear that while the internet is playing a big part in changing our shopping habits, but it’s not the only factor in the high street stores demise. Recessions don’t help, nor does online competitors who avoid paying all their tax.
What is clear that many of the businesses mentioned above failed to adapt to changes in technology and consumer demand. Blockbuster in the US (still trading) has an on demand streaming service, so why was this not launched in the UK before Netflix ever reached our shores? Comet were sucked into an unwinnable price war with online competitors. They certainly didn’t sell on good service, remember how Comet staff would try and hard sell extended warranties? It made you scared to walk into the place.
Businesses need to have a strong online offering that compliments their physical stores and physical stores need to be more than showrooms for other online competitors. Richer Sounds and Maplin are two good examples of companies that employ knowledgeable and helpful shop floor staff who add real value to the shopping experience. In the age of the internet things change fast, consumer habits change almost overnight and for businesses this means learning to adapt before you get left behind.