Posts tagged ‘retail’

Entertainment Retail is Dying

Things seem to just be getting worse for retailers as difficulties mount.  In turn after unfortunate turn, the stories seem to end up with retailers shutting down.  And this is especially true with retailers that sell DVDs, Blu-ray discs or CDs.  Unfortunately, the broader entertainment industry is not doing much to help out.  In fact, the finger of blame for much of the closing of these very important channels for entertainment companies can be pointed directly at…the content owners themselves.

Entertainment Retail is nearly dead and is gasping for air

In today’s news, Nipper, the loyal old dog that used to listen to His Late Master’s Voice, seems to have turned on all of his owners and has lived up to his name by biting one of the last surviving entertainment retailers in the UK.  You see, HMV – the retailer with the logo of the cute little terrier listening to the gramophone, is pretty much a goner.  The share price hit its lowest level ever during trading today and closed at 10.25 penceRecently, in a not-so-amusing gaff, an important Englishman named George Osborne (he’s the Chancellor of the Exchequer) basically stated that HMV is just about dead.

After three profits warnings in the past four months and continually trying to sell different chunks of the business, the future does not look so good.   They continue to fight for their life, but let’s just say that HMV is not a particularly appealing stock.

On our side of the pond, Best Buy in a recent press release talked about some not-so-good Q4 results. No, Best Buy is not going out of business, but their entertainment category might.  In Q4, entertainment declined by low double digits.  And their recent erratic behavior (buying the CinemaNow name to try to win its own Best Buy digital customers while recently doing a deal with Roku that hands customers directly to Roku and its content partners), indicates that they have no idea what to do.

Now try this:  Think back to ten years ago.  What retail stores did you go to in oder to buy your music?  Name three stores.  OK now think of today.  What retail stores do you go to in order to buy music from your heyday?   Not so easy to think of, right?

You get the evidence

So what is going on here?  Sure, there’s the lame excuse about the economy, the proliferation of entertainment options, the shift to other ways of consuming.  But, there is something else going on.  I believe the content owners have been playing games that have led to the destruction of entertainment retail.  As if on cue, Kevin Tsujihara of Warner Brothers Home Entertainment today announced a “Mega-App” that basically cuts retailers right out of the picture so Warner can go direct to customers.

How’s that for kicking a dog while it’s down!

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It sucks to be a retailer, cont.

As a follow-up to my papercuts comments from the other day about how much it sucks to be a retailer, Ultimate Electronics has gone the way of Circuit City and has declared bankruptcy with several hundred million dollars of debt.

Rough times to be a retailer, I’d say.  The consolidation of the small guys into the big guys is almost complete.  What happens next will be even more interesting – can big box showrooms compete with the online juggernauts?  Stay tuned…

What other retailers out there are on the brink?

Papercuts and shopping

I was just thinking how much it would suck to be a big box specialty retailer these days, and the phrase “death by papercuts” came to mind.  I came across an article today which talked about Amazon’s Marketplace offering which enables specialist retailers to be exposed on Amazon’s store to schlep their goods and services.  Specialist retailers pay a tiny subscription fee plus a referral for each sale to be featured on Amazon’s site.

Sure, this is old news, but it’s worth blabbering about as a warning to big box specialty retailers (think CE retailers like Best Buy, toy stores like Toys R Us, kitchen and bath stores like Bed Bath and Beyond) as well as those folks who have money tied up in retail stocks.   I am increasingly beginning to believe that big box specialty retailers will go the way of the Service Merchandise.  Think about it:  as a consumer, you can do pretty much everything online and buy everything cheaper.  I argue that the ONLY differentiation for retailers is one thing.

Touch and feel.

The human element and service is what retailers will blow hard about.  Really?  I do all my research online.  And when I do get help in stores, it’s generally to go to a different store.

If you don’t agree with me, go your local Best Buy to purchase a fire wire adapter for your Mac.  Stand in the aisle looking dumbfounded at the price, and ask a salesdude why it costs so much.  He’ll tell you to either buy it and return it when you’re done with it, or he’ll give you the web address of his favorite gear store.  It’s baffling.  Doesn’t he get where his bread is buttered?  (As a consumer however, my dear salesdudes/dudettes, please continue doing this because it really helps me out.)

So what does that mean for retailers?

Well, sorry to say, those specialty retailers  will become showrooms for you to touch, feel, taste, smell and see to your heart’s content.  Then, with a simple wave of their smartphone and a click of the bar code with your camera, you price shops on the spot.  You know instantly how much more the retailer is charging to pay for those lights, the nice fixtures and the salesdudes who actually turn business over to competitors.  (Note to the savvy reader: Search on “price scanner” in your phone’s app store and you’ll be amazed.  Amazon just released their own.)

It sucks to be a big retailer.  With one or two clicks, a specialty retailer can be on Amazon’s Marketplace and instantly gain exposure to Amazon’s huge customer base.  While it is hard to get noticed, customers are increasingly turning to online to get their stuff and NOT buying from specialty retailers.  It’s death by papercuts for retailers.

Farmland

As a fun, oversimplified and reckless exercise:  Best Buy has close to 2,000 stores in the US; Bed Bath and Beyond has close to 900; Toys R Us has 840.  Figure an average of 25K fee per store (that’s low by the way), and another 50K square feet of parking space and you get 280.5 MILLION square feet of space.  That’s nearly 6,500 acres of showrooms and parking lots between 3 specialty retailers.  I say we convert those stores to farmland so we can feed hungry folks in Bangladesh…

Other than becoming farmers, what DO YOU think can retailers do?

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