Jessops – some lessons for SMEs

To a keen photographer it was temptation incarnate, an ocean of exciting products printed on both sides of a very large sheet of paper in very small print.
Reissued with updated listings regularly, the Jessops product list was a must-have for anyone who loved their photography in the 1970s and ‘80s. And visits to their stores was akin to stepping into Ali Baba’s cave — lined with objects of tech lust and often some far-off wish for a pools win to make their purchase possible.
Ever since Jessops opened in Edinburgh I have been a regular customer with them and, given its place in my photographic life, I was deeply saddened to read of its fall into administration yesterday.
So what when wrong? Looking over the coverage, here are the main factors and lessons for SMEs:

• Its core market had been eroded from both ends of the price range – high megapixel smartphones being chosen instead of lower-end digital cameras while top-spec cameras were being bought online from specialists with better ranges based on reviews.
  Lessons:  1) If a new trend or technology is threatening your market, you need to be in it, not fight it like King Canute or you’ll only be washed away by Schumpterian forces of “creative destruction”. Jessops should have offered at least a range of the best cameraphones, but didn’t; 2) You need to find a way to price-match or get close to the price leaders on at least the key products, like John Lewis does. Linking with other independents (through groups like Euronics & Nisa) to gain buying muscle to match the big boys’ prices is one way for smaller retailers.

• Its core marketplace was down overall – you can’t do much about the overall market but you could fight better for a share of what’s still there (see below).

• It hadn’t made the “profits it planned” – it maybe needed to look harder at costs, store locations and alternative ways to do its back-end services (e.g. sharing distribution services with other High St chains). But were its targets too high? Given the debt for equity swap with HSBC in 2009, were they pushing for an unrealistic turnaround timetable? We don’t know, but word on that may emerge.

• Timing of rent payments – this hits all High St retailers equally unless they own their premises. Cashflow is always hard at this time of year for retailers and combined with the importance of Christmas for so many and fiercer price competition, it will have been one of the tipping point factors that forced it into administration.

• It lost the confidence of its suppliers – this is a clear strategy fail. You have to retain credibility and the relationship. This will have been one of the reasons why Canon didn’t go forward with a rumoured cash injection (to help maintain their own High St sales). If Jessops marketing had been better, this, and sales, might have been better.

• It was a victim of 'showrooming' — In economics a distinction is made between ‘experience goods’ (things you have to try to know their quality) and ‘search goods’ (things which are identical commodities for which you’ll typically simply seek the lowest price as you know the product will be the same e.g. branded goods).
  In the early days of e-tailing it was thought that experience goods couldn’t be sold online, but once ‘showrooming’ (where customers sample a product in-store and then buy it online) emerged, it meant experience goods were being tried on the High St but bought online like search goods. So unless a shop can afford to price-match, or at least get close in price, like John Lewis, they will often lose the sale.
  A survey showed 24% of all UK shoppers ‘showroomed’ in the lead-up to last Christmas (39% for 18-39s, 18% for over-40s). You might worry that if that carries on the only winners will be the big chains with ‘clicks & mortar’ offers including collect-in-store, online-only retailers and the postal and courier services, but don’t panic yet as showroomers only represent 10% of overall shoppers and only 40% of showroomers bought items from a competitor after trying in-store.
  The lesson could be, if appropriate in your market, to focus more marketing spend on older non-showroomers via appropriate channels and, if possible, use in-store wi-fi to track what showroomers are searching for and offer them a time-limited ‘have it now’ discount voucher on the in-store price if they check-in to secure the sale. There are lots of occasions when you need something TODAY, so ensure you maximise the stock of key items that are urgent purchases.
  Also, once the last date for online delivery for dates such as Christmas is past, you can target your marketing messages on the ability to get it NOW in-store in time for the big day.

So how else can local and independent High St retailers fight back?

• Make good use of PR and social media – they work just as well for you as the big boys. Yes, they have dedicated teams of experts, but with the key knowledge, the help of people like me, some creativity and some dedicated time you can make it work for you too. It’s all about content and that’s a level playing field where your David can beat the chain Goliath, especially if you can offer the product today.
• Reassess your basic business model, including location to ensure you’re doing everything you can to make the most of your offer & USPs.
• Make sure you’re communicating your USPs regularly — I was amazed to find a local computer supplies shop in Forfar is cheaper for my printer ink than anywhere in Dundee, but I haven’t seen them advertising it anywhere. Shout about your strengths!
• Look into linking up with other local independents to help each other – like the retailers in chain-averse Totnes. Their solidarity is said to be one of the factors behind their success.

There are, sadly, no panaceas for all High St retailers, but if you undertsand your business well you can maximise your chance of not being the latest victim of its tranforming character.

Given my long and happy relationship with it, I hope PWC can find some way of saving Jessops.