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. 

MIT may be inventing future technology, but it’s up to us to decide how we use it

Once again I’m indebted to the print edition of Wired UK for news of a couple of things which will be a real boon to people in the world of marketing.
The November issue (sorry, no link as its content isn’t online to avoid cannibalizing sales of the print edition) is entirely devoted to the work of the MIT Media Lab, which the cover headline rather grandly describes as “inventing the future”. Hyperbole aside, it’s come up with some cool stuff over the years — from e-ink (think Kindle) and Lego Mindstorms to the XO Laptop.
Among the latest things its team of world-leading researchers have developed are two pieces of technology of particular interest to marketers.
The first, Video Response codes, are basically like the QR codes we’ve seen in print for a number of years, but are instead embedded invisibly in video displayed on screens.
The idea is that you use your smartphone to take a photo of the screen and the software grabs the VR code, decodes it and links you to text, images, coupons, whatever, to be downloaded to your phone. Presumably, as the codes are imperceptible to anyone watching the screen, the video will have to have some kind of ‘snap this for cool stuff’ message included so you know there’s a VR code there to be captured.
Straight off the top of my head I can imagine this being used to create interactive cinema and TV adverts (QR codes have already been tried on TV, but there’s been a mixed reaction to them from consumers for various reasons). Or embedded in YouTube videos to link to other Web-based content.
As with so many technologies, their use is limited only by your imagination.
The second technology is Affdex. Originally developed in the Media Lab, it’s been spun off into its own company, Affectiva.
Put simply, the software tells you what the emotional state is of the person your camera is looking at by measuring key parameters on their face.
The original algorithm was built on autism research to help sufferers read the emotions of other people, It was first used to create “Mindreader” spectacles which told the wearer, via a tiny LCD screen, whether the person in front of them was happy, sad or whatever.
Rosalind Picard and her team took it further by training it recognize the emotions of more people from around the world by showing it videos. The goal — so a computer could recognize their emotional states.
It’s now so successful that marketing research giant Millward Brown has partnered with Affectiva to use it to get accurate real-time feedback from consumers and research subjects on TV adverts. The result is more accurate data where subjects may feel socially constrained from saying how they feel — not everyone’s comfortable telling someone their ad sucks.
But, as with almost any technology, the other possible uses are huge. Imagine having it for when you Skype a key journalist about whether they’re going to use a story you’ve pitched (think lie detector!) or are following up a business pitch with a potential customer (are they really as interested as they say?)
Unsurprisingly, pollsters are already excited about Affdex’s potential for more accurately judging voters’ reactions to candidates’ TV ads and debates. And the US National Security Agency has already expressed interest in using it for obvious reasons, although Affectiva aren’t keen to licence it for military use.
As much as we may legitimately want to know what others really feel in certain work circumstances, we also sometimes want to keep our own emotions private.
The article quotes other possible uses including allowing Facebook or YouTube to read your emotion (via your laptop webcam) as you watch a video (e.g. of a friend’s baby) and post your reaction online automatically. But what if you’re secretly jealous of your friend’s joyful event but don’t want to upset her? What if you don’t really think your friend’s new outfit is lovely?
Do you really want Facebook and YouTube, or your government if you live in a repressive country, to know how you truly feel about certain articles or videos online?
Clearly this technology has great potential for ethical uses, but given its claimed ability to get behind social barriers in the communication of feelings it has to be used within a strict set of opt-in guidelines and licenced carefully.
MIT may be inventing technologies of the future, but it’s up to us to decide how they’re used.

We can all learn from how guerilla marketing was used to disarm real guerillas

This month’s print edition of Wired UK has a great piece in the Ideas Bank section about how marketer Jose Miguel Sokoloff and his team at Lowe-SSP3 in Colombia helped the struggle against the FARC guerilla movement there by using clever marketing techniques.
Careful research involving demobbed guerillas revealed that while hiding in the jungles many felt as much a prisoner of the revolutionary movement as their hostages. Most followed football passionately, so TV and radio advertising during games was used to target them with messages from former guerillas about how they too had become disenchanted with the movement and how comrades had suffered badly in their personal lives while fighting for FARC. Most were told personally but had limited success.
Then, as Christmas neared, they found inspiration from the story of a foot soldier who missed his mother so much at Christmas that he deserted to be with her. So they installed Christmas trees near where they knew FARC moved soldiers and supplies and got locals to make gifts and messages for the homesick soldiers, which they floated down the river to where they knew they were.
The result was a bigger wave of desertions.
Listening, understanding and connecting with their covert emotions engaged with them powerfully.
We all need to do that with our target customers.

‘Sticking to the knitting’ and other things the local banks can teach the big boys…and other organisations

The second part of Michael Robinson’s BBC Radio 4 documentary series Fixing Broken Banking features the Cumberland Building Society and the German local bank Handelsbanken, which has branches in the UK.
Robinson’s persuasive thesis is that these comparatively small, locally-based banks have thrived while the big boys have floundered because they’ve stuck to the old-fashioned model of local, relationship-based banking. And when you listen to the programme you can hear why.
Here are some of the reasons why:

• They embrace proper relationship marketing by only accepting savings from and offering products to local people, only selling their products directly, not being driven by selling the most profitable products, quarterly targets or bonuses and by being “embedded with community”, in the words of the Cumberland’s chief executive. They demonstrated that after the floods in Cockermouth, when they were the only financial institution to contribute to the post-event flood defence fund.
  Their reward has been bad debt and repossession stats far lower than their rivals, partly because they know their customers better than simply from the data analysis tools used by the big banks.
• A key part of that is delegating decision-making to the level with the greatest knowledge of the customer, so managers aren’t just implementing top-down policies or sending data to head office decision-makers. This makes sense as the person meeting the customer will usually have far more relevant information than HQ e.g. local reputation of a business, NVCs from a customer talking about their financial situation.
• They “stick to the knitting” (in the phrase coined by Peters & Waterman in their classic In Search Of Excellence) by keeping their core business in the local banking they know (no leap off into backfiring risky sub-prime mortgages in search of continued high growth), being 98% funded from local savings (in the case of the Cumberland), staying at the scale they understand.
• They take managing their reputation seriously — by sticking to a low-risk strategy and walking their talk every day with their policies…which leads to stability and sustainable organic growth, which are, in mutually reinforcing.

Relationship marketing isn’t new or sexy, but its truths and benefits have never been more valuable in the uncertain times we all face.

How to spot new trends

Once again I have Wired UK to thank for some great new ideas.
The June issue’s “How to spot the future” feature has sage advice from a host of tech success stories about spotting trends.

My favourites are: 

• Look for cross-pollinators: ideas which have been taken from one area and used in another. And people who integrate ideas from different fields.
• Demand deep design: where it’s a core part of the simplicity of something, the way Apple and Facebook, for example, do it.
• Favour the liberators: those who liberate something for consumers and users (like iTunes pricing policy did) and those who allow liberate underutilized resources by giving easier access to them, making them more liquid in the financial sense.

Go read the rest of the article for the rest and some inspiring examples.