Shutters close on Jessops
Jon Weeks, Director in Ipsos Marketing looks at the demise of Jessops on the High Street, and what lessons can be learnt for FMCG categories in 2013 and beyond.
It didn’t take long, but the first victim of 2013 has already been announced. Jessops, the photographic store has gone into administration, with 2000 jobs at risk. Factors that have influenced this can be lessons across the High Street.
Convergence is part of life and will continue to increase at pace. Jessops has partly suffered from the emergence of the Smartphone, as they become ever more capable in terms of quality compared to standard & now even higher end cameras. The evolution of the mobile was swift: first the phone, then with cameras, then e-mail, videos, music, games etc. How many people this year received a digital camera for Christmas? We would expect relatively few, certainly compared to previous years.
Only specialist and niche audiences remained – those for who photography was a hobby – and likely they were as savvy as the average consumer, enough to window-shop at Jessops and buy online more cheaply – the same issue that saw off Comet in the latter part of 2012. Niche audiences are fine as long as your business is scaled accordingly, or you have more than just one audience. Certainly not sustainable across 192 stores. Just a quick look on the Jessops website showed that. A Canon EOS 650D was £562, but an online retailer offering the same package for £540 – a 4% saving without any real effort.
Convergence through tablets, as well as new devices such as the defining Kindle will likely cause problems for book retailers in 2013, as the higher costs of running a business on the High Street can’t compete with the lower costs for a web based business that has an out of town distribution centre.
So what can we learn from this to apply to other FMCG categories?
How big is big enough? Be clear on what you need to sell in order to remain sustainable – forecasting is critical to provide a clear metric on sales, combining consumer opinion, the markets structure, and the plan you want to launch with. It will help you gain ROI on marketing to ensure every penny is effective. It will also help manage scale – even when markets are not in a recession it is never good to either over (or under) produce stock.
Can you afford unnecessary extra storage costs for unsold product, that can be compounded by a shelf-life that looms and lead to wastage (or cut price activity that floods the market). Even worse can be demand outstripping supply, where a lost sale could mean a consumer lost for good to a competitor’s brand. Forecasting is your friend – and investing in this technique can help save short term and longer term problems.
How do you cut through? The white noise for consumers is ever increasing and unrelenting. Having a clear insight into your proposition as early as possible is needed on the primary measures of trial: Being relevant to address the consumers’ needs, being different from your competitors and being at a price point that is compelling for consumers and sustainable for the brand. If any of these underperform or erode as a new player enters the market, then your brand could be at risk. Pressing on with an innovation that will not bring you sufficient sales is time & money that could have been allocated elsewhere. Make sure you understand your innovations success factors, and launch into the market with your eyes open.
Make the consumers’ lives easier. Convergence has shown us that consumers like a painless existence. This is a lesson not just for the product itself (that it works as intended, with form & function optimally entwined) but also that the shopping experience is at least pain-free, and hopefully a great experience. John Lewis saw its sales jump 13% to the end of December, with MD Andy Street commenting: “…a testimony to the strength of the brand and the commitment of all our partners to give outstanding service”. It doesn’t end when the widget comes of the factory and into your store, as consumers anticipate great service and knowledgeable store teams to help them navigate their purchase decisions.
At the moment, predictions are suggesting more years of volatility in the economy and for consumers – ranging from an end being seen in 2016, to projections of another decade of strain. Much like in the natural world, only the strongest survive when change happens – evolve and adapt to your changing surroundings, or be left behind.
Jon Weeks Director in Ipsos Marketing. Follow me on Twitter: @weeks_jon