What can we learn from recent news about the demise of both Jessops and HMV?
Both are recognised High Street retail brands and both pretty specialist operations.
The former was known for its photography expertise, the latter for music CDs and DVDs.
Both to some extent were hamstrung by the changing world in which we live. High Street premises and staffing the stores must have represented huge costs to their respective businesses.
The question that they appear to have failed to answer was how do they compete in a world where the products they sell can be ordered online, delivered to the buyer at home the next day and usually all at a lower price than available in store?
Jessops always struck me as an interesting case because there are similarities with our own business in that they were a great source of advice. I have seen the very thing that I now describe.
Customer walks into Jessops and engages with a helpful young man or woman (in my experience they were usually quite young) they pose a technical question about a particular camera or supporting item.
Keen young shop assistant provides an easy to understand answer and usually offers an alternative solution or opinion.
Shopper says ‘thank you’ and leaves the shop to order the particular piece of equipment online from a competitor who can offer a lower price because of lower overheads (no High Street costs or pesky UK corporation tax to pay!)
So Jessops fell into a trap that is wide open to many of us. They decided that they could provide advice without charging for it!
They provided this advice in the expectation that the consumer would buy the product from them. Possibly they did not realise that the advice was worth paying for and the product was simply a commodity.
In the case of HMV, younger family members look at me as if I am a dinosaur when I talk about buying CDs because their fix of music and indeed films and games these days is pretty much about a digital delivery.
They don’t buy CDs and even if they do they know the shop they want to go to is called Amazon.
It is a shame really because we all bemoan the death of the High Street and yet most of us contribute to its demise through the purchase of online goods and services.
In the retail financial services world there is a “turf war” going on.
Those of us who recognise that advice is the valuable bit and that product more and more is the commodity vs those who think product should dominate what the adviser really is about.
A good point of recognition of the players in this turf war are that the former charge for their advice, usually through a fixed monetary amount, and the latter charge by a percentage of the investment made into the product.
In the past intermediaries have tended to charge more for the commodity, the product, and less (or in some cases even nothing) for the advice part.
This is just really odd, we should always charge for the valuable bit not the less valuable bit.
There is a real risk that the financial intermediary might go the way of Jessops or HMV.
If they give advice away and expect to make profit from the sell of a financial product they may just find that they lose the turf war and just to mix my metaphors a little someone else may eat their lunch.
Photo credit: Flickr/vasta
