2019 Retailers in trouble thread

[jakesmith]

As the 2018 thread is not on the first page and the year is nearly over I thought I’d start this with some bad news from HMV

They are owned by Hilco who effectively restructured and saved them years ago. They have arguably kept it alive longer than many would have thought 6 years ago last time they were in receivership

I have heard unsubstantiated rumours that they have in some cases aggressively renegotiated or negated rents to extremely low levels in some malls due to the footfall the HMVs bring in and the impact on the malls if they decided to make that store one of their closures in past years

I believe they have traded pretty well over peak but you can only hold the tide back for so long

[jakesmith]

Argos have certainly made serious moves to keep up. 10 years ago you’d think amazon would have killed them but they have invested and grown

Computers in all their stores to check stock
Massive promotional activity
WOW deals that offer genuinely exclusive products at low prices in many categories
Move to digital advertising attempting to copy Amazon but at least picking up revenue there
Move to omnichannel using Sainsbury’s estate as pick up points with an upgraded logistics capability to support fast delivery to larger number of stores
Complete store rebrand

[jakesmith]

eccles said:

I really don't understand them, several times we've tried to use them and they never have stock, but you can't order it in store, and they don't know when they'll be getting new stock! Twice I've had the same guff from management types in store, and they really came across as if they didn't care.

I have worked for that business before and have friends who work there. It is not inside information to say they are in serious trouble. Not only did the acquisition of Carphone not deliver the goods after just a few years as consumers move to buying from networks directly and keeping handsets for 2 or more years, but their massive store estate requires a huge investment to keep adequately staffed and modernised.
I wonder if they paid their staff £2 an hour more to get better staff, at a cost of about £20m (300 stores, 15 staff per store, working 2000 hours a year each), they would recoup some of this in better customer experience and maybe ensure better longevity.
It is not easy or maybe even that possible, to manage a huge retail chain and make it profitable and have a good customer experience, as the margins are thin now the internet is really taking over

[jakesmith]

eccles said:

jakesmith said:

eccles said:

I really don't understand them, several times we've tried to use them and they never have stock, but you can't order it in store, and they don't know when they'll be getting new stock! Twice I've had the same guff from management types in store, and they really came across as if they didn't care.

I have worked for that business before and have friends who work there. It is not inside information to say they are in serious trouble. Not only did the acquisition of Carphone not deliver the goods after just a few years as consumers move to buying from networks directly and keeping handsets for 2 or more years, but their massive store estate requires a huge investment to keep adequately staffed and modernised.
I wonder if they paid their staff £2 an hour more to get better staff, at a cost of about £20m (300 stores, 15 staff per store, working 2000 hours a year each), they would recoup some of this in better customer experience and maybe ensure better longevity.
It is not easy or maybe even that possible, to manage a huge retail chain and make it profitable and have a good customer experience, as the margins are thin now the internet is really taking over

I'm not sure that paying the staff more will help when it seems to be their model that you can see something in the shop, but they have no stock, you can't order it there and then, and they don't know when they'll have stock in. This happened in shops on opposite sides of the country, so it's not as if it's a local issue.
Perhaps paying staff more would make them seem to care a bit more when they can't supply you something they have on show and advertise in the press!

Sorry I wasn't responding directly to your specific issue more the abysmal in store experience contributed to by demotivated staff who don't care about good customer service

[jakesmith]

alock said:

I've started using Argos more for things I don't trust Amazon with. Amazon haven't done enough to make me 100% confident that many electrical items are genuine and not some Chinese ripoff.

That's a very good point, they really do sell some crap on Amazon, dashcams that stop working after 3 weeks. I bought some for our fleet and they were rubbish. They had good reviews but the problem is Amazon reviews only highlight if a product was in line with the purchaser's expectations.
Argos by contrast pick a range of products
Amazon should have a 'validated' or 'authentic' certification scheme but it would be like trying to moderate Facebook

[jakesmith]

bloomen said:

Whoever's been running Argos deserves a pat on the balance sheet. Their alignment with Ebay was a wise move too.

I find the whole Currys process irritating as hell. I want to go into somewhere, find something, pay for it, leave. I don't want to have to find someone strolling around, ask permission to buy something and have them wander away and back to find out they ain't got it.

I've no idea who set that process up, but they're tts. It's the least appealing way to shop possible.

Edited by bloomen on Saturday 29th December 17:59

If you saw some of the brazen theft that takes place it would blow your mind. When I worked at their head office many moons ago we had access to the security alerts which showed stills of thefts.

There was a couple who took a washer dryer, plenty lifting up and taking large screen TVs, a delightful chap who would go into a store and threaten staff with a hypodermic needle and just walk out with what he could pick up

The stores sacked all their security staff as the cost was greater than the shrinkage but it does explain the lack of boxed product on shop floor

I was in The Hague a few weeks back and went to an electrical store, TVs and laptops piled as high as the ceiling

[jakesmith]

bloomen said:

jakesmith said:

If you saw some of the brazen theft that takes place it would blow your mind.

It doesn't have to be out on the shelves. There should be a dedicated sales section with all the stuff ready to go behind a counter where you go after looking at the display bit. Most of the time I don't need anything displayed to me.

Cut the goons strolling around by 50 or more per cent and set them to actual work.

Too many laptops & TVs and iPads near the door
Also you can't cut their staff any more! They are cut to the bone. Large stores might onliy have 2-3 people on the shop floor now. They are shortly moving to sharing a manager between 2-4 stores too that's not going to help!

[jakesmith]

ian in lancs said:

WHS gets my vote; awful place

No chance, they're doing great, they are anchored in every high street in the UK, carry a huge range of a limited number of categories, are excellent at cross-selling high margin products, the MD Carl Cowling is a very smart guy who had great success at Dixons back when they were good, and their travel estate is a cash machine in terms of footfall, sales, and ability to sell space to their vendors for huge prices

[jakesmith]

Brooking10 said:

At first yes but they ultimately moved to mp3 delivery.

That they were later to the party than others isn’t really the issue as 2005 was only two years behind iTunes (which was two years behind iPod) and several years ahead of relaunched Napster, Spotify, Tidal etc.

That they failed to leverage the HMV heritage and equally gradually sold out of the digital business and disassociated the brand with digital delivery over time is probably the biggest failing.

Strangely enough HMV Digital ended up becoming 7 Digital which is a well performing business today.

Even if they had sucessfully transitioned to digital, which was always going to be near on impossible as Apple are such a monopoly, it still would have resulted in all the stores going.
Hilco knew this day would come and have been keeping it going as long as possible and running it well, 6 years since it looked like it was all over
Also the movie distributors saw all the money go out of music due to how iTunes and Spotify fees are structured and vowed not to open up their catalogues in the same way and HMV (after Love Film) went, became the only place to acquire back catalogue films, this was a declining but sizable trading category for them for some time
They have a huge section selling headphones and record players and other high margin / growth categories
It probably would not have been possible to have made any strategic moves that would see the company continue as anything other than an online brand

[jakesmith]

hyphen said:

Really?

Wilko and Poundland tend to corner the market as the go-to destinations for stationary stuff on high street.

WH Smith can't sell many magazines or books nowadays surely? So how do they make the money on the high street locations

I disagree, WIlko and Poundland you are lucky if they have the specific stationary item you are after amongst the sea of towels, shaving foam, chocolate, reading glasses, vases, packs of fuses etc
WHS are a customer of ours (I work for a large multinantional) and their overall business is in good health, especially propped up by travel which is huge, growing, and allows them to sell space to vendors such as us at high costs

[jakesmith]

Rich_W said:

Hamleys posted a big loss in profits recently. Regent Street has to be a loss leader? But where else do they make money?

A crap business, has gone from being a standalone version of the Harrods toy hall to a tourist trap mini TOys R Us with extremely limited ranges. My parents went in to buy some dolls house furnature and all they had was Sylvanian Families. In this day & age they need to be a premium destination not a mass market retailer in what is possibly one of the most expensive retail rental location in the world

Rich_W said:

Jessops I think restructed. Certainly less stores now.

Didn't Peter Jones buy them? They are like HMV with the movie distributors, in that the camera industry will not want them to fail but sadly that industry has lost a lot of ground to smartphones now

Rich_W said:

Toolstation also seems 2nd rate to Screwfix (I know of several sites within walking distance of each other!)

Screwfix are especially agressive in this respect, they open up wherever there is a TS it seems. Toolstation hasn't got as many of the expensive brands but both are always busy when I go to either, I can't see TS going TBH

[jakesmith]

Brooking10 said:

That’s pretty much exactly what they had before Spotify has any kind of foothold and they turned their back on it !

An opportunity wasted if ever there was.

With hindsight one wonders if the labels disincentivised the whole thing at the time though in a vain opportunity to try and keep a foothold in physical.

ETA - this was 10 + years ago and as mentioned previously pre dates Hilco’s ownership.

Edited by Brooking10 on Sunday 30th December 20:26

My friend worked at Universal Music about 15 years ago in the early 2000's. Apart from fking her boss, she was clued up and told me about the transformation aka devastation the business went through as it went from physical to digital. There was pretty much over the course of a few years, a cliff edge drop in their operating margin as a few pounds per album became a fraction of a pence per track downloaded.

She said before, it was all music industry piss ups, people off their faces on drugs from the night before, lots of money swimming around. And afterwards it was a lean, numbers focused business with skeletal staff to find and sign talent and a few accountants. My friend said it was the same before & after Hilco at HMV. Head office cut from maybe 400 to 50 that sort of thing.

And don't get me wrong all these people living it up and doing easy jobs and having a load of fun, well that isn't great for shareholder value but all that money now is simply sitting in Apple's bank account doing nothing, I'm not sure that's better from a holistic point of view.

[jakesmith]

Justayellowbadge said:

Vaud said:

Apple have $285B in cash in reserves. Mostly due to the inability to repatriate cash to the US and it will be from devices as well as apps and music.

Oh, absolutely. They are a nation in terms of gdp.

Music, though, has become cheaper for everyone because of the renting rather than buying model that now exists.

The idea of purchasing an album because you want to hear 1 track on it must seem beyond bizarre to anyone under 30 or so.

That's what I meant & I was refering to the early days of iTunes, tracks were 79p each and Spotify didn't exist. People were still spending money on music, more than £10 a month or whatever it is now
Tell you what though has the quality of music suffered as a result of noone buying albums any more. Can artists be bothered to make a quality structured creative album any more if people are only going to buy one track

[jakesmith]

Justayellowbadge said:

Well, yes. They are wheeled into an upright position and go through the motions. But, Stones.

2013 Hyde Park was alright.

Got given absurdly good seats for Elton in 2020 for Christmas, something of a surprise. It ain’t going to be Philly in the 70’s but I’m definitely looking forward to it.

I thought they were good at Glasto, when was it? 2013? With the big eagle on the top of the Pyramid

[jakesmith]

Brooking10 said:

It’s been established via various posts.

By the time of the first admin six years ago it was too late and Hilco knew that too.

But.... Several years before that HMV dipped toes into both digital and live, they exited both to concentrate on retail. These were the opportunities for a material reinvention, but of course hindsight is 20/20 vision !

Hilco traded them profitably for 6 years however the took all the annual profit put and paid it as IP usage costs to the holding company as part of a tax strategy. As a result their vendors couldn’t get credit insurance so had to deal with brands that were willing to risk their stock holding. Ironically several smaller brands that didn’t have the marketing budget to grow in the big players like Argos, Amazon and Dixon’s, took this risk and grew their market share

Hilco were never going to invest in the business, just distance themselves from as much liability as possible, trade the profitable categories as hard as possible, and pull the plug the moment before they had their first loss year

Even the new e-commerce platform, was a joint venture using a white label platform paying a percentage of revenue, to enable them to have an online presence without investing

[jakesmith]

Lemming Train said:

I read somewhere that Maplin are coming back as an online electrical retailer but not seen anything since. Hopefully they'll give up on that idea as they won't last 2 mins trying to compete with Amazon, especially not if they still think they can flog 0.5m HDMI cables for £40.

Maplin need to close the curtains for good. They've had their day and - like HMV - missed the boat to change their business model a decade ago.

If Maplin come back- it will only be as someone bought the IP to their brand in the administration. Their offices are closed for good. And if the do come back online they’ll likely play in Amazon and eBay.

Just my thoughts but the electronics industry has a gap for a known brand playing in new product categories. Things like phone power packs, li-ion vehicle jump starters as 2 examples, do not have a known brand in the category, always makes me wonder about the integrity of the products when I buy. Maplin brand could come in here

[jakesmith]

Eric Mc said:

Who says they are the best minds?

Who says the purchasers have any intention of keeping the business running long term?

I worked directly with them
Not the best minds in business no way

[jakesmith]

JagLover said:

Just to pick up on this point but I find it hard to believe that what we have at present is the most effective way to monetarise all the "back catalogue" films.

They get a bit of revenue for some through TV rights, a bit for whatever is picked up by Amazon and Netflix, but this can only ever by a minority of films, Surely DVD sales cannot be that high for older films, particularly once you exclude the classic films and Disney/Pixar ones.

As well as the option of streaming I am increasingly coming across full movies on YouTube for older films, though the picture is often awful and seems based on VHS transfers.

If there were a platform where you could rent most of these movies for, say, £1 or buy for £2.50, that might be a new source of revenue rather than cannibalising existing sales.

Well it's finished now as physical formates are about to die but it worked for a bit
I too agree that if there was a PPV option for back catalogues it could work well as long as the prices were right.
Sometimes you get an urge to watch a classic like Rain Man or Top Gun or something and if it isn't on Netflix or Prime you're a bit stuck

[jakesmith]

Lemming Train said:

Same here, salmon. I do usually have a cursory look at Amazon & Ebay to check the price isn't wildly different but it's nearly always a waste of time as their pricing is either the same or very close. For example, my £895 Argos spend could have been reduced to £885 had I bought the exact same items from Amazon but if something goes wrong with the large item it will cost a small fortune to courier it back to Amazon as the return postage is nearly always at the buyer's expense. Buying from Argos, if it goes wrong then at the very worst all I have to do is box it up and chuck it in the back of the my car and wheel it in to them next time I do my grocery shop, however as it's a home delivery item I think you can even arrange for them to collect it from your house at no cost as well. That convenience and hassle-saving arsing about is worth a tenner imo!

Amazon are usually very good for returns - if you use their label sometimes I am refunded within minutes of it being scanned at the PO. However as you highlight for anything large Argos / Sainsburys has an edge and even more so over John Lewis or Currys as you can pretty much guarantee they won't even bother looking at whatever you're returning. However I have found Argos to be quite a bit pricier on some things like children's car seats. More than a tenner added, more like 25% dearer

[jakesmith]

Vaud said:

Though they have the advantage that they have to respond to shareholder pressures or activist investors.

I get the ethos behind the rebrand, in the day of Amazon and Argos they are establishing themselves as having integrity or substance

I wonder how much it all cost though it’s an odd time to make an investment like that, I wouldn’t relish being their Marketing Director and trying to come up with innovative strategies for such a large and old business in modern times