Archive for January, 2013

Jessops and HMV tell us nothing about the state of the high street

Posted in business with tags , , on January 16, 2013 by Tom Leatherbarrow

HMV financial troublesThe collapses of Jessops and HMV have been followed by the usual outpourings about the decline of the High Street and the relentless onward march of online trading.

I think it is important though to take a step back and look at both in perspective.  This is going to sound harsh, but both of these businesses were incredibly outdated and both had conspicuously failed to embrace digital when they should have done.  Their demise has nothing to do with any recession.  The writing has been on the wall for quite some time.  Nobody can say this has been a surprise.

The danger is that these collapses, along with Comet, get lumped into “Death on the High Street” headlines when the truth is far more subtle.

For every disaster like the closing of a JJB there is a brilliant success story in the shape of JD Sports, who have just recorded another record Christmas trading period for its sports fascias, in which like for like sales for the seven week period ended 5 January were up 3.2 per cent.  Crucially, margin in the core UK and Ireland sports and fashion fascias has strengthened and is now close to last year’s levels cumulatively.

My own view is that the collapse of both Jessops and HMV is a continuation of the culling of the weak that started with the collapse of Lehman Brothers and triggered the financial crisis in October 2008.

The truth is that if you know your customer, buy well, maintain your margins (which means not going into sale in early December), embrace digital where possible (and not run scared from it), it is possible to not only compete but thrive.