HMV and Blockbuster – the blame is in the boardroom

Few people are surprised at the demise of Blockbuster and HMV this week. It comes as no surprise as both retailers have failed to move with the digital age and embrace new models of media consumption.   Whilst the headlines have rightly focussed on the number of retail staff who are unfortunately set to lose their jobs, it is in the boardrooms where blame should be laid for failing to move with the digital age.

It pays to monitor market forces

It is now the norm for many people to search a digital library and play on demand. Why make a trip to the store when you have access to many more titles from your home?  Any business who fails to recognise market changes is likely to end up the same way as HMV and Blockbuster. If your consumer is behaving differently than they were a year or two ago, or if a new player has entered the market then it is indeed time to take a long hard look at your strategy and consider your options. The move to digital has been taking place over a number of years, so the Directors of HMV and Blockbuster cannot claim that market forces took them by surprise. Indeed online searches for either brand have decreased steadily over recent years.

Why do organisations fail to get on board with digital?

There can be many reasons, but in my experience the two main factors are failure to invest and unwillingness to take a risk. In some organisations the traditionalists believe so strongly in the bricks and mortar model, or the ‘this is the way we have always done it’ approach to believe in the case put forward by their marketing or product teams for investment in new technology. Company Directors need to remember that their behaviour as a consumer does not necessarily match that of their business’ customers.

In an earlier ‘dot com boom’ I was fortunate to be working within an organisation which believed in it’s marketing teams, and listened to our bid for investment in online retailing systems. The marketing teams of the National Express Group train companies joined forces to make the case for investment, and we were successful in launching our own rival to the new kid on the block The Trainline. And Qjump Ltd was born! Many other train companies were wary of adopting online retailing full stop, let alone contributing to the significant investment required to develop and maintain an online retailing operation.  Business decisions later down the line meant that Qjump Ltd was sold off to The Trainline, but that does not belittle the bold decision and financial investment that NEG made. As well as ticking over financially it was a statement to the City of the type of organisation NEG was.

I’ve also been unfortunate enough to work at organisations where investment in ‘new ways of doing things’ is regarded as a nice to have, rather than essential.  Sometimes new systems are slow to grow or are beset by technical problems, but without taking those risks and riding the tough times the organisation is permanently in a ‘do nothing’ state. OK, so you might have to take your Marketing Director’s word for it that this investment is necessary. There may not be a business case based on fact. Innovation rarely has a benchmark (otherwise it wouldn’t be so innovative!) so forecasts are always going to be ‘best estimate’.  But if you don’t listen to your Marketing/Product team who are keeping abreast of market forces you risk staying in the dark ages as far as digital is concerned.

This, I suspect is the reason why Blockbuster and HMV have failed to move with the times and stuck with their outdated retail models or invested too little too late. Indeed, speaking to Marketing Week, marketing and e-commerce director Mark Hodgkinson says HMV has a “fantastic brand and heritage” but that financial problems have held it back.

Many models for ‘clicks and mortar’

Bear in mind that the bricks and mortar retailers don’t have to replicate their business entirely online – a clicks and mortar approach means complimentary arms to the business online and on the high street. Ultimately each retailer has to find the model that works for them and their customers.

With Jessops and Comet also disappearing from our high street, we really need our bricks and mortar retailers to embrace changing consumer habits and embrace online retailing or the UK high street is set to become emptier still.

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