Comet’s failure paints a bleak picture for bricks and mortar retail. Today’s Observer summed up its woes concisely. Several themes emerge:
Comet was squeezed in a pincer movement by internet retailers and by supermarkets encroaching on their territory. The former enjoy much lower fixed costs; the latter have greater buying power and a loyal customer base who visit them frequently.
A competitive market
Selling electricals is tough as margins are thin. New products like flatscreen TVs command a premium when introduced: prices halve annually thereafter meaning retailers have to sell double the volume to keep up.
“Must have” products supplied direct
Recent innovations like 3G TV have failed to piqué consumer interest. The products people wanted (tablets and EReaders) were often bought direct: iPads from Apple and Kindles from Amazon.
Low consumer confidence
Not only is there less cash around but people are reticent about big-ticket purchases. Fewer people are moving house – thus are not reappraising their white goods.
Savvy consumer behaviour
Comet, like all bricks and mortar retailers is a victim of showrooming: people visiting a brick and mortar retail location to touch and feel a product and then going online to buy it at a lower price.
A dated retail estate
“…Comet’s stores are generally grim, underinvested outlets on first-generation out-of-town retail parks: the sort that have a burger van in the car park rather than a Starbucks.”
Not keeping up with direct competitors
I’d add a final point: Comet’s main competitor Dixons has spent millions on staff training. They realised the one thing bricks and mortar stores can do online retailers can’t is give face-to-face advice and guidance. The rollout of their KNOWHOW programme is testament to this. Dixons will be the main beneficiary of Comet’s demise.
Reviewing the roll-call of recent high street casualties the article sums up:
“If you are not best in class, you are a dead man walking.”
These themes are largely borne out from other sources.