7 reasons Comet failed

Comet’s failure paints a bleak picture for bricks and mortar retail. Today’s Observer summed up its woes concisely. Several themes emerge:

New competitors

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.

BBC

http://www.bbc.co.uk/news/business-20164564

Telegraph http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9648883/Comet-most-high-profile-retail-casualty-since-financial-crisis.html

Independent

http://www.independent.co.uk/news/business/news/another-day-another-death-on-the-high-street-as-investors-pull-the-plug-on-comet-8273828.html

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About Simon Shaw

I'm a Director at a communications agency. I'm interested in marketing, market research & consumer psychology. The views expressed are not necessarily those of my employer.
This entry was posted in Market research, Retail, Strategy and tagged , , , . Bookmark the permalink.

One Response to 7 reasons Comet failed

  1. dongrgic says:

    I think the seven points you raised are issues all retailers must keep an eye on.. or end up being irrelevant.

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