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RESCUE ADMINISTRATIONS


arrangements need to be more flexible. Retailers are struggling and long leases can be a death knell. We need shorter leases and affordable rents, perhaps based on turnover.” This step may be too radical for many


landlords but the retail landscape, while always a dynamic environment, is also undergoing radical change. Nick Symons, partner, MXX Retail, says: “The days of 500 and 600 stores are gone. Massive expansions are no longer sustainable. The debt carried by loss-making stores is too much. Online sales are increasing and those retailers that haven’t fully


adapted to this are suffering. Look no further than Jessops, Blockbuster, Comet and HMV.” However, Jessops was snapped up by


entrepreneur and Dragons’ Den star Peter Jones, Blockbuster was bought by restructuring outfit Gordon Brothers Europe, and Hilco, another restructuring expert, bought HMV’s £176m debt for £40m. Hilco has a track record in making


millions by sucking up the assets of ailing brands and in the past it has moved in on Woolworths (see panel), Borders and Habitat when they fell into trouble.


JESSOPS AND THE RISE OF ‘SHOWROOMING’


The demise of Jessops, the camera chain, mirrors just how the retail landscape is changing. In 2009, Jessops managed to avoid administration by agreeing a debt for equity swap with its lender HSBC. However, increased competition from online sales and supermarkets led to a decline in its core marketplace in 2012, which showed no sign of abating during the Christmas sales. In January the administrators were called into its 192 stores. The company, founded in


Leicester in 1935, also fell victim to bad management, according to former employees who questioned the wisdom of


spending large amounts of money on store expansions and refurbishments when the chain was not doing well. Jessops has beefed up its web


presence and the new 40-store company is expected to act as a showroom for its online sales. The new outlets opened to date, including the Oxford Street store in London, below, feature interactive displays and a wider range of accessories. The company is also putting


greater onus on experienced staff. It recognised that people will visit for advice and, if they do not make a purchase in store, will be encouraged to buy at Jessops’ online store.


This tactic is an attempt


to address “showrooming”. Research by design agency Foolproof found that 24% of people showroom while Christmas shopping. That is, they go into stores to research products and then make their purchases online at a cheaper price. This is one of the factors that contributed to the downfall of Jessops. The Foolproof survey revealed


that after showrooming 40% of people took their business elsewhere. When Jessops went into administration, staff at one store hung a sign in the window saying: “Thank you for shopping with Amazon.”


These retailers are not re-emerging as


they were before. Jessops has gone from 192 to 40 stores; Gordon Brothers Europe took 264 of Blockbuster’s 528 stores; and Hilco plans to reopen about 140 of the original 239 stores. And their business models are changing. Patrick Keenan, director at Lunson


Mitchenall, says: “The secret to success is about establishing the right business model to stay competitive in today’s market. For example, HMV very much has a place in the UK, with a significant level of consumer demand, strong heritage and a loyal client base.


12


Summer 2013 www.estatesgazette.com


REX FEATURES


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