Jessops will not be the last to fall

This week Jessops, a specialist retail business, fell into administration in the face of a nagging economic crisis that had already sent once profitable businesses like Barratts, Game, Peacocks and a host of others, to the cleaners. With the dismal figures the British Retail Consortium is showing, most street shops empty, Jessops will likely not be the last.

Jessops’ mistake, according to experts, was putting much of its investments in digital camera, confident that the booming demand for it will last, at a time when smartphones and internet retail is blossoming. Jessop tried to adjust but the timing was off. It tried to diversify when the bubble was about to burst and when it did, got saddled with a lot of inventories and unmanageable debt.

Experts are not optimistic about the prospects of typical high-street businesses in 2013. Neil Saunders, retail analyst from Conlumino, thinks many will have a hard time dealing with greatly reduced number of visitors who do not have a lot of money to spend in the first place. He also thinks that a number of specialist video and music stores go into administration sooner or later like Jessop did.

HMV, labouring under a month loss of 37million pounds in December, announced a sales promotion binge to last a month that will reduce prices by 25%. Stores similar to HMV have a lot to win back a lot of customers lost with the music and videos now downloadable from the internet.

Analyst Nick Bubb agreed to the observation that while the bigger shopping-cum-entertainment hubs like Buewater, Westfield, and Lakeside are likely to do well since that’s where retailers and consumers like to be, the humbler high streets would have a lot to of problems put up with.

Bubb added that some of the players are reducing store numbers, which is not good news for more modest high streets and less affluent locations. That means specialists stores in these locations have a lot of work do.