Are bricks and mortar store relevant in the digital age?

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Unread post Tue Feb 05, 2019 9:04 pm

Shops like Poundland and supermarkets will always (mostly) have a place in the digital age, but even supermarkets are contracting, just take a look at Marks and Spencer, Tesco, Asda, Morrisons, Sainsburys et al. They've all suffered in the past 10 years, more so for M&S and Sainsburys'. But can they survive in the digital age?

All the supermarkets now offer online shopping and delivery, I haven't been out shopping in months, I order online and get it delivered at a time that suits me. Sure they mostly offer 24/7 shopping in store, and for those midnight releases (Call of Duty I'm looking at YOU), they're essential. So for some, instore is how it's done, for those who prefer online, that too works, and they're all trying to carve a niche for themselves.

This is all fine for groceries, and while not glamourous like hi-tech toys, it's still a thriving industry.

What isn't thriving however are the bricks and mortar electronics and video games. Take HMV and GAME for instance, both have recently undergone big hits and are fighting desperately to survive. We're just not buying in store anymore, not like we used too. And that's the nature of the business of hi-tech, the adopters of technology find easier and better ways to get what we want, which usually involves the internet. And that's what confounds me, how can the board of directors at these companies not see the writing on the walls? It's the industry they're in, and if they didn't write it someone close to them did. Maybe they did and just ignored it, or they are just trying to survive as long as they can before the inevitable death knell in this modern age of right now.
Just ask Comet.
https://en.wikipedia.org/wiki/Comet_Group

https://www.bbc.co.uk/news/business-47132310
And it won't be long before more close, but even online HMV and GAME are struggling, fighting against the giants like Sony and Microsoft who offer all their games online. One convenient button press away, albeit a slightly more expensive button press. Then there's Steam, who had cornered the PC market entirely, only EA and their Origin client had the clout to resist Steam. Now there's Epic, Origin, Battle.net and even Discord biting a big wedge out of Gabe Newell's ass, and doing a good job of it too, it's just a shame we need so many clients to play games.

Amazon has grown beyond belief and is now one of the biggest employers in the UK, even if it is temporary contracts, and they did this by doing one thing really really well... online only. Once amazon only sold books, but then they pivoted to doing more, much more. You can now buy practically anything on Amazon today, get it delivered tomorrow, and if need be, return it the next day. While all this sounds like normal practice, some time ago it was unheard of and just a thing of dreams.
But Amazon do something else too, they STORE stuff in warehouses. I don't know the ins and outs of being an Amazon trader, but I imagine they are also charged for storing stuff. And to be fair, this probably helps keep prices keen too, after all, the longer its sat on a shelf the more I'll cost you to keep it there, so sell cheap and fast.
So amazon will take a bite out of the transaction, take a fee for storage, possibly take a fee for delivery, and sell their own stuff too, like books and digital music and Prime!.

So that brings me to my final industry, Music.
Sean Parker was a visionary who created a monster, but that vision and that monster changed a whole industry and by sheer force of will. Up to that point we all went to the local record shop to buy our music, usually on CD and occasionally on vinyl. MP3's were a thing, and I once spent a 2 week holiday ripping every CD I owned to MP3. All napster did was make my MP3's available to everyone and everyone else's MP3's available to me and others. Now illegal as that may be, it was fast, easy and fairly risk free. There were some upstarts that came shortly after napster that tried to sell music online legally, but they soon died as they really struggled to get any good signings, it was usually older back catalogue music they had.
Then along came the iPod and the iTunes music store, and the industry would never be the same again. No longer do you have to trudge around town looking for that one single or album, it was just there at your finger tips and at the same price as in store too.

And that brings me to one final conclusion. Sony and Microsoft have digital games available at inflated prices, and this is done for one reason only... to keep the retailers happy. After all, it's these retailers that stock the hardware and software to make a complete system.
All Sony and Microsoft have to do is drop the prices to reflect retail stores... and the stores would be gone overnight.

I mean, how big a deal is it to buy a PS4/Xbox from Amazon and then buy the games for that system directly from Sony or Microsoft online? It's the final piece of the puzzle and hundreds of lost jobs.

So are bricks and mortar stores still relevant? Yes, but only while the equilibrium exists. Once Sony or Microsoft no longer see it that way... bye bye dodo.
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Unread post Thu Feb 07, 2019 9:35 am

They'll be gone in the next 10 years.
Even big places like you mentioned are starting to run at a "break even" this year - i think asda and lidl/aldis are the only ones really doing well.
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Unread post Sat Feb 09, 2019 10:12 am

Great write up!

Here in the States, GameStop purchased ThinkGeek and FunkoPop, and now their stores are practically half video games, half pop culture. Clothes racks, mugs, posters, and “nerdy” gifts line half their space.

Not to mention the entire wall of hundreds of FunkoPop figures.
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Unread post Sat Feb 09, 2019 11:35 am

Stormbeard wrote:
Sat Feb 09, 2019 10:12 am
Great write up!

Here in the States, GameStop purchased ThinkGeek and FunkoPop, and now their stores are practically half video games, half pop culture. Clothes racks, mugs, posters, and “nerdy” gifts line half their space.

Not to mention the entire wall of hundreds of FunkoPop figures.

Funkopop figures are cool, but keeping the price low so kids can spend their pocket money could be a damn good way to keep sales high, plus, who doesn't like collectibles?
I think part of the problem with retail is the difficulty in pivoting, Game.co.uk are very much video game orientated - obviously :) but they also do a large selection of video game memorabilia, and are dedicated to this genre. They should start to include all pop culture too, Marvel, DC, Big Bang Theory et al, but they don't.
Second hand games used to be a big part of their makeup, but with the increase in digital sales... there's nothing to exchange. The EU government made some rumblings a few years ago about being able to exchange/sell digital games, but nothing came of it.

Another issue are video games are expensive to buy, with only small margins, especially so with triple A titles. A game might cost £50-£55 to buy yourself, but the retailer will be paying £30-£40 per item. Sure upto £25 profit per item sold, but to buy copies in might cost several thousands to ensure stock levels are high. And what if a game tanks... we've all been there, day one releases that stink to high heaven. Fallout '76 anyone? As a retailer you're left with unsold stock. So you either get it off your hands by discounting it, or you wait and hope that the publisher will buy them back. Either way it's a big loss to the retailer.

Unless retail makes themselves relevant again, I can only see one this going one way.
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