The Battle Against Obsolescence in the High Street

The high street is successfully fighting for its life on many fronts, but in some categories it is a lost cause, and scarce resources should be focused on realistic revival prospects.

For instance, given the inevitable drift of business to new delivery systems like downloading, in categories such as DVD sale and rental, along with retailing of CDs, books and even games, it is important to distinguish denial from planned demise in a product or category lifecycle.  Anyone in doubt need only think of the declining fortunes/demise of Blockbuster, HMV, Borders and GameStop for some high-profile examples of the trend.

The inevitability of the life-cycle 

Essentially, it is important to accept that all brands go through a natural lifecycle from innovation to growth, maturity and decline in response to market demand.  Whilst the latter stages can be delayed, the process of prolonging active life usually becomes increasingly expensive and produces diminishing returns.  However, in some circumstances, the life of a brand can be prolonged profitably by constant innovation and ‘reinvention’ in the absence of serious threat from substitution.

Retail format life-cycle...

However, if we accept that a home entertainment retail format offering video-rental and sale, like a brand, has a life cycle, we need to acknowledge that the format passes through stages such as innovation, growth, maturity and decline, as night follows day…  Here the download alternative provides convenience, choice and ‘instant’ gratification in a way that is impossible for traditional outlets.  As the download providers take increasing shares of these categories, in time their low cost-base will allow them to complete the process via price-cutting the traditional outlets out of existence.  In these circumstances it is important for traditional home entertainment retailers not to deny the inevitable, but rather to proactively manage the maturity and decline of their format.

Meanwhile, at the receiving end... 

For store-owners, the ultimate question of how long the mature and decline phases will last has to be replaced by one reflecting the owner’s lifestyle expectation in terms of return on investment, coupled with their risk-profile (risk-averse, risk-neutral or risk-seeking).  This will help the owner to determine a satisfactory risk-reward relationship that will help them to decide whether to persevere for five or ten years, or seek a radical reinvention of the home entertainment format.   As entrepreneurs at heart, store-owners will be accustomed to making business decisions that offer a realistic balance of risk and reward in a market undergoing constant change.

Obsolescence is but another variable in the game….in which suppliers have a strategic role