There are some things you never expect to see, such as the opening of Wembley stadium or the last sale at DFS, but occasionally the unexpected can happen and it is not always pleasant.
This week two once-solid high street names issued disappointing trading updates, and while I think they will both live to tell many more tales it is instructive that newspapers actually speculated on whether they will go to the wall.
Photographic retailer Jessops has proved the adage that profit warnings always come in threes and it has done so in remarkably quick time. The year was not yet quite a quarter of the way through when bombshell number three dropped on Wednesday afternoon.
Along with the profit warning, Jessops parted company with its commercial director and its chairman decided he had better make way for someone who could devote more time to guiding the beleaguered ship.
The surprising thing about Jessops is that it is coping so badly when you would have expected it to be cashing in on the digital age. Yet the downward spiral in digital compact cameras is spinning ever faster. The trouble with selling electronic gadgets is that prices are forever tumbling, and margins likewise, until a new, expensive must-have invention come in and starts the whole process going again.
Woolworths is by far a longer-standing name but its problems are no less deep-seated. For many months now Seymour Pierce analyst has been referring to it a ‘the living dead’. It, too, blamed problems in the world of high-tech gadgetry for its latest fall in profits. In this case Sony and Nintendo failed to produce their new games consoles in good time for the key Christmas period – in fact Sony failed to make Christmas at all and Sony managed too little too late.
While this was a severe blow, Woolworths has another problem of a different sort and one that has persisted much longer. It sells too many items such as confectionary that are available elsewhere and the only way to make its own offering attractive is to compete on price.
These cheap prices, though, set the tone for the entire store and make it harder for Woolworths to create a more upmarket image. It wants customers to come into its outlets to seek out products that cannot be found elsewhere but so far it has failed to carve out a niche for itself despite having had some excellent lines such as Ladybird.
Woolworths has been far too slow in going online but it is catching up quickly. It has cottoned onto the idea that customers can order online and accept delivery at home or pick up the purchases at the nearest store. Here, at least, there is cause to hope for better times.
These are, admittedly, still difficult days in the high street. It has taken more than three years for supermarkets to break the price war cycle and, with a great deal of outside assistance, start to convince shoppers to buy on grounds of health and quality (at higher prices, naturally).
No such sentiments will come to the rescue of Woolworths and Jessops and if consumers decide to spend more on their stomachs they may well spend less on non-essential items.
Woolworths has been touted for some time as a possible target for a private equity bid, although the last attempt, by Apax, foundered is rather unfortunate circumstances after the conducting of due diligence. Since then both chains have gone much, much further down the slippery slope. Would even a venture capitalist want either of them now, and at what price?
