How can we save Jessops?

16 07 2008
1888 Kodak camera

It will never last...

I was speaking with David Pickering, CEO of Charteris at a breakfast briefing recently when the subject of Jessops came up. We both agreed that we didn’t want Jessops to go out of business as we found their stores a really useful source of advice and information but were equally worried about how they would survive given the financial performance they had been experiencing [when we spoke]. So yesterday when I read that Bloomberg reported Jessops losses had widened my concern increased and I decided to carry out some desk research of my own.

Sales in store have fallen 11% in the past three weeks. That is not that surprising when you consider the prevailing market conditions and gross profit percentage is up. A year ago the company announced that it would close 81 stores, 31 of which were loss making and with these changes in place the company still expects to report improved EBITDA figures on last year. A big problem however is the level of debt they need to service. Borrowings are at £52.26m and although they managed to restructure the debt with HSBC they will have to make a payment against the £49m of senior by spring next year according to FT.com. Even a year ago Jessops was being referred to as a ‘Private Equity Disaster‘ although despite the results Chief Executive David Adams is optimistic about the future.

So they have a lot of big problems and have taken extreme measures to cut costs and do the normal things companies do when they are going slowly down the toilet. But in my view, they are still worth saving. Why? Because they are one of the few high street retailers that are truly specialist. If you visit Jessops and you are interested in photography you will be met by employees who on the whole are passionate about photography and happy to spend time with you helping you. The problem is this doesn’t make you any money when the product has become commoditised and online competition is fierce. And it is this, the multi-channel elements of their retail strategy that in my view they get most wrong.

On Saturday I tried to do my bit to save Jessops. I had 3 digital photos to print: two 10″ x 12″ and one 7″ x 5″. Online, including delivery in 24 hours (which is real as I have used photobox before) the price £4.09. At Jessops each of the large photos was over £4 (the 3 day services £3.49 and 1 hour £6.99). These prices are available on the website as the link in the last sentence indicates.

On the same website I can link to Snapfish, Jessops online photo business and be offerd an 8″ x 10″ print for £1.25. Snapfish is in fact an HP business and the arrangement with Jessops has existed since 2006. Jessops have actually done something quite innovative by connecting the web with stores and providing a ‘reserve and collect’ services. The problem is the pricing and also the lack of specialism. Why would you pay a premium to order one day and pick up in store when it is cheaper to order and have a home delivery where they have no differentiation?

The website is completely “off” brand experience. There is no content beyond products for sale. If you type ‘advice’ in the site search you get a message that “nothing was found matching your search criteria”. The only link with the store are the prices of products or so it would seem. In fact when I navigated to the photos tab and then once in selected ‘photos home’ I was presented with a range of specialist in-store services. The usability of the website surrounding this content is so poor however that I can’t believe many find it. Interestingly there is listed here a further service that I have experience of.

I wanted my wedding video transferred from VHS to DVD. I went to Jessops (another opportunity to save them) and was told by the incredibly helpful and knowledgeable assistant that a store round the corner did it and Jessops didn’t. Thanks I said and took my £40 round the corner. According to the website this is a specialist service provided in store and a further demonstration of multi-channel strategy being poorly implemented.

Nor is the website well marketed and I wonder if this is an indication that where online is concerned, Jessops are not expansive in their thinking about what business they are in. If you search for “photography” in Google.co.uk, Jessops don’t appear on the first page at all. Changing the search phrase to “camera” and they come second in natural search, but have no paid for advertising. It is no coincidence that there is no photography content on the site.

In 2007, when commenting about the cuts Jessops were making David Adams, said: “The strategy allows us to re-position Jessops as a true multi-channel retailer, building on our core strengths in the digital imaging market place.”

It appears to me they have precious little strength in the digital imaging space and are not a multi-channel retailer. For sure they have multiple channels but they may as well be two separate businesses. I want to save Jessops but as a consumer I am struggling to work out what I can do to keep them alive.


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Categories : Brands, Customer Experience, Economy, Multi channel, Usability, User Experience

Will online sales benefit from high oil prices?

14 07 2008

The Economist this week (The Economist July 12th 2008 ) reported that driving behaviour had changed as a result of higher fuel prices. Garages report that there has been a 5-10% drop in in fuel sales and this is as a result of fuel prices rising at their highest rate ever in June. The Economist also reports on data from Footfall, a research firm that tracks customer numbers, that indicates visits to out of town shops have fallen and at a higher rate than the drop in visits to town centres.The suggestion is that consumer behaviour is altering as a result of fuel price inflation.

At the same time Internet Retailing, an online retail website, reported increased sales to online grocery websites. Value retailers have experienced growth of between 30 to 40% in the four weeks to June 7th and visitor numbers for both Morrisons and Asda were up by more than 48% for the 3 months March to May 2008.

Meanwhile on June 30th 2008, ASOS, the UK’s largest online retail store attracting over 1 million visitors per week, were reported by Retail Exec, an online publication aimed at Retail Executives, to have achieved a 90% increase in revenues to £81 million and post pre-tax profits of £7.3 million up £3.4 million on last year.

I was asked to contribute to a book recently called “winners and losers in a troubled economy” and to offer my views on whether ‘online’ would be effected by an economic downturn. The answer to me is clear: Not if executives take on board the data available to them about changing consumer behaviour and the benefits the online channel offers. Having done so, they need to determine to make their online property best of breed.

Not everyone will do this of course and it is easy to predict that in 18 months time when the down turn is becoming a recovery there will be a number of high profile casualties that did not make the right investment decisions and were not able to maximise the opportunity that a down turn presented to their business.

We have all learned over the past decade or so, sometimes painfully, that the Internet is not the answer to all of our problems. However, where the case is dropping high street sales due to altering consumer behaviour as a direct result of high fuel prices there does seem to be a strong positive correlation and maybe this time, it is.


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Categories : Customer Experience, Economy, General Comments, Multi channel

Starbuck’s to close 600 stores in the US

10 07 2008

An article this week in HBS revealed that Starbuck’s is to close some 600 US stores. HBS put it down to 3 reasons: disenfranchise early adopters,  too many products and superficial growth from too many stores and products, which in many ways boils down to this: “they delivered a lousy customer experience”. More importantly they made the mistake that Facebook are making - they forgot who really owned the brand.

Starbuck’s thought they owned the brand and in pursuit of earnings to satisfy the markets they grew like crazy and changed the brand and therefore user experience. Soon getting a coffee in Starbuck’s was no longer about the laugh and joke with the Barista, the remembered regular order and the great coffee sipped at a well positioned table from a comfy chair. Rapid service and more choice than you can remember took precedence in the pursuit of growth.

When will brands realise that sometimes you have to sacrifice growth for sustainability? For sure the market puts enormous pressure on businesses but this is a chicken and egg scenario and greed wins out. It is certainly difficult (I imagine) to become a gozillionnaire by pitching up to a VC and saying “we won’t grow that fast but we will be profitable and our customers will love us”. But it would be nice to think that somewhere out there another Amazon exists.


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Categories : Customer Experience, Multi channel, User Experience

The Future (of digital, of media, it’s been one of those weeks!)

20 06 2008

One week and two conferences on the future of stuff. The first on Wednesday run by eConsultancy and opened with the normally upbeat and insightful Ashley Friedlein with words along the lines of “when I thought about the future of digital and this years conference I realised there wasn’t much to talk about, we haven’t moved on that much and this year is more about execution”. Clearly by this point the audience was beside themselves with excitement and thankful that we had paid the full fee to be there. But as it happened, unusually Ashley was wrong. There was lots going on and whilst an awful lot was about execution the main thrust was about organisations doing things others had not already done.

Thomas Cook in particular, whose presenter Russell Gould delivered his presentation by video due to the imminent birth of his second child, demonstrated just what was possible if you have big ideas and in particular a big budget. Travel of the future is truly a multi-channel world with interactive store fronts, video catalogues and, thank the lord, no more welcome meetings - well video welcome meetings but presumably they come with a fast forward facility.

The panel that followed however seemed to miss the point entirely about the competitive threat the Web2.0 future presents. Prior to this session on travel we had heard, at length (the panel barely had time to go up on stage) about the pressures on the increasingly commoditised insurance business. The pressure is coming from aggregators who add value by offering the consumer choice. The products which are ultimately commodities are price differentiated and it is only the total confusion that consumers have that keeps them loyal. (That isn’t true I just made it up). It may as well be though with the amount of inventive thought flying around the room.

We were told that insurance policies are priced for a 3 to 4 year lifetime value and at the same time that consumers are bored with organising insurance and treat it as an annual chore which they detest. This makes it open season for aggregators as they can at least price check. It surely won’t be long before we sign up with an aggregator for 5 years and they simply provide an annual report of their market sweep and tell us which provider we will be insured with next year? This must be an opportunity for insurance providers also if they can convince their underwriters.

Surely the travel industry is going to suffer from the same problem, as technological differentiation dissapears faster than our holiday money on fuel supplements? All the travel companies tried to make out they differentiate because they sell “an experience”. What they sell is convenience - from a consumer perspective they simply will not care if an aggregator provides that convenience rather than the agent. The game was somewhat given away when one travel agent admitted they sell anothers product because “they can make money out of it”.

As Seth Godin reminds us in his blog this week “there is no such thing as price pressure”. The price you charge is based on the value you offer - as perceived by the user/customer.


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Categories : Customer Experience, Economy, General Comments, Multi channel

EDM2008 Monday 9th June

11 06 2008

I attended EDM08 on Monday which was coincidentally the 8th year the conference had run. It is a fairly small affair with perhaps 100 people (max) but they travelled far and wide to be there and on my table were people from the US, Nordic area and mainland Europe.

EDM stands for European Directories Marketplace and the event is run by Whitaker Associates. It is fair to say I had no idea about how the connection with directories worked before attending but it is of course to do with the delivery of information services and hence this years theme: mobile.

The keynote was delivered by Dr Mike Short Director of R&D at O2 and a man’s whose credentials in mobile are extensive. He is Chairman of the mobile data association (the mda) amongst other things but has spent 20 years in the mobile/telecoms industry. He shared plenty of stats and insight to research that O2 will publish in July both of which I have summarised here in a few bullet points:

  • there were 2.95bn mobile subscribers at June07
  • 3.3bn are forecast by end 2008 (source: The mobile world)
  • There is 115% mobile penetration in the UK which equates to 69 million handsets
  • There were 57 billion sms sent in the UK in 2007
  • 449m picture messages were sent in the UK in 2007
  • 17m accessed the mobile internet in 2007

From O2’s research:

  • Most people would rather leave home without their wallet than their mobile
  • Research that trialled combining mobile with Oyster and Credit card (separately and together) using near field communication technology (NFC) resulted in a greater degree of success when sim and oyster were combined than sim and credit card. It will be interesting to see what conclusions O2 draws from this as it seems to me that it is a moot point. Ultimately won’t they all be combined anyway?

Finally Mike described the phases of mobile, starting at phase one with voice and text, up to present day phase six which is the ‘Content’ phase. Mike believes that phase 7 is the ‘application’ phase.

Following the keynote there were a range of presentations and discussions and I am not going to blog them all. There were some really interesting debates and opinions that I would like to record.

There was some debate around the importance of mobile compared to pc and James Levey of Amdocs suggested that click through rates online were currently at about 2% on average but that he predicts mobile will achieve 4% click through rates in the near future. In terms of search, mobile search currently represents 2-4% of desktop search globally, where China is an exception with mobile search representing 25%. Google predict that the cross over point where mobile search overtakes desktop will be within 4 years and that not long after mobile search will double desktop search.

To put some more context on this it is worth mentioning stats presented by Russell Buckley of Admob. Admob started business in 2006 and are already the worlds largest mobile ad marketplace. Russell talked briefly about global page views on mobile and which countries had the largest global share. Currently he estimates that there are 3bn page views per month on mobile [correction: which Admob see on their network and on which they serve ads on today]. The largest contributors to that number are:

  • US = 50%
  • India and UK = 10% each (total 20%)
  • South Africa = 5%
  • Indonesia = 5%

Interestingly all the above are in English language!

Other presentations delivered nuggets such as ‘in 10 years you will be able to access the knowledge of humankind from a mobile’ and the fastest growing age of penetration of mobile phones in the UK is 7 to 8 year old’s. All exciting stuff. But then I was blown away by Simon Grice of www.Ideas.org.

Simon rattled off more concepts and ideas in 10 minutes than I have in a decade. The few I caught hold of were “Information is the new pollution”. IN a conference focussing on information services and directories he argued that in the future this will be too much and humans won’t be able to deal with the flow of info. Search will become useless because the range of results will be too difficult to filter. Simon suggests that when people get bogged down with information they ask people they know for advice and in this way sites like Twitter and facebook become the information services networks of the future.

Simon also talked about discovery as opposed to search. Search is fine if you know what you are looking for but what if you don’t? For example your local pub is holding an Italian night. If you don’t search for that you may not find out so you need to be told or have a way to discover it that is not necessarily advertising. Location based services have a role to play but it is not clear what role at this stage.

These ideas are worth exploring further, which is what I intend to do.


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Categories : Economy, General Comments, Mobile, Multi channel

SpeechUsability

8 06 2008

I read this week that SpeechUsability have been acquired (well had all their assets acquired) by PSS. Although Foviance (the company I work for) have carried out a variety of ‘usability’ work on IVR systems I wasn’t aware that their were any specialist companies. It seems to me that Speechusability is really just one person Dr. Susan Hura an “industry luminary”, according to Todd Funk, President and CEO of PSS (you can’t make this stuff up!).

Speechusability employ user centered design (UCD) principles to create better IVR experiences and Dr Hara has a strong background in the area. Here is her bio from the press release about the acquisition:

“Susan L. Hura, PhD is the founder of SpeechUsability, a consultancy focused on improving the user experience by incorporating user-centered design practices in speech technology projects. Susan started and managed the usability program at Intervoice as their Head of User Experience, and prior to that was a member of the human factors team at Lucent Technologies. She held a faculty position at Purdue University in the Department of Audiology and Speech Sciences where she cofounded a multidisciplinary research team dedicated to studying novel approaches to computer speech recognition. Susan holds a doctorate in Linguistics from the University of Texas at Austin. She is a frequent invited presenter at speech technology and usability conferences, and serves on the Board of Directors of AVIOS (the Applied Voice Input Output Society). Susan is also co-chair of the 2008 SpeechTek conference.”

PSS seems to be going from strength to strength and is one of the fastest growing firms in the US and is listed in Entrepreneur magazines top 100. At 48 people and $6.6m revenues after 5 years it is not a stellar grower but is in a good space. Certainly worth watching, particular if they genuinely take usability of IVR seriously, which it would seem they do.


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Categories : Customer Experience, Multi channel, Usability, Voice

Steve Hurst: Customer Strategy

7 06 2008

Customer Strategy log

I had the pleasure of putting the customer experience world to rights yesterday morning over a bacon roll with Steve Hurst, Editorial Director of Customer Strategy, a CMP publication. Steve has been with Customer Strategy (previously Customer Management) as long as I have been with Foviance (over 7 years) and has seen the same developments in the industry that I have observed. As a result we had a wide ranging conversation which frequently resulted in the conclusion that “customer experience only gets better if the CEO wants it to”. It seems in quite a few organisations, they simply don’t!

I recommend checking out Steve’s Blog Industry Insider as it covers ground beyond customer experience. We both agreed that actually customers are pretty much at the centre of everything organisations do - or at least they should be.

One area I was particularly interested in is an interview Steve has lined up for next week with Premier Hotels. One of the aspects he hopes to discuss is the expansion in India and I hope to hear whether they intend to include mobile booking engine as part of their expansion plans. Given the ’single screen economy’ nature of India this would seem sensible although I haven’t yet seen figures about mobile internet penetration. A ‘to do’ for me. I did read this week about the drive to produce a lower cost mobile (sub $30) and the work Motorola were doing here but I am fairly certain these devices don’t contain web access. The target market for the hotels is the growing middle class in India and these I assume will have mobile access to the web, and presumably desktop access also. Like I say, more research required.


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Categories : Customer Experience, Economy, Mobile, Multi channel

Mobile VOIP launches in the UK 13th May 08

15 05 2008

To coincide with my wedding anniversary (kind of them) Nimbuzz launched in the UK. According to their Chief Marketing Officer Tariq Dag Steinberg Khan, Nimbuzz goes beyond Skype and offers “free calls, chat and more.” On the face of it this is true. In addition to mobile VOIP calling it also offers conference calling, instant messaging, chat, photo and file sending across multiple IM communities including Skype, MSN, Google Talk, Yahoo! and Social networking sites likes Facebook and Myspace.

The application is free to download and once the user has registered the contacts from their selected IM communities are aggregated in to a single contacts list with icons that show real time status - online or offline. Apparently Nimbus already works with more than 500 handsets and VOIP works in 90 handsets worldwide. If they can integrate geo-location somehow that would be even more interesting.

Although the calls are free the costs of data are still charged for by the carriers and so the recent announcement by Vodafone in the UK of the first all-you-can-eat data package is even more significant. A year ago flat rate data plans didn’t exist in Europe and the launch of this type of technology would not have generated the excitement it no doubt will.

Nimbuzz claim to have subscribers numbering 500,000 from 176 countries and that their launch is driving data take up on mobile devices. I mentioned Trutap in a recent blog and like it, Nimbuzz is another example of technology the uses the specific attributes of mobile devices. It is still the carriers with their control of data rates that will control the effectiveness and adoption of these new technologies.


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Categories : Customer Experience, Mobile, Multi channel

Mobile metrics: Carriers are witholding

13 05 2008

An interesting example of the flawed mobile business model surfaced this week. According to Matthew Feldman, president and CEO of Versaly Entertainment “Anyone in the mobile industry will say reporting is probably one of the weakest segments of the mobile industry”. Jack Hallahan, VP of advertising and brand partnerships at MobiTV Inc., which has almost 4 million subscribers said the company also has the problem. “MobiTV knows what device type is watching at any time, but it still doesn’t know who that user is”, he said. The problem is that whilst they know the device the content is being viewed on they don’t have any detailed demographic information. “We don’t have a data point of exactly what’s happening on the last mile,” Hallahan added.

The information is held by the carriers but they are not sharing it. Not only are they not sharing data they are also taking a large share of the revenues for providing the pipe for distribution of digital media like video - typically 35%. The combination of these two factors is reducing investment and stifling innovation. Until the business model changes mobile will suffer. Interestingly, in the US data revenues fell for the first time ever in the second half of 2007. Will it take an economic collapse of the scale seen in the music business caused by innovative consumers to force the change or will carriers wake up and smell the Begonias?


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Categories : Mobile, Multi channel, iDTV

The challenges faced by multi-channel organisations NOW.

12 05 2008

Organisations are trying to catch up with the market having finally realised that customer experience will be a major differentiator for them, and would be today, if they had invested in it 5 years ago. Most are attempting to establish a framework for delivering a consistent and differentiated multi-channel customer experience. Their biggest single challenge is that the consumer has already moved on and as a result the bar they are trying to reach has already been raised.

For sure there is a world of trouble getting from where they are now to even a catch-up situation. Most are organised wrongly so that silos exist and employees in one channel have little to do with the others. Even if they do, they are not rewarded in a way that encourages customer centric behaviour. People issues are always tough but can be overcome with senior management buy-in, better structure and appropriate rewards.

Equally systems issues exist with multiple views of customer data, inefficient supply chains and lack of employee access. At Foviance we regularly see organisations that have 20,000 employees and only 5% of them have systems access. To compound this most organisations have not recovered from the foiled multi-million dollar investment in CRM systems from organisations like Seibel (now Oracle), that have never delivered the value that was promised.

The reason organisations find themselves in this situation is the same reason they will most likely fail again. They did not look outwardly and plan for the way consumers would want to interact with them in the changing world. They were not, and are not ready for this changed world and with recession looming the next few years is likely to see most senior execs once again focusing internally. As Foviance and RXP’s recent research illustrated, in the retail sector only organisations with a multi-channel history are performing well and this is not the majority. Even if organisations catch-up with their peers this will not be enough. Most will benchmark against their competitors and count themselves successful if they are on level terms. For the consumer this is not sufficient.

Consumers do not make allowances for different sectors and industries. Their expectations are set by the universe of experiences they have. The supply chain differences between white goods and fast moving consumables have no bearing on how well the experience should be delivered in their view. Organisations that win the multi-channel experience war will be those that reach the bar set by their consumers, not by their peers.


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Categories : Customer Experience, Multi channel

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