Crunch time
Jessops is confident that it will defy the doom-mongers and survive high street oblivion but the business faces a ?very difficult? year ahead, according to chairman David Adams.
Earlier this month Jessops rushed out its buoyant Christmas sales figures on the back of mounting press speculation that Britain’s biggest high street photographic retailer was on the brink of collapse.
In the wake of credit crunch headlines and consumer gloom what now for the future of a business which has shut down a quarter of its shops and laid off around 700 staff in the past 18 months?
On the day the UK officially entered a recession, and just days before the firm’s full-year trading figures are due to be released, Jessops chairman David Adams spoke to Amateur Photographer magazine.
It’s ‘tough’ out there
The Jessops? chief is confident that the firm will remain on the high street. But he could not give any guarantees about the future and was unable to comment on the soon-to-be-announced financial figures.
‘It’s certainly tough out there… this year is going to be very difficult,’ he told us.
‘There’s no certainty in this world? who would have expected what’s happened to some of the banks?
‘But we are working very hard. I am confident but I can’t give you any assurances – that would be wrong of me.?
Key focus areas
Despite the obvious struggle ahead, Adams believes there is a real place for a national photographic retailer, and his customers, suppliers and even his rivals tell him that. ‘A lot of our competition believe there is a place for a national retailer providing the kind of service we do ? if we get it right.’
He said he is in close communication with the firm’s bank which, given Jessops? £50m debt, is a key stakeholder in the firm.
Adams – a former House of Fraser executive who was hired in June 2007 – believes Jessops must focus on three key areas: price, customer choice and service.
Asked whether he felt Jessops’ decision to drop the legendary Pentax brand from its stores will cut consumer choice he said: ‘We would love to work with them [Pentax]. We felt, quite simply, that this time round the products were not the most compelling offer in terms of functionality and price.’
But he stressed that the door is ‘always open’ to Pentax. ‘If they come back with a fabulous product at the right price we’d be delighted.’
‘Redefine’ choice
The move was part of Adam?s plan to ‘redefine choice’ where choice doesn’t necessarily mean stocking everything. Adams accepts this will inevitably lead to ‘some casualties’ for which he said he makes ‘no apologies’ given the competitive nature of the marketplace.
Adams wants to develop ?deeper, better relationships? with ‘fewer’ suppliers. He also has the firm?s financial position to consider. The business has more than halved its stock levels with Adams at the helm, from £55m to just over £20m.
Following the strategic review, Jessops former chief executive Chris Langley had suggested the chain would increasingly focus on selling digital SLR cameras. Eighteen month later, however, Adams’ suggests that DSLRs are not the number one focus. Instead he believes Jessops should offer a broad range of products.
‘I firmly believe that choice is not having absolutely everything available. In the past Jessops was perhaps guilty of the stores becoming too cluttered.?
He cites the decision to sell satellite navigation systems, for example, as a step too far. ‘That excursion into non-core products was unsuccessful. We are a photography retailer…’
NEWS UPDATE 30 JAN 2009: Jessops reports £19.1m loss
Page 2: Products, prices and service
Products and prices
To keep pace with the changing market Adams had to bring in more lower priced compact cameras. He said this was based on figures which suggested 60% of consumer demand for compacts lies in models priced under £100 ? 20% higher than the figure Jessops? former product mix had been based on.
‘We had set our strategy and weren’t going to have sub-£100 ones? we had to adapt because the market had moved.’
However, there is a limit to how low he would go. He said Jessops will steer clear of the cheaper brand ‘£50? cameras offered elsewhere, preferring to concentrate on core brands such as Canon, Nikon and Panasonic.
Adams is realistic about the challenges posed by internet-based retailers on price. ‘We will never be the cheapest and can’t be the cheapest because our balance sheet won’t allow it and you can’t compete with an Amazon on price – it’s just a different business model.’
Independent camera shops can take heart. Smaller shops pose a bigger threat to Jessops than big high streets chains, according to Adams.
‘In a way the thing that probably worries us more than, say, Currys… are some of the very small players who I think discount a bit too quickly,’ he said. ‘I accept that Jessops has been guilty of that in the past but it’s important to try and keep some [profit] margin.’
Customer service backlash.
Many customers, including AP readers, have criticised Jessops over its customer service and for its staff having insufficient technical knowledge.
‘I think that is true to some extent… It’s a fair point,? said Adams. ?I think we could be better and that is what we are working on.’
Though Adams feels its customer service rivals that of its competitors he admits that Jessops will have failed if it does not deliver in this area.
Adams told us that Jessops invests heavily in staff training, citing the Jessops Academy project that was launched last year.
And he points out that its stores are now less cluttered and arrange displays by brand not price, to make it easier for customers.
Page 3: Negative headlines, staff training
Jessops wants to involve more of its suppliers in helping to train Jessops in-store staff.
‘Previously, the business has been a bit resistant to having a lot of brands. We maybe concentrated on one or two. Now there is an open door to any brand to come in and work with us,’ Adams told us.
Passion for brand
Adams? commitment to Jessops as a brand remains undimmed by negative headlines, and his passion for the brand is clear.
He recently dismissed a newspaper claim that Jessops planned a tie-up with a single camera maker as ‘complete rubbish’ of ?April 1st? proportions.
‘How would I manage my Nikon relationship and my Sony relationship if I did a tie-up with Canon,’ he questions. ?It’s not a practical solution. We are choice. We are service and we are not a single brand store.’
And he was straight on the phone when a major newspaper ran a cartoon satirising the fate of the chain, telling them it was ‘irresponsible’.
?I think Jessops is a fabulous brand – I wouldn’t have joined if I didn’t think so. I also think that its job is to represent and sell the best brands in photography.’
Jessops is due to announce its preliminary results, for the year ended 30 September 2008, later this week.
