Trading Tough for the UK Big Boxes

Best Buy LogoFrom recent news in the UK, the tough economic conditions appear to be hitting the technology and electrical particularly hard with Best Buy and Comet in the front line.

After losing nearly £50 million in the last six months, Best Buy is going to close all 11 stores in the UK after just 18 months in   operation. Best Buy Europe was a joint venture between Best Buy, Inc and Carphone Warehouse, with Best Buy purchasing half of Carphone Warehouse’s retail division for over $1 billion. Over 200 stores were originally planned but now 1,000 jobs are at risk.

Roger Taylor, CEO of Carphone Warehouse said, “The eleven Best Buy UK ‘Big Box’ stores have performed exceptionally at the level of customer satisfaction, but they do not have the national reach to achieve scale and brand economies. Due to the lack of visibility of an acceptable rate of return on historical and future potential investment we have decided against rolling out more ‘Big Box’ stores and we will be closing our existing stores, subject to consultation with our employees. Our immediate focus is our people and we are confident that the large majority will be offered alternative positions elsewhere in our UK business.

Today, Comet has been sold for just £2 to a holding company “Hailey” after revenue in Comet fell 22% over the summer. A further £50 million will be invested by Comet’s parent company in the holding company. 17 stores are already earmarked for closure with a further nine to be reduced in size.

In guarded comments, Bob Darke, Comet managing director said, “We are encouraged by today’s announcement and – with shareholder approval – absolutely committed to a smooth handover. For our customers and our people, it is business as usual and we are 100 per cent focused on delivering a successful Christmas trading period and great business performance into 2012 and beyond.

DSG Retail with its Dixons, Currys and PC World brands is the main player in the UK market but even it saw a fall of 7% earlier in the year. The next set of results isn’t due for a few months and it will be interesting to see what they show.

Overall, it’s not looking good for the big boxes in the UK.

Are You Dumping Your Extras?

Cell service providers are beginning to notice a somewhat alarming trend among users. As plans graduate out of their contracts, more users are giving up extras like mobile web, texting, and SMS messaging. These “extras” can cost an extra $20-100 a month on most plans, and even more for family-type multiple-user plans like our family has.

As the economy worsens and people look for ways to cut costs, dumping a $40 data plan and a $30 texting plan can really impact a squeezed budget. Most users have alternatives for data, like laptops, netbooks, home computers, etc. The cost of the extras can outweigh their conveniences, in some cases.

Not that we techies don’t like our conveniences and our gadgets, of course. But when the choice is to pay your mortgage or pay for your extras on your cell phone, I think most of us know what the choice should be. In fact, when I hear of anyone buying a smart-phone these days, especially ones with expensive data plans like the iPhone, I have to wonder what they are thinking. I actually have a friend who works for the mortgage business and just bought an iPhone and locked herself into a 2-year contract that is twice as expensive as her cell phone plan had been before. What happens when her mortgage job goes south?

Scary stuff. I know we’ve cut back on things we don’t need that we can live without, including paring down our cell phone plans. And I have to wonder, if enough of us do that, will the cell phone companies, in order to maintain their business, start offering those extras at a lot lower price, as I know they can afford to do?

Economic analysis based on actual data!

We have seen a lot of news reports that talk about large macro economic indicators in dire terms. What’s happening in terms of black friday sales figures, how property prices are falling, and consumer confidence figures for example. While all of these make good news stories, they are lacking in direct information. Most of this is indicator information, and while it could mean that things are bad it can also mean that people think things are bad.

Aaron Patzer has provided a little bit of the missin detail in a guest post on Techcrunch. Aaron is the CEO of a company called Mint. While I am not personally familiar with the company, they do have the details of the spending and financial position of around 900,000 US households. In aggregate form, this data shows us a very good picture of what is going on in the real world bank accounts of a statistically significant subset of America.

It shows that while people are indeed spending less, their bank accounts are lower, and their loans are higher. This shows a picture of what is happening on the street. I reccommend you have a look at the article if you have any interest in this subject. There is some things lacking in the information though. We do not see in the article any detail on the high level demographics of the sample set compared to general US demographics. This stops us knowing how representative this set may be. Also given that Mint appears to be a fairly new company, and the data set compares August to December, it would also help to know whether there was any change in that demographics. I would also like to see a comparison of only users who where customers of Mint at both time periods.

Despite these minor questions on the data, this is one of the best looks into what is actually going on in the economy that I have seen.

Tech Will Save You

I see all this junk happening in the news from bank failures to foreclosures. And I admit it is disturbing & can be disheartening if you allow it to be. But what I hate to see is people making excuses for why their life sucks. We all do dumb things, maybe me more than most. But it is better to own up to stupidity & try to fix it and do better in the future. One thing that really bothers me is when people complain about not being able to get a good paying job. I know it is tough out there. I really do but that is no reason to give up & expect someone else to take care of you & you life. You are in charge of you. No one from Washington is coming to save you.

You may be thinking what does this have to do with tech. Well I believe this time we are living in is the best opportunity to succeed in life. The low cost of computers and the availability of the internet makes it possible to educate yourself as much as you want to. There is the equivalent of millions of tons of data right at your fingertips online. That is how you make it. You educate yourself and make yourself more valuable to a company or make it possible for your small business to become successful. I just found http://www.scribd.com/ , a website that has many free books to download in PDF format and of course Google has many books available in the public domain.

I know it is easy for me to say & hard for some to do. “Pull yourself up by the bootstraps” as they say. The single mom with 3 kids will have a harder time than a guy right out of school with no kids to provide for each day. It is harder to GET OUT of a hole than to STAY OUT so I do sympathize with people having a hard time. I just don’t want people to give up especially when economic times are truly tough right now. Did you know that more millionaires were made during the Great depression than during any other time in US history? Me either until I heard it on a podcast last week! That means it is possible to “make it” even when things around us are seemingly in bad shape. Another reason I am optimistic is that I read (online for free about) about people with great disadvantages who would not be denied a good life. Helen Keller was blind and deaf yet she is known everywhere as a great poet & writer. Type Helen into Google & the first choice they give is “Keller”. We should be ashamed when we complain about our little problems compared to Ms. Keller’s. What could she have accomplished with today’s technology? If you could bottle what made her tick & sell it you would get rich quick.

Time is our best friend & most valuable resource. If you are worried about the affairs of the country & your finances then how are you preparing? Are you spending 16 hours a week watching TV or reading about your passion that you can turn into a business? How are you using the vast library called the Web to make you more valuable to your boss? I’m not preaching to the audience anymore than to myself. I know I can do better & be more productive as well. One of my favorite books is The Fountainhead which shows what determination & self-reliance will do for you. Mark Cuban has said that book is what motivated him to succeed in business. I wish it was required reading in high school as it truly has motivated me to help me. Download it for free here if you need inspiration. http://www.scribd.com/doc/6315480/Ayn-Rand-The-Fountainhead

Blu Ray Pricing

I saw where Sony was dropping one of their Blu Ray players down to $300. This will obviously send other companies to slashing their prices as well. There are different opinions on what the price point is where Blu Ray will take over DVD sales. I don’t know if it is $199 or $149 or even as low as $99. One thing that will slow the conquest is the sluggish economy. I am not one of these people who always think the sky is falling but I recognize a slow down when I see it. I am not talking about any stats I see on the “news” or musings by experts. I am basing this totally on people I know in business and others I talk to on a regular basis about it. So a Blu Ray player is something that consumers can do without especially when most own a device that does the same thing but just not as good. Some would argue that people did not wait to buy a HDTV when they had a TV that did the same job just not as good as an HD model. But that boom was a while back when the overall economy was better and people watch a lot more TV than they do DVDs.

I’d like to have a Blu Ray DVD player but I have not even bought an up-converting player yet, even at super low prices. I just have not seen the need for one. We get Netflix so we watch about 3 DVDs per week. Obviously we view enough movies to warrant Blu Ray consumption which I believe is the same price for now on my movie service as standard DVDs. But I just can’t pull the trigger yet even though the picture quality Is phenomenal. With football season starting this weekend that will hold me over for a few more months as I will have plenty to view in HD without worrying about Blu Ray.