2012 was a tough year for small and large businesses alike, with many popular high street stores struggling to attract customers through their doors. In fact, trading was so poor that many high profile brands such as JJB Sports, Clinton Cards and Peacock’s were forced to enter administration. Unfortunately, it seems that this trend is set to continue into 2013, with the first administration of the year arriving this week.
Camera chain Jessops has announced the appointment of administrators from PricewaterhouseCoopers (PwC) after failing to make any substantial profits in the past few years. The chain occupies 193 commercial properties across the UK employing more than 2,000 staff, and while no store closures have yet been confirmed, the company has said that branch closures are “inevitable.”
Specialist chains of this sort have felt the effect of the smartphone boom more than others, as the majority of mobile phones now come equipped with a high resolution camera which can also be used to capture video clips. Furthermore, the images can be uploaded directly to social media sites such as Facebook, Twitter or Flickr immediately, rather than uploading pictures onto a laptop via a memory card as with a traditional digital camera.
Administrators at PwC are hopeful that a buyer can be found for the business before too many jobs are lost, calling Jessops a “well-known brand” with a “strong reputation for service and a significant national footprint.”
Yet experts believe such optimism may be misplaced, claiming the only chance the brand has is for a major camera supplier to downsize the chain and use it to sell high spec, hugely expensive cameras which do not tend to sell well online.
The largest shareholder for the camera chain is currently HSBC, with a 47 per cent stake after writing off £34 million worth of corporate debt in 2009. The banking chain has also provided £1.5 million to pay employee wages for January, thus allowing branches of Jessops all over the country to continue trading whilst administrators negotiate with potential buyers.
Rob Hunt, of PwC, believes that trading will be able to continue throughout the administration process should discussions with interested parties prove fruitful.
He said; “Trading in the stores is hoped to continue, but is critically dependent on those ongoing discussions.
“However, it is inevitable that there will be store closures.”
Helen Dickinson, of the British Retail Consortium (BRC), believes that worse news is yet to come for the high street in 2013. She states that a lack of disposable income amongst the UK’s consumers means that stores will once more have to tighten their belts or face following Jessops down the road to administration – spelling further bad news for the high street.
She says; “If you look at the amount of money people have got in their pockets, that is expected to continue to be under pressure.”
Do you think the high street will be able to turn a run of poor fortunes from 2012 around as the year progresses, or will further squeezes on consumers’ already tight budgets ensure that Jessops is only the first of many well-known brands entering administration in this quarter?
Should PwC be concentrating on large successful electronics brands, such as Samsung or Sony, to take over the endangered Jessops stores, or perhaps sourcing a private investor who could inject the cash into the business that is required to keep the camera store on Britain’s streets?
