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The end of Whitcoulls and Borders in New Zealand

If you have a Borders or Whitcoulls voucher, even if you hate the idea of spending double to be allowed to spend your voucher, I recommend you do it quickly, because within a couple of weeks it will be worthless. It was interesting to see that there is no mention of the current situation on the Borders website which talks about eBooks coming soon, although Whitcoulls have been a bit more responsible with a home page announcement.

The demise of these companies isn’t about eBooks, it is largely around debt as pointed out by Liam Dann in this morning’s Business Section of the NZ Herald.  and the business models. I’m not going to discuss the debt because that doesn’t reflect on the industry itself, it reflects on higher level financial decisions and the economy, not on the book trade.

Book stores and music stores are in industries that are steeped in history of “this is how we’ve done it for the last 50 years and why change it if it aint broke”.

As was mentioned in today’s NZ Herald story by Isaac Davison, “In 2010, 9.67 million books were sold, an increase of 1.2 per cent in volume but 0.1 per cent down in value against 2009. This was despite the mark-up on books in New Zealand, which saw paperbacks sold for as much as $20 more than online, even after shipping costs.”

So much for Amazon (of course there were a huge number of Kiwis including myself who purchased from Amazon as well) being the cause of the demise of our local stores.

I also appreciated the comment in the same story from Jo McColl of Unity Books that many people bought hard copy books as a consequence of having purchased eBooks. I’ve done that too. I read eBooks, listen to Audio Books and still have a personal library of around 2,000 print books. The same with music, I listen to lots of music online but have still purchased at least 10 CD’s so far this year.

I might have to go to a separate blog about how Whitcoulls and Borders business model needed to change in order to stay viable and vibrant (ignoring REDGroup‘s debt which doesn’t reflect on the book trade business model itself) because for these guys its too late unless they get a savvy new owner (who will not purchase the chains’ debt) who is ready to adopt a new business model.

REDGroup have called in Administrators. I don’t care who the administrators are. Their role is a short term one and it isn’t about changing the business model or trading back into profit. It is about the creditors.

They will try to negotiate with the book publishers and wholesalers and other suppliers who are desperate to get paid for their product and worried about their future viability in NZ. Inland Revenue want their taxes and will be first in the queue.

They will need to negotiate with the 1,000 staff who will have to have new short term contracts and will be justifiably worried about whether they will get paid at all, let alone have a future with the chain, but at the same time, will be essential should they find a new buyer for the chains.

Based on the outcome of their negotiations a decision will need to be made on whether to go into receivership which is next most likely step. If that happens, enjoy the book sale, because there will be many bargains up for grabs.

The shame of it is that (outside of the decisions that got REDGroup into this financial position) the problem in the trade is that the business model needed to change and like the music industry and other industries, the people running them don’t get it. They should have learned from the music industry, which still doesn’t get it. Other industries who don’t get it include banking, telecommunications and consumer electronics to name a few.

What should they have done and what can other retail businesses do in order to not follow Borders and Whitcoulls into the mire? Subscribe to my blog and I’ll give you a few pointers for free. It isn’t rocket science, but it is a fundamental shift in thinking, whilst also remembering the fundamental simple principles of retail and distributon.

We live in a new world, its exciting and there is a lot of money to be made, but the fatal flaw is thinking that if you do the same thing you have always done, that you will get a different result.

There is an RSS feed to this blog. Come back and read some of my ideas on how companies like Whitcoulls and Borders can thrive and prosper.

Here are a few things I would look at:

  • Understanding your business
  • Communication with customers
  • Communication with staff
  • Distribution methods
  • Stock turn and inventory management
  • Engagement
  • In Store Events
  • Proximity based marketing
  • Shelf Management
  • Relationships with community
  • Relationships with education
  • Location Based Business Analytics
  • The Internet
  • Gift Registry

I could and probably will go on. The answers are a mixture of the old and the new, neither of which these chains have effectively managed. Borders started in the right direction in the US, but didn’t continue the evolution. International chains like Borders and WH Smith focussed more on the  era of globalization than evolution of the business model. Something that would have made short term heroes who have probably made their money and moved on, but was only ever going to be short term.

February 18, 2011 Posted by | banking, Business, consumer electronics, contracts, ebooks, economic depression, economics, economy, entertainment, future technology, futurist, home entertainment, ICT, investment, marketing, media, new economy, new zealand, nz herald, people, reading, technology, the future, Uncategorized | , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment

Comparison Shopping

Comparison shopping on mobile devices has been around for a long time. I first saw apps pop up for Palm many years ago even before I had Bluetooth connectivity. Today things are even easier because of devices like iPhone and Android.

A couple of weeks ago I was listening to a Harvard Business Review Ideacast podcast with John Donahoe , which was refreshing  in itself because John had a refreshingly clear vision and understanding of what eBay is as a business, which is not about selling stuff on eBay. Have a listen for yourself. Any business should understand what it really does in order to be able to do it well. For example if you think a grocery store is there to sell groceries, or a car lot is there to sell cars, then you need to listen to this interview.

Anyway, he was explaining why eBay bought the company Red Laser, which reads bar codes through the camera on your iPhone or Android and lets you see information about the product and compare pricing at both other retailers and websites, such as Amazon and of course their new owner eBay.

This is really exciting, especially in countries like New Zealand where items such as books, which I buy a lot of, are really expensive, so shopping around makes a lot of sense. In that area, I have to say that locally I buy on impulse, when I see something I really want or when its on special. They are just too expensive otherwise. Of course if I had an iPhone or an Android, I could check in real time and see if it is worth buying now or paying the postage from the US.

It was really sad to hear that Borders is likely to file for Bankruptcy this month. They really are my favorite bookstore by far, even though I have complained that in NZ since Whitcoulls bought the local franchise, they are slowly turning them into bigger versions of Whitcoulls which pretty much defeats the purpose, although this situation may vindicate them.

One of the arguments sited for Borders’ woes is their failure to prepare for the growth of the eBook market. This may be true to some degree and it is inevitable that print media will follow the music industry. I’ve blogged about this before, which you can find if you dig into my tags. Print is expensive but there are lots of things that you can do. eBook readers is one, but for Borders I would have thought a great opportunity would be Print On Demand, because this can still  be done via the store and allow access to massive stocks without worrying about the costs of shelf space and aged stock.

Whoops, off on a tangent again. I was talking about comparison shopping. Yes there are loads of applications available, I’ve only picked on one. Mashable has a huge number of blogs on this topic if you want to find more.

So have a look at the Red Laser site, to see what what they are all about and watch the short video below from DizzyDougTV to see how cool this is. You don’t need a bar code reader, just the camera on your SmartPhone. Damn I do have to get an iPhone or an Android soon! Maybe I should set up a website with a PayPal (another eBay subsidiary) link called by Luigi a Smartphone:) Would you donate?

Footnote, a lot of people think of Smartphone apps as being the domain of men, but for women who love sales and special deals, this is one for you. I’ll leave the last word to CHIP Chick.

February 5, 2011 Posted by | advertising, Android, Business, consumer electronics, disruptive technology, ebooks, economics, entertainment, future technology, ICT, internet, iphone, IT, marketing, media, Mobile LBS, mobile marketing, mobile technology, music, new economy, new zealand, people, podcasting, reading, record company, retail, technology, Telecommunications, the future, Uncategorized | , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments

The Future of TV

I was watching a TED Video recently. Unfortunately I can’t remember who was talking, but a couple of statistics resonated. The speaker said that by the time an American student (in most western countries probably the same) gets to university they will have spent 20,000 hours watching TV and another 10,000 hours playing video games.

What’s really amazing about that is generally (especially this time of year) how crappy TV coverage is. I have written in blogs previously that I believe IP TV is going to change things massively, but of course that will spell the demise of TV as we know it unless broadcasters get on the bandwagon. If they don’t, they will be singing the same song and laying off loads of staff in the same way as the music and newspaper industries are.

One thing that will make a difference is interactivity and in NZ we are way behind on that score, although I did note during the T20 Cricket match between Pakistan and New Zealand on Boxing Day on Sky TV, you could vote for your man of the match via your remote control. Normally you have to text and pay a premium, so that’s a start, but NZ is way behind the 8-ball when it comes to TV interaction.

In the December issue of The Futurist John M Smart of Acceleration Future Studies came up with some insightful comments on where TV will go, which should be compulsory reading to broadcasters.

Interactivity was one of those concepts. Two areas he covered were collaborative rating social viewing. Both of these happen independent of TV already, but are not embraced by the broadcasters. For example, kids send each other SMS messages via their mobiles all the time when they watch TV. This has been happening for years. The only way the media has taken advantage of that is for competitions and voting on programs like American Idol, which recorded 178 million votes this year. It’s hard to find out what revenue they got from that because it depended on how you voted and who your carrier was, but you can be certain that signifiucant revenue was made, but I digress.

I was talking about social interactivity. So kids text message each other all the time while they watch TV and with new media such as Twitter, the same thing crosses the age barriers. For example whenever there is a major sporting event on anywhere in the world, people are tweeting in real time and sharing their opinions and passion. I believe this will be huge during the Rugby World Cup in New Zealand in 2011. It will be happening concurrently around the world via mobile and internet. That would be a great opportunity for Sky TV in New Zealand, NBC, and others to get involved, but I doubt they have the foresight.

Another topic that John Smart covered was ratings. I don’t know how accurate the current TV ratings systems are, but if TV really wants to compete with the Internet, why not give all viewers the ability to rate what they are watching on TV and at the same time  what they are viewing by way of IP broadcast media.

A great thing about the Internet is that it can cater for every taste. I have around 60 channels on my TV, but I have access to so much more media online. Family overseas have access to hundreds of channels, but most of it is reruns of old TV series.

I regularly watch TED videos on my TV via my iPod connected to my home theater, but the interface is ugly and its a pain to connect my notebook to my TV. I don’t have an iPad as yet, but I can certainly see myself getting some sort of IP TV connectivity, whether it is a home media hub (so I can get internet radio as well as YouTube and other products around the house).

Today, according to Smart there are 20,000+ streaming Internet TV Channels including YouTube, Vimeo, Metacafe and Viddler. Boxee is an example of a Set Top Box that started off with an open source media software package. Unfortunately many of their services such as Pandora are not available in New Zealand. I’m going to give it a try and see if I can make it work downunder.

I’ll stop here and will come back to this topic as I am just grazing the surface. Leave your comments and bookmark this page if this is of interest to you. This is a very exciting and rapidly changing environment and it will be interesting to see who the winners and losers are in the next 5 years.

Boxee review suggests it has potential, but isn’t quite ready?

December 27, 2010 Posted by | consumer electronics, disruptive technology, entertainment, film, future technology, home entertainment, internet, Lifestyle, marketing, media, music, record company, social networking, technology, Telecommunications, the future, tv, Uncategorized, web, YouTube | , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment

Farmville and the new Virtual Economy

The computer gaming industry is of course massive and simulation games have been popular for a long time. Traditionally though, game makers made their money by selling games and upgrades for games. The SIMS being one of the best examples. I must admit to having enjoyed some of their games in the past, especially the classic Sim City.

Zynga has taken this to a whole new level of success with Farmville, a sim game which has become incredibly popular on Facebook. People pay real money to buy virtual tractors and other items in the game. This has now gone to such an extreme that Tesco is now about to start to sell real money vouchers in their stores.

In About Us on Zynga, they emphasize that their games are free, which is totally true, but there are elements in many of their games where you pay money to buy virtual things, or for example in the poker game, to buy back in to the weekly tournament if you lose your chips.

This adds an amazing dimension to this free game business. According to industry experts, as reported on Rev2.org, Zynga could be worth as much as US$5 Billion, which they predict could double in the next 5 years. Seems the concept of free and internet based games may have some commercial merit:)



November 21, 2010 Posted by | agriculture, Business, community, computing, disruptive technology, economics, economy, ecosystem, entertainment, facebook, farming, future technology, home entertainment, ICT, internet, investment, IT, Lifestyle, maps, marketing, new economy, people, poker, social networking, technology, Telecommunications, the future, trade, Uncategorized, web 2.0 | , , , , , , , | 2 Comments

The Smart Connected Home

The home, its technology and its inhabitants are now becoming more and more connected. Many of us now have WiFi networks in the home. We can sit with notebooks on our laps, wireless routers connected to our internet connection allow us to connect entertainment systems, iPads and other network appliances, printers, external drives, Smartphones and more.

Many other devices are now being developed that also offer the benefits of connectivity. For example Internet TV is almost here with products like Google TV being right on our doorstep.

Many years ago I had the opportunity to spend a day at the Arthur Anderson offices in Chicago for a glimpse of the future. An example was an intelligent  fridge with a bar code reader that created a shopping list and could automatically send the list to the local grocery delivery company.

Bill Gates had a master plan of having a Windows CE engine in home appliances, creating an intelligent house. Smart Appliances will I’m sure be in the home soon and the idea Gates had was that if they all used Windows CE, they would all have a common platform to communicate not only with each other and with your mobile computer, perhaps your home appliances.

The European Commission has perhaps seen the light in setting up The Hydra Project. “The Hydra middleware allows developers to incorporate heterogeneous physical devices into their applications by offering easy-to-use web service interfaces for controlling any type of physical device irrespective of its network technology such as Bluetooth, RF, ZigBee, RFID, WiFi, etc. Hydra incorporates means for Device and Service Discovery, Semantic Model Driven Architecture, P2P communication, and Diagnostics. Hydra enabled devices and services can be secure and trustworthy through distributed security and social trust components of the middleware.”

This has the potential to reduce the risk of being tied to specific brands of computing, communications and other technology by providing middleware that everyone can work with. Of course the home is only one place that can benefit from this concept. It applies equally to telemedicine (monitoring patients in the home), business automation, security, agriculture, manufacturing, warehousing and pretty much any industry you can think of.

Once again Science Fiction is about to become reality. It’s taken a while, but looks like we are getting there.

The following video shows an e-home controlled by voice or even by your X Box Controller and of course you can control it from your iPhone:

September 7, 2010 Posted by | architecture, communications, computing, consumer electronics, disruptive technology, entertainment, FMCG, FMCG Marketing, future technology, futurist, home entertainment, ICT, internet, iphone, media, medical, medicine, mobile technology, people, research, Science Fiction, technology, Telecommunications, the future, Uncategorized | , , , , , , , , , , , , , , , , , , | 1 Comment

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