The collapse of Comet is a stark reminder of how the retail landscape is changing. Over 6,000 jobs are at risk unless administrators Deloitte can work some magic and spark some interest in a rescue package for the electrical goods chain. But despite the dark cloud hanging over the retail sector, in a difficult year that has seen a number of big name casualties, there is plenty of light at the end of the tunnel for those willing to embrace change, particularly for smaller businesses.
The traditional 'bricks-and-mortar' shop is losing its place in the consumer shopping experience. By 2022 most goods will be bought online rather than on the high street, according to Economic Intelligence Unit (EIU) forecasts. "Shops would operate as little more than showrooms but will continue to act as a channel for consumers to see, touch and try out goods - even if they make purchases using other means," Jon Copestake, chief retail analyst at the EIU is quoted as saying (ft.com). He goes on to suggest physical shops will serve primarily as a mechanism for establishing and building brand reputation and service excellence, rather than generating sales.
One retail giant that seems to have heeded this bit of advice is Argos. The struggling high street chain announced a few weeks back that it is to close 75 of its 700 stores and shift focus on online sales; as part of a five-year plan, it is reinventing itself as a digitally-led business to meet changing habits. Whether it has done so in time to avoid the same fate as Comet remains to be seen. The fact is e-commerce is growing at double-digits every year in the UK and any business that sells merchandise offline should take action to ensure they have an online presence as well.
Where the online model presents one of the biggest commercial opportunities is for the smaller retailer. Small shopkeepers under the traditional model have, for sometime, faced a barrage of pressures from rising rents, and the omnipresence of supermarket giants whose huge buying powers have meant the 'little people' simply cannot compete on price. The internet opens the door to a whole new world of potential and a chance for smaller businesses to address some of this imbalance. A local shop trader in a little market town can suddenly sell to a much wider target audience, thanks to the global stage the Internet offers.
One of the challenges the smaller e-commerce seller faces is that it is a very competitive environment. Customers in this David and Goliath battleground are often still only interested in one thing: the price of your goods. Consequently, a shop owner who works on price to give themselves a competitive edge needs to be agile and be continually on the look-out for opportunities. So if a scenario does arise where a large amount of cheap stock is being offloaded, the small retailer needs to be able to react quickly and grab their chance.
Which brings me back to where I started. Out of the doom and gloom cast by the Comet announcement, there may be some good. An estimated £120 million of stock is being put up by the administrators in a fire sale, as part of the liquidation process. What smaller retailers need to survive, and to be able to contribute to wealth creation in this evolving retail market, is the necessary financial support that plays to their strengths. Ensuring that a good cash flow is in place is critical and at times of need, raises a big question mark over traditional lending methods. Most bank loans take around eight weeks to come through, by which time it is safe to say Comet's cheap stock will be long gone.