Prioritising the store experience, embracing new technology to improve the customer journey and providing as much value to a person walking through the door compared to an increasing number of competitors and alternatives are vital aspects of commercial retail maintenance that help a company thrive through the years.
An important story of what happens when none of these are prioritised can be found in the sudden and shocking demise of Blockbuster Video, which went from being worth over £2bn at its peak and over 9,000 stores around the world to just one that survived bankruptcy after bankruptcy.
The modern version of this story is fairly simple; Blockbuster was an old company with an old business model that failed to adapt to newer competitors such as Redbox and Netflix.
This is only partly true, as the fact is that Blockbuster absolutely could have continued to survive and thrive to this day. Part of why they did not is in part the cause of one of their competitors suggesting an alliance, twice.
In 2000, suffering major losses as a result of a dot-com bubble about to burst, then-new online rental company Netflix offered to sell their company for $50m, which given the company is now worth over $100bn is considered a bargain in hindsight but was seen as overvalued at the time.
In 2007, the more established and valuable Netflix offered to help with Blockbuster’s belated attempt to pivot to online rentals, Blockbuster Total Access. The idea was Netflix would buy Blockbuster’s online business and run it with the benefit that Netflix rentals could be dropped off at a Blockbuster store rather than posted back.
This ultimately never happened, which caused two major issues. The first was that Netflix was not an ally but a competitor, and the second was that Netflix’s business model inherently eliminated Blockbuster’s main source of profitability: expensive late fees that penalised consumers.
Attempts to change this, with the DVD-by-mail service Blockbuster Total Access, the Netflix deal and an online streaming service, were all ended after CEO John Antioco was sacked due to the expense of these new initiatives.
New CEO James Keys had the instruction to end the incentives that made Total Access successful, increase the price of online rentals and cancel the deal with Netflix. Blockbuster went bankrupt less than five years later.