With companies having to adapt to shifting markets faster than
ever before, 4C's Guy Allen considers the challenges facing the
History is full of companies which have failed to react to a
change in the market quickly enough. From the slow demise of the
UK's motorcycle industry in the 60s to Kodak's recent bankruptcy, a
failure to embrace new practices can be fatal for a business. The
newspaper industry is currently losing margin at a relatively slow
pace but this may well change in the near future.
During the past five years the circulation figures for UK
nationals have declined by 16 per cent, one of the highest drops in
Europe. This has led to a declining revenue stream from traditional
print business, which has to be balanced with a disproportionate
rate of growth in online revenues. The danger is that with an ever
increasing number of people getting their news free online, this
gradual downwards slope in revenue may abruptly reach a cliff
face. There are lessons to be learned from recent corporate
Transforming the High Street
HMV, the high street retailer once synonymous with music and
video, was slow to react to the growing threat from online vendors
and was overtaken by Amazon as the UK's leading provider of music,
video and digital games.
Amazon, whose UK site generated sales of more than £3.3bn in
2011, has rapidly become a major player in the retail sector. By
adding outside vendors to its site and implementing innovative
practices in digital distribution, Amazon is playing a key role in
driving traditional high street competitors out of business.
Figures from Kandar Worldpanel show that HMV, which recorded an
8.2 per cent decrease in sales last Christmas, now finds itself
playing catch-up with online rivals including Amazon's Lovefilm and
Apple's iTunes. In 2011 HMV announced plans to close down 60
outlets across the UK.
Lead or React
It is highly unlikely that British newspapers, in their current
format, will maintain anything like their current circulation
figures. Those that will still be around will have adapted to a
market place where readily available free content rendered their
traditional business model redundant. The organisations which
survive will have pioneered new business models or been quick to
embrace these new models. Either way in today's market there is no
room for complacency and even less for a lack of flexibility.