Well, 2018 has been a good year for business so far, right? Wrong. The only way I could represent the business climate this year would be…
In fact, ‘business failures’ became a bit of a trending topic in 2018, as more and more organisations spiralled out of control and straight into administration.
The growing number of businesses failing this year started with Toys R Us announcing its to-be-expected closure. Shortly followed by Maplin. Since then, the trend of business failure has only grown; and imminently, more and more organisations are either in severe turmoil or are shutting up shop altogether.
Names of just a few businesses that are in crisis in 2018 include:
- New Look
- And now, Poundworld (who this blog post is mainly targeted at, as you’ll see.)
All arguably brilliant brands that all seem to have common connections that are dooming them for failure. Which I’ll touch on shortly.
So, is it something in the water this year… Or, is there a pattern forming for these fateful few?
The Trend Of Business Failures
Something that these businesses have all universally agreed on is that the reason for their failings are their decreasing footfalls year on year.
(Footfall = the number of ‘feet through doors’ for a business. Basically, what every company strives for.)
But what’s the reason for the dramatic drop in footfall in recent years? Here’s a few of my ideas why.
Diminishing business models
For certain companies, the simple fact of the matter is that there is no longer an industry for their product, simple as. Toys R Us are a stellar example of this. The majority of kid-kind this day and age are more interested in gaming and technology rather than physical toys which initially hurt the company and then ultimately, led to its failure.
This is perhaps the saddest case for such companies as frankly, without changing their whole business model… There’s not much they can do. Companies such as Blackberry and Blockbuster have exampled the same kind of situation. When people no longer want your product, you either have to completely reform your business and its values, or give up the fight. It’s sad, but it’s business. And ever-changing times are seeing more and more once-strong organisations falling fatal to the same cause.
Not knowing your market
Another of the main reasons I would use to explain these business failures is that such organisations simply do not know their market as well as they should. One of the biggest trends in the last decade is online shopping, hence the struggle of in-store retailers such as New Look.
It costs unholy amounts of money to open and maintain physical stores and as times change, more and more businesses need to question the need for them. It was estimated this year that 44% of shopping is done via a smartphone or desktop and this, therefore, is something that all retailers need to action. Poundworld, who (at present) operate solely in-store are struggling to remain afloat, so perhaps e-commerce is an option they should consider moving forward.
One company that set the bar for moving with markets is NME, the famed music magazine. Knowing that print is a dying trade, they made the decision to abandon it and operate solely online. So far, it seems to be working well for them and is a move that i’m sure the company will be thankful they made early on when print imminently ‘dies out’ in the next decade or so.
(Note, this is my opinion only so don’t take my word as law – but I do genuinely believe that print doesn’t have much of a long-standing future.)
Not embracing digital
And herein is where I act out some shameless self promotion.
Having worked in digital for the past year, i’ve really learned its value and can confidently say that digital knowledge is one of the most important things for a modern day business.
Things such as local search, SEO, SERP and web optimisation (UI and UX) are all so important for modern day businesses as so much is done online. The aforementioned decline in footfalls is probably primarily due to companies’ failures to act on digital regimes.
We’ve become a nation of ‘lazies’ and we’re much more inclined to use Google to find what we’re looking for as opposed to a decade ago where we’d just walk to the nearest shopping centre and do the work ourselves. With the introduction of voice search devices (such as Alexa and Google Home) as well as local search, finding things from the comfort of your own home is so much easier than it ever has been before. Using local search as an example, let me show you how not honing in on digital can really hurt your business.
This isn’t staged, I genuinely about 5 minutes ago typed ‘pound shops near me’ (knowing Poundworld is a failing organisation) in to Google to test its local search. (Not knowing that it would perform poorly, but expecting it to) and…
Though Poundland is further away, it comes up higher than Poundworld. Also, Poundworld only appears once, missing another two potential opportunities to get that business name a high SERP. This means that those of us who are inclined to pick the top result (which is most of us) would automatically navigate to Poundland as opposed to Poundworld, meaning a decline in footfalls for the business.
As so much of our lives are spent online, it is this kind of mistake which hurts a business beyond repair. As, of course, we are now seeing with Poundworld closing almost 50% of its stores in a survival bid.
Digital is worth investing in now more than ever, end of.
(And no, i’m not biased.)
What do you think?
But hey, i’m no business expert. These are my personal top 3 reasons only and I could sure think of a few more that would resonate with these organisations and their failings. What do you think? Are there any more ‘red flags’ for you surrounding these businesses? I’d love to hear what you have to say in the comments.