Death of a Retail Outlet

POSTED BY Christina Arbini on Feb 10, 2014

Following is a POV written by Andy Shapiro:

It was with bitter irony that I recently watched the last Blockbuster brick and mortar store close. I found myself asking, “Did it really have to end that way?” Granted Blockbuster had been in a slide for years, but it had virtually re-invented its category merely a decade earlier. So what happened?

Years ago, when I was at a previous agency, Blockbuster reached out asking for help to “re-invent” their stores. They saw traffic sliding and figured that if they polished up their store experience, it would reverse the trend. We engaged, but early on asked for a broader scope of work that included re-imagining the Blockbuster entertainment experience. The answer was a swift and resolute no; they wanted a new store. From their perspective, the store was the Blockbuster experience – consumers loved visiting, browsing and seeing their neighbors.

Unfortunately, it was just the opposite. The stores seemed tired and out of synch with where and how consumers wanted their entertainment delivered. We presented a market snapshot that highlighted the introduction and rapid adoption of Netflix, the opportunity for a Redbox type model (keep in mind this was several years ago), and the cable companies vying for consumer entertainment dollars with on-demand content. What we shared with them was the opportunity to transform their business based on the changing needs and demands of consumers. Their brand equity had more than enough elasticity to extend into other entertainment delivery channels. 

During our first conversation, the client informed us that we missed the mark. They were expecting concepts like a co-branded store with Pizza Hut, so consumers could get dinner and a movie all in one-stop. They wanted denser SKU merchandising strategies, giving consumers more options while visiting the store. The exercise was all about changing consumers’ habits to encourage more frequent visits to the store, rather than aligning their visions with the changing consumer habits and rituals. In my mind, this was the fatal flaw and ultimately the end of the line for our collaboration with Blockbuster.

Time and again, we see brands lose their way. Most often they stop listening to the consumers' needs and wants. They adopt a “build it and they will come” philosophy, rather than adapting to changing market forces. We all need to learn from both the market success stories and also the failures. Blockbuster falls into the latter category, but provides valuable clues about the need to adapt to your consumers’ changing rituals and habits. The next time you watch Netflix or download on-demand content from your cable provider, consider how different your options could be if Blockbuster had changed their business model back then to deliver that content to your living room without ever visiting a store. As it is, Blockbuster has finally jumped on the in-home and on-the-go distribution bandwagon through its recent partnership with DISH Network and the Blockbuster On Demand mobile app. Whether or not it’s too late for their brand to gain back a sustainable consumer following is yet to be seen.  



WRITTEN BY Christina Arbini

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Julian Strait

Feb 12, 2014 at 3:09pm

Blockbuster did attempt a pretty radical change at one point: they offered videos by mail almost exactly the same way Netflix does. They even built in incentives for customers to drop their DVD's off in-store instead of just mailing from home—in exchange for free rentals. I think there was merit to that move and kind of a smart tactic to keep customers coming in. Conversely, their downfall seems to have been just that mentality. They fell in the middle, they weren't completely digital and by no means a mom and pop neighborhood location. If they had reinvented themselves into the best parts of what "the movie store" could be or just completely jumped into the digital realm I think they would be in a much different situation. Much like many large businesses, when the boat is that big it's hard to make sharp turns.