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Comet Electricals going bust – Will Amazon fill the gap?

With today’s news that  electricals giant Comet is about to go into administration, it’s a sharp shock that indicates the UK’s recent move out of recession may not be as assured as we had hoped. The bad news for Comet follows the recent closure of their online competitor Dixons.co.uk (owned by Currys) and a UK withdraw at the start of this year by American company Best Buy.

If Comet cannot find a solution to its financial woes and is forced to close, who would be left to stop the market leader Currys from having an unfair monopoly on the high street?

There are of course a few smaller players in this market (e.g. Euronics), but Currys’ biggest competition is increasingly coming from more general retailers like Amazon, Tesco, Argos and John Lewis. It’s these sort of companies that Comet has failed to compete with, not because they offer superior products or even cheaper prices (in most cases John Lewis are more expensive); it’s simply that these stores offer greater convenience with better online shopping and delivery options, as well as no pushy sales people as soon as you walk through the door.

It’s a UK quirk that Best Buy failed to understand when they opened their first stores here several years ago, as many British shoppers were actually put off by the large proportion of sales advisors to shoppers, all wearing check shirts and beige chinos. In contrast, the simple pop it in your trolley experience offered by large supermarkets far outweighs the lack of specialist advice available from staff members, and as technology advances even the cheaper brands on offer at places like Asda Walmart, are not as inferior as they were just 5 years ago.

So with Comet on a collision course to administration, could we see a foreign company like Best Buy making a more cautious investment in the UK electricals sector, by investing in the ailing company rather than trying to re-invent the way we buy TVs and Computers here in the UK.

I actually predict that Amazon, could seize this opportunity to make a major investment on the British high street. They’ve already announced plans to open stores in London, but could they use Comet’s financial problems as leverage and make them an offer they can’t refuse?

Info:

Comet has 6,000 employees.

They have just announced a £35 million loss over the past year, but they have substantial assets, with over 240 bricks and mortar stores.

 

 

On a light segway – the Currys website has now gone ‘responsive’ and uses CSS media queries to make it fit any screen size.  Contact Sparkstone if you would like to discuss making your website mobile and tablet friendly

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This entry was posted on November 1, 2012 by in Bricks and Mortar, business, High street retail, Retail news, technology.

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