Seeing REDgroup – Part 4 – A Perfect Storm

8 03 2011

A Perfect Storm

The failure of REDgroup is ‘A Perfect Storm’ writ large.  They were saddled with major debt right form the start, have been financially squeezed from every corner, but more than anything else they’ve compounded their problems with a sequence of bad decisions made by “bovver-boy” managers installed at the expense of losing their inherited experienced staff, thinking that the book publishing and retailing industry would yield to corporate thug tactics, or that consumers would be the slightest bit interested in buying barbecues from Borders.  One could argue that PEP made a mistake even buying the beleaguered (Borders) chain in the first place.  Alas, 20-20 hindsight comes easily.

Books are a sacred miracle of human evolution, representing that quantum leap from storing information only in our heads to be re-told to our descendants in stories, song and teachings, to miraculous devices that are easily and cheaply copied with fidelity, allowing an author, perhaps dead millennia ago on another continent, to speak directly into our head.

But where we buy books (and many other things) from is anything but sacred – most of us don’t give a toss, we just want to pay a fair price, and if Amazon et.al. can sell & ship it to me for up to 50% less than Borders or A&R can, where do you think I’m going to go?  And if I can have a book without a single tree being felled… hello?!?

It was this ‘revolution’ in book publishing that was partly responsible for lifting of the veil of the Dark Ages, a fundamental shift in humanity’s course.  Why should a significant refinement in how books are made, delivered and read also not have a significant impact on society again now? It’s not like I have a vendetta against bricks-n-mortar book retailers, but we simply don’t need as many of them as we used to, and will continue to need less of them as more people buy online and switch to eBooks.  Blacksmiths and shoe repairers died out because we didn’t need them any more.  So too will many categories of brick-n-mortar retailers, and hopefully coal miners.  That’s unavoidable progress.

REDgroup isn’t the first retailer to face the 21st Century and fail.  It won’t be the last.  But relative to its book retailing peers, it fell *now* because it made a bunch of bad decisions by people who didn’t understand the subtle, respectable, low-profit-margin art of bookselling.

And I’ve learned a lesson in being dependant, albeit indirectly, on an Old Media business failing to meet the challenges of the 21st Century.


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