Jessops was last night rescued out of administration by Dragon’s Den star Peter Jones in a surprise acquisition of the brand. Retail Week studies the implications of the deal.
Peter Jones’ acquisition of the Jessops brand appears a good fit, as Jones operates electricals retailer and service provider Expansys, already selling digital cameras online.
As an entrepreneur, Jones is expected to refresh the company, keeping it as an online only operation after shunning any hope of the 187 stores Jessops closed just two days after it went into administration re-opening.
Until yesterday, restructuring specialist Hilco was tipped to be leading the bids for Jessops but Jones’ surprise acquisition has been welcomed by commentators.
“He will inject excitement,” says Conlumino managing director Neil Saunders. “It is very helpful that he is a big name and most people have heard of him.”
Saunders believes Jones’ backing will give shoppers the assurance to shop at with a brand which could be tainted by its administration. “He will be able to transfer the trust from his own personal brand on to Jessops,” he says. “He’s a builder, he is not there to strip Jessops of its assets like some of the others that were interested in it.
However, Jones will still have to tackle a retailer which has proved its business model does not work in its current form. The biggest contributing factor to Jessops’ administration was its product range’s increasing irrelevance in a market dominated by smartphones with cameras.
Independent analyst Nick Bubb says Jones may extend Jessops’ product offer to include smartphones. But he cautions that, as in the case of Dixons’ Pixmania business, extending its range away from its core camera offer has failed.
“Jessops will have the same problems as it did before it fell into administration,” Bubb adds. “It certainly won’t be a licence to print money.”
In addition, Jessops will still have to battle for market share with its chief competitor - electricals giant Amazon. The supermarkets have also taken share from Jessops with increasing sales of entry-price cameras in recent years.
But Saunders believes that Jones’ strength lies in his existing operations. His existing Expansys business provides a foundation for Jessops to become a bolt-on rather than building a new etail business from scratch.
And Jones’ decision to keep Jessops online-only appears to be key to the future of the brand.
“One could make a financial case for having a handful of stores for consumers looking to browse and for advice,” says Saunders. “But I don’t think Jones would want to take on too much because it would be going back down the route that went wrong in the first place.”
It is positive news for the retail sector following a month of high street failures which has also seen the fall of two big name bands HMV and Blockbuster.
Trading will remain just as tough online as on the high street for the 78-year-old camera specialist but Saunders is positive: “The Jessops brand is safe in Peter Jones’ hands. It is the best possible outcome for Jessops. And it shows there is still interest in the retail sector. It’s not all doom and gloom.”