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Fade to Blacks

Fade to Blacks 

So far, we have seen the abrupt shutdown of Target Canada’s 133 stores, which resulted in a loss of 17,600 jobs, and Future Shop, who cited better performance of online retail for the closing of their remaining physical stores. The latest store to join the closure club is photography retailer Blacks.

Founded in Toronto in 1930, Blacks had a long and storied history as one of the top camera and camera supply stores in the Country. However, in recent years, the chain had fallen on hard times, especially as the number of users of traditional film cameras dwindled.

The chain was purchased by Telus in 2009, with the hopes that it would eventually return to prominence with a new parent company at the helm. However, Blacks continued to struggle, especially since many of the services they offered were available online at little or no cost to consumers.

Blacks’ problems finally came to a head on June 9, 2015 when the company announced that it would shutter all 59 of its locations across the country by August 8. In an official release, Blacks stated that “despite positive momentum and financial improvements our Blacks team has delivered over the last year, we have been unable to realize profitable growth, and it would take considerable investment to adapt Blacks to ongoing change.”

The main question many people have regarding the decision is where Blacks went wrong. Was it a lack of innovation, or were there other underlying issues? IT in Canada spoke to Barry Cross, an assistant professor at Queen’s University, and an expert on business innovation, execution and project management for his analysis of the situation.

IT in Canada: Where did Blacks go wrong?
Basically, what happened was their market evolved, and Blacks was not able to keep up. In fact, we could probably say that their market disappeared, which is really a behavioural shift in their customer and consumer base, and that shift is something that we’re all pretty familiar with.

It’s the fact that we stopped using the core services that Blacks provides, which (included) the cropping, editing, tweaking of photos and relying on them for printing service. People started swapping, storing, sharing and editing photos without ever printing them off.

ITIC: How did the chain suffer from a lack of innovation?
You can look at this two ways. You could say “Was there something that Blacks could have done that could have prevented their failure?” or “Was this the type of change that was inevitable?”

To me, there are different types of innovation. You could look at product-based innovation, services, and even process innovation. But for (Blacks), it would have required some sort of significant business model innovation, which is really just how they operated, who their target customer group was, and how they served those customers.

The core things they were doing inside of their operation were not going to survive. In my opinion, Telus bought an “aging dog” back in 2009. I’m not sure if they thought there were potential synergies there, but at the state that they’re at, there really wasn’t anything I think they could’ve done to prop up Blacks or prevent them from closing.

ITIC: What were some of the red flags that Blacks should have paid attention to?
You look at most businesses has having some level of metrics and key operating indicators, something that would have some indication for them that customers were making fewer requests of their nature then they had in the past. They could also look at less store traffic and the fact that customers were printing off fewer photos.

A big red flag to me was the Chapter 11 (bankruptcy) and closure of Kodak south of the border, which is directly related to that industry, and is in fact one of the icons of the 20th century. That organization declared bankruptcy back in 2012, and is no longer with us at this point. That’s got to tell them that their core customer groups are behaving in a different way.

If we don’t try to get on board and understanding what’s happening here, then we are definitely not in control of our own destiny.

ITIC: Is there something company executives can do to forecast potential market changes or potential areas of concern down the stretch?
It’s really incumbent on all executives and leadership to think about who their customers are. Not only who those customers are today, but who those customers will be tomorrow. What you’re doing there is getting a sense for who you are looking after today, and what your customer group will look like two or three years down the road. If we struggle to do that and we can’t get a picture of that market is going to look like in a couple of years, that’s where we run into trouble.

When we can forecast who those customers will be, and what the market will look like, what we can do is align ourselves to what those customers are going to want. And if we do that, we’ll be fine, but if we don’t, like Blacks or Kodak, we’re probably done.

If we look at what’s going on in the market, how people are behaving, and what they really want, we can tie into that and, in fact, provoke that kind of behaviour in new and interesting ways. That’s where it gets to be interesting.

ITIC: How do these forecasts lead to future trends?
These trends evolve because of companies, and in a lot of cases, because of individuals. Companies create markets; it’s not the other way around. Initially, to me, those companies generate an idea, and it becomes an innovation once they crystallize that idea.

If you look back 10 years, think about your first exposure to an iPod, most of us at the time didn’t know we needed this device, or that we absolutely had to have a device that held 1,000 songs. I’ve got my CD collection, and it’s organized and alphabetized, and I know exactly where everything is. Why would I want something that holds 1,000 songs? We became skeptical about it.

Apple creates that market, and then people start to adjust to it. They start to see the utility, it starts to get promoted and more people are using (the iPod). Then there are people who are influencers who are starting to use these things, and it simplifies our lives.

That’s how the evolution of some of these ideas and technologies (occurs). It’s changes like that in people’s behaviour that led to photography changing from what we would call experiential photography, with iPhones, GoPros, and things like that that are up 30 or 40 per cent. Now, that whole industry is what you would call the self-serve or now industry, where you can upload, edit or publish (photos) without a third-party service.

ITIC: One commonly-heard phrase in the business world is “innovate or die.” Why must companies innovate to stay afloat in today’s marketplace?
Our markets change, where it’s driven by the economy or competitors. Customers change their demographics or psychographics, and you’ve got new Canadians or Americans who are coming in every year.

Markets change, adapt and evolve, and no organization is going to survive long-term if they fail to recognize that these changes are happening around them, and dig in and find ways to manage some of that outcome. There’s a long list of organizations that have suffered because of failures to change and understand those customers.

The markets and population are changing around us, so as business leaders, it’s really up to us to keep a close eye on who these customers are and what they want, and find that one thing we can be best at that’s going to get us attention out there. We can then exploit that, and build a market.

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