Page 3: Economic factors
Impacts of recession
Changes in the wider economy impact on businesses. In 2008–09, the UK economy went into recession. This had a negative impact on the retail industry. During this period unemployment was rising. Even people in work felt the effects of the recession. Many employers were forced to cut wages or to keep pay rises very low.
As a result, consumers had less disposable income. This means they are less likely to purchase luxury goods. This had a direct impact on Jessops as camera sales declined. This was just one of the factors that forced Jessops to restructure its operations. The company was required to obtain funds from the bank to finance this restructure.
In business, the term margin relates to the amount of profit that a business makes on sales. During the recession, Jessops’ sales margins on hardware were falling year on year. Fortunately, the margins on services such as photo and imaging remained stable. To improve the overall company margin, Jessops decided to focus its attention on making its imaging business the market leader.
Responding to competition
Another important economic influence on a business is the level of competition in its markets. In the photographic and imaging market Jessops is facing increased competition. Online competitors include Amazon and online photo printing companies. Jessops also faces competition from supermarkets. Although supermarkets do not have Jessops’ reputation and expertise, they are able to offer low prices.
Jessops response to this difficult economic and competitive environment is a multi-channel strategy. This involves offering customers more options in how they access Jessops’ products and services.
Customers can now order images and gifts in various ways. In addition to visiting the stores, customers can make purchases and orders online. The online service is supported by a responsive call centre and draws on Jessops’ longstanding expertise in the industry.
The company has also increased its product portfolio. It now offers a wider selection of products to meet customer demands. This approach is leading the market, and it has enabled Jessops to obtain a competitive advantage.