In hindsight, Blockbuster CEO Jim Keyes’ statement regarding the new upstarts and streaming pioneers disrupting the DVD rental industry sounds, at best, naive. “Neither RedBox nor Netflix are even on the radar screens in terms of competition,” Keyes told the Motley Fool in 2008. His company filed for bankruptcy just two years later. In 2020, Netflix’s net worth reached $194 billion, and children younger than 16 have likely never been to a Blockbuster store.
In other words, the time to embrace technology was yesterday. This is true for even the most conventionally “old fashion” industries—from DVD-rental chains to brick-and-mortar grocery stores.
With industry giants like Walmart and Amazon embracing digital retail channels, they’re giving customers the tech-savvy shopping experience they’re looking for, offering high quality apps, personalized product recommendations, preference-tailored promotions, and more. If brick-and-mortar retailers don’t hop on board, they’re at risk of becoming obsolete.
Remember: Blockbuster was once an industry giant. But their refusal to embrace technology was their undoing. And they are not alone.
It’s hard to picture a world that doesn’t include Netflix, or Hulu, or Prime Video, or HBO Max, or Peacock, or...you get the idea. But back in the day, people used to have to go to an actual store to pick out a movie for a movie night. Imagine that.
Blockbuster was a video-rental chain that made a solid chunk of its profits by charging customers late return fees. To be fair, Netflix didn’t start as the high-tech operation it is now; its first business model was a subscription-based DVD mail service. Aside from the mailing aspect, the major difference between Netflix and Blockbuster was that Netflix’s subscription model eliminated late fees. In fact, Netflix's founder Reed Hastings said he originally founded Netflix because he didn’t care to pay the $40 fine he acquired at Blockbuster. How’s that for an incredible origin story?
As Netflix’s digital platform progressed, Blockbuster made a fatal decision. In 2000, the company was offered the opportunity to buy Netflix for $50 million, and they turned it down. Blockbuster failed to see new technology as a legitimate threat, and they paid dearly for it.
Thereafter, Netflix only continued to rise, riding the wave of popularity and digital advancement. By the time Blockbuster launched Blockbuster Online (and ended late fees) in 2004, the company was already light years behind Netflix.
Today, there’s one lone Blockbuster remaining in Bend, Oregon. While it is still renting videos to a handful of loyal customers, it partnered with Airbnb last summer to open the store to overnight guests for just $4 a night: a fun idea solidifying Blockbuster’s place as a relic of a bygone era and even worse, a retail cautionary tale.
Toys “R” Us
Despite being a magical land of childhood joy, Toys “R” Us (ironically) failed to keep up with the new generations. Even childhood joy is no match for e-commerce.
The Toys “R” Us story is a relatively complicated one, but we’ll simplify it: as Amazon and Walmart started selling toys online, Toys “R” Us couldn’t keep up. Instead of jumping on the digital bandwagon, they responded by cutting product prices. A good idea, in theory. But this meant trimming other expenses, like necessary staffing and cleaning services. One former employee cited dust falling from the ceiling.
In addition to this making the Toys “R” Us in-store shopping experience unpleasant, the company still couldn’t compete with the prices offered by Amazon and Walmart’s online stores. By the time the retailer properly invested in an improved digital retail platform, it was too little too late. Other retailers were already two steps ahead.
What’s more, the company’s outdated IT infrastructure wasn’t developed to support the digital changes. Toys “R” Us’ website attempted to deliver a redesigned look, faster checkout, better navigation, and registry revamp—all things consumers want. But glitches and missteps caused issues, including store inventory mistakes and outages during Black Friday and Cyber Monday.
Their failure to digitize properly, in conjunction with a host of other problems, led to Toy “R” Us’ bankruptcy in 2017. The website is still active, but it redirects users to make purchases on—you guessed it—Amazon.
RadioShack was once the one-stop shop for all the new electronic gadgets, and it was even a best-seller of one of the first early personal computers. But the company’s affinity for technological innovation didn’t last; you’d be hard pressed to find a RadioShack nearby.
The first mistake RadioShack made—way back in the ’90s—was deciding that computers weren’t going to be the moneymakers. In 1993, it ceased computer sales altogether and focused all its energy on cell phones (which were, to RadioShack’s credit, a rising technology).
While the company embraced one innovation, it rejected another: e-commerce. When Amazon and Best Buy built slick e-commerce sites allowing customers to easily purchase products, RadioShack's website featured only store locators and press releases. It wasn’t until 2006 that RadioShack added a “ship to store” option. Not only were they too late, but why would a customer drive all the way to RadioShack when they could get their new iPhone shipped right to their home?
The bottom line
Good news: you don’t have to end up like Blockbuster, Toys “R” Us, RadioShack, and the countless other businesses that crumbled in the wake of an increasingly digitized marketplace.
Swiftly can help you embrace digital retail. We can help you grow sales and build brand loyalty, while allowing you to reach more shoppers through retail media networks. Your shoppers want a personalized and digitized shopping experience—we can help you give it to them.
To learn more about working with Swiftly, contact us today!