Blockbuster Confused Retailing With Technology

Blockbuster's slow, painful stroll into a digital sunset continued yesterday with an announcement it will close more than a third of its stores, proving yet again that the company's confused vision is its most intractable foe.Full disclosure: I ran public affairs at the company in the mid-90s, back when the headlines first declared that technology was going to put it out of business. It was utter noise at the time, so Blockbuster's response was to double-down on its video rentals, and to use its extensive customer knowledge to stock its stores with a variety of other things (music, books, plush toys, and stacks of cheap candy) that it had good reason to believe would sell.

Sure, technology played a central role in its business -- videocassettes, and then DVDs -- but it was, and is, a retail concept. I thought the company knew that. But when digital distribution models caught up with the media hype 10+ years later, it was clear that Blockbuster had chosen to see its strategy as dependent on competing with technology. It invested in its own digital and mail services while letting its stores get more cluttered, its associates less inspired, and offering less thoughtful presentation...and more of a chaotic sprawl of titles.

The premise that digital distribution is better because it's a click vs. a trip to a store just isn't intrinsically true.

"Convenience" is in the eyes of the consumer, as anybody who makes a daily trip to Starbucks will attest. The marketplace is filled with different experiences, but one is just as valid as another, depending on the matching of customers and benefits; some folks will be exclusive to one model, but there are vast numbers of people who will pick and choose depending on circumstance and need. Until the far-off time when DVD players have disappeared from every home, Blockbuster had the opportunity to deliver relevant, meaningful, and utilitarian value...value that didn't aspire to match those benefits better dealt by other technologies, but rather those that were exclusive to its own.

It was up to the business and branding strategists to invent and present those benefits to consumers, and they had many, many years to do it. But the company confused that challenge with all the nonsense about technology, which even today dominates the headlines about Blockbuster's woes. Technology didn't kill the video rental star. Blockbuster did.

Jonathan Salem Baskin writes the Dim Bulb blog and is the author of Branding Only Works On Cattle.