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Introduction

Jessops has been a leader in the photographic business for over

75 years. The Jessops story began in 1935, when Frank Jessop

opened a photography store in Leicester. Today, the company is

the UK’s premier photographic retailer operating from over 200

stores around the UK. In addition it has an online shop and call

centre. Jessops is the trading name of The Jessop Group Limited,

which is a subsidiary of Snap Equity Limited.

A key part of Jessops’ product portfolio is its photo and imaging

business. Jessops operates in two main sectors of the

photography market.

The modern photographic industry has changed radically. The

business originally focused on producing prints from photographic

film. Every shot of a reel of film was printed regardless of quality.

Today, however, digital cameras allow consumers to choose which

prints are produced. As a result, traditional film printing in the UK

is declining by around 30% year on year. This poses a challenge

to the directors and managers at Jessops. To sustain and grow

the business, they must develop ideas and plans to combat the

changing market and stimulate new demand.

This case study reviews the external factors that have had an

impact on Jessops’ operations and strategy. It shows how

managers study the company’s external environment through a

PEST analysis. This involves identifying the political, economic,

social and technological factors in the external environment that

could impact on the business. This information is then used to

assess the company’s current position within the market.

The findings of the PEST analysis can be used by the board of

directors to reassess business strategy and tactics. The board

will decide what changes should be made to business operations

to respond to external environmental changes. In this way,

through carefully analysing the political, economic, social and

technological changes in its external market, Jessops has been

able to develop new business opportunities.

Curriculum Topics

• Political factors

• Economic factors

• Social factors

• Technological factors

G L

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S A

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www.thetimes100.co.uk

Subsidiary: A business organisation that is owned completely or part owned by another business. Product portfolio: Range of goods and services that a company produces.

Strategy: A plan for making major changes in an organisation and its activities.

Tactics: Decisions driven by short-term objectives within a longer-term strategy.

Environmental changes: Changes that take place outside of a business organisation.

www.thetimes100.co.uk Jessops | Responding to changes in the market environment 61

Responding to changes in the market environment

Hardware

Photographic equipment ranging from compact cameras to digital single lens reflex cameras

Services

Photo printing and imagery

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Political factors

Businesses can be affected by many aspects of government

policy. In particular, all businesses must comply with the law. They

must also consider the impact of any forthcoming legislation on

their operations. This may require taking action before the

legislation comes into effect.

One issue that affects manufacturers and retailers of electronic

goods is the disposal of these products at the end of their life.

Recycling is high on the public agenda. There are government

initiatives to promote more recycling. These initiatives are sometimes

backed by legislation. For example, the Waste Electrical and

Electronic Equipment (WEEE) regulations are designed to reduce

the amount of electronic waste going to landfill sites. Businesses

must obey these environmental laws. However, a company that

goes further by taking other measures to minimise its

environmental impact will be seen more favourably by consumers.

Jessops responded to the WEEE regulations by contributing

towards a national fund to assist local councils to develop

collection facilities for electronic goods. The company is working

to increase awareness of the WEEE regulations. It has set up

convenient battery recycling points in its stores. These responses

show a dedication to minimising the company’s environmental

impact. This could give Jessops a competitive advantage over

competitors that have not taken these initiatives.

Businesses also have to take into account the more general

political ambitions of the government. The current Conservative-

led coalition government is cutting jobs in the public sector and is

hoping that the private sector will grow to create new jobs in the

economy. The private sector consists of small single-owner

businesses (sometimes known as sole traders), partnerships and

companies, like Jessops, owned by shareholders. The

government’s emphasis on private sector growth could provide

opportunities for Jessops if it leads to a more buoyant economy.

Economic factors

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.

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.

G L

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Private sector growth: Growth of businesses that are owned by individuals and groups of individuals rather than by the government.

Recession: A fall in the level of national output and expenditure for at least two consecutive three month periods.

Disposable income: That part of an individual’s or household’s income that remains after deductions for tax, national insurance and a pension.

www.thetimes100.co.ukJessops | Responding to changes in the market environment 62

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2008 2009

UK consumer spending Falling Falling

Jessops’ margin on sales of photographic equipment Falling Falling

Jessops’ margin on sales of photos and imaging Constant Constant

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Providing customers with an ideal solution

to meet their photographic

needs

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.

Social factors

Society is continually changing. For example, tastes and fashions

constantly change. As an example, consider the growing

popularity of social media such as Facebook, especially among

younger people. Unlike their parents, young consumers have

been brought up in an age where mobile phones and computers

are used every day. Young customers are more likely to use digital

technology, to shop online and to prefer online methods to print

images. Older generations are more likely to stick to traditional

methods. For example, they are more likely to want to have their

photos developed and printed in-store.

Jessops must meet the needs of all customer types. It is

important that Jessops caters for more traditional customers, as

65% of the photo business is still associated with producing

standard prints. However, the company is responding to the

younger demographic by delivering its multi-channel strategy

using modern technologies. For example, iphone, android and

ipad apps which allow customers to order and print gifts directly

from their phone/Tablet. Customers can upload and download

images from Facebook to use in a single-image premium product,

such as a high-quality print or wall art. They can produce photo

books – a collection of their images presented in a personal book.

A challenge for Jessops is to increase customer awareness of this

product. Its research shows that 80% of people in the UK have

not come across the idea of a photo book.

As well as meeting the needs of the different generations,

Jessops is also developing products for niche markets. It offers:

• services for students who need to produce portfolios, including

art and design work

• short print runs of personalised products such as headed

notepaper, business cards and calendars

• products designed specifically for professional and amateur

photographers.

Consumers’ expectations are higher than ever. Today’s customers

want products and services on demand. They are not prepared to

wait. To respond to this social change, Jessops now offers a

25-minute service for prints or a one-hour imaging gift service for

products such as photographic wall art, posters, banners and

photo books. It has also introduced an in store photo portrait

service where customers can have their portrait transformed into

gifts on the same day. It is refurbishing many of its stores to

improve customer service. Many consumers like to try a product

before they make a purchase, so customer interaction with

products is a key feature of the new stores.

To underpin the new focus on multi-channel delivery and gift

products, Jessops has invested heavily in staff training and

development. Staff are trained to be experts in their field. They are

given the knowledge and skills to provide a high level of customer

service. This is increasingly important in a competitive retail

environment. As a specialist retailer, Jessops seeks to provide the

best possible service to its customers. This is a total process

involving three key stages. High levels of customer service will help

to provide competitive advantage and create loyal customers.

Technological factors

The photography and imaging business has experienced

considerable change in recent years. Technology has been at the

forefront of this change. New digital cameras and digital media

enable ordinary people to take high-quality photographs. These

images can be quickly edited and altered. The digital camera market

has expanded rapidly as a result. It is also quickly changing. For

example, as more mobile phones come fitted with good quality built-

in cameras, sales in standalone digital cameras have begun to fall.

The development of the internet is also having an impact on the

market. Young consumers are also much more willing and

confident to experiment with new media. More customers are

using the internet for shopping. The development of these new

selling channels has helped to push down prices.

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Training and educating customers to get the most out

of the products

Helping customers to purchase the most suitable photographic

equipment and photos

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Modern photographic equipment is much more affordable. High

specification cameras can now be bought at relatively low prices.

The increased use of the internet has also started to change the

way people use photographs. Increasingly, people use social

media to share images online on sites such as Facebook and

Flicker. Many people upload images from their mobile phones

onto a social media site. By consuming and sharing images in this

way, there is less demand for print copies. Sales of digital prints

are declining by 10% a year.

Jessops have come up with technological solutions in response to

these changes. Customers are now able to print images taken

from social media or other websites. These images can be printed

in a variety of sizes and shapes. They can be compiled in photo

books. Selected images can be printed on canvas, acrylic and

aluminium. Customers can incorporate their images in gifts such

as calendars, posters and greetings cards. The company is

responding by providing products and services that reflect the

way that customers take, use and distribute photos. It has an

integrated service for images created on mobile phones and

loaded onto social media sites.

Jessops is seeking to make its customers aware of all its multi-

channel services. These include a range of new opportunities for

printing images and for uploading and downloading images to

Facebook. New developments include being able to create photo

books and gifts from images generated through Flicker and

Picasa. Customers can also order their digital prints online and

collect them from their local store. These developments, alongside

a wider range of products, improved online functionality and

consumer finance with an instant decision, have resulted in rapid

growth of Jessops’ online business. In fact, its .com business has

trebled in size over the last 3 years.

By using wide-format printers, customers will be able to have wall

art printed on site within the hour. New kiosk technology will

enable customers to convert old videos and films to digital formats,

with results saved to Blu-ray Disc or DVD. Tablet style kiosks with

a seating area will be introduced to Jessops’ centres of excellence

to allow customers to order their images in a relaxed environment.

Jessops also offers customers a free 10gb storage facility that can

be accessed in store via a kiosk or online. This allows customers

another way to save their images. These images can then be

accessed online, in stores or through smart phone applications.

Conclusion

In order to survive in increasingly competitive markets, businesses

need to monitor and respond to changes in their external

environment. This case study shows how changes in society and

technology have particularly impacted on Jessops. The company’s

response has been to ride the wave of new technological

development. The emphasis has been on developing technological

solutions to the meet the needs of today’s customers. It is based on

the recognition that sophisticated consumers require a range of

digital solutions to access and display their images. The success of

Jessops in rising to changes in its external environment has been

recognised. It was awarded Best Retailer of the Year 2010, the

Gold Good Service Award 2011 in Amateur Photographer

magazine and was nominated for Multichannel Retailer of the Year.

G L

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Picasa: An image organiser and viewer for organising digital photographs.

Kiosk technology: Kiosks fitted with touch screen technology so that customers can adjust, crop and play around with images that they want uploading or printing.

www.thetimes100.co.ukJessops | Responding to changes in the market environment 64

Q U

E S

T IO

N S

1. Why might an organisation wish to carry out a PEST

analysis? What are the four key components of a PEST

analysis? How does a PEST analysis help to provide a

picture of the challenges facing Jessops?

2. What has been happening to margins at Jessops? How

have these margins been affected by changes in the

economy, and by changes in competition in recent years?

3. Formulate a strategy for Jessops that will enable the

company to respond to changes in the environment in

which it operates? What new products and services

should it be seeking to develop in order to respond to

changes in its environment?

4. Which of the technological changes that Jessops has

faced do you think would have had most impact on the

organisation’s margins? What technology-based solutions

can Jessops develop to respond to these changes?

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