Why so many failures?

Businesses come and go, but that’s not a surprise. Especially when a majority of the businesses that entered at the start of the year, leaves at the end of the year. But there are stores and companies out there that we never expected to pack their bags and leave, yet they do. Does anyone remember “The Wiz?” “Nobody can beat the Wiz,” or so it might have been. That store has been around since I was a kid and I was surprised it failed. The same goes for Sharper Image, whom recently filed for Chapter 11 bankruptcy. The business has been around since 1977 and they have stores in many of the malls in the US. If you search the web, there are probably many different opinions of why they failed. It would range from the decline of sales, competition, economy, anything goes. However, these things could’ve been predicted by how Sharper Image has been functioning even if you didn’t look at their financial statements.

Here are some of the so call “symptoms” of Sharper Image’s failure:

Too much diversification: Products sold to several unrelated customers/markets – When a company’s product targets the wrong type of customers or market, they usually don’t last long. Why? They won’t get enough sales. This is a simple implication of a failing business, but who would’ve thought this would happen to Sharper Image? As you walk by the store, or even go into the store, there are usually many customers, well, potential customers anyway. Sharper Image’s products can be pretty cool I admit, but people go in there usually to play with the products more than purchasing them. The price range is another factor that pushes their unique products away from consumers. Some people even claim that the only people lining up to the register most of the time are tourists, more than local customers. If your store is targeting the wrong customers, no matter how cool your products are, they will not help your business succeed.

The company does not have much product variety compared to competition – When companies are too focused on one or two of the products that they are selling more than everything else; they are bound to hit obstacles sooner or later. Sharper Image has been known for their Ionic Breeze Air Purifier, which has been turned against them by lawsuits. It is one thing if your product is out of style or the trend is heading another way, but when it is being sued and you have to recall your product, that’s suicide. How many other things can one recognize from Sharper Image besides their purifiers? Their massage chairs? Trump’s Steak? Their other electronics aren’t much of a sale since customers can buy them else where with a better selection and probably at a cheaper price. That was what hurt Sharper Image the most; counting on their purifiers, massage chairs, and Trump’s Steak. Going back to targeting the market, their products are sometimes just targeting a risky portion of the market.

Shaper Image is a wonderful store. They have great ideas and innovative products. But when you start counting on things that aren’t a necessity in a consumer’s life and aren’t backed up by anything else, it can be a hard business to sustain. The lawsuit was another factor toward their road to bankruptcy, but this was also because Sharper Image did not have another product to pick them up or be their cushion. I’m not saying that selling innovative products or high end electronics will set a business toward failure, but when there is no backup plan, it is hard to pick up the business if they hit obstacles such as the purifier situation. For Sharper Image to recover, they would need a new and amazing invention or a better way to attract customers. Since the economy plays a great factor, if Sharper Image keeps pushing the same strategy, their products will only be going against the current.