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back to article Why did Comet fail? Hint: It wasn't just the credit insurers

Comet's fiscal light was burning less brightly well before OpCapita entered its orbit, but the venture capitalist's involvement snuffed it out entirely. Signs that all was not well can be traced back to 2008, when Comet's profit before tax tumbled from £56m to £25m. In successive years it posted losses of £8m, £3m and finally £ …

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FAIL

"consumers stay away .. avoid dogged selling of extended and expensive warranties"

Spot on - that's what put me off. They were sold so hard that you couldn't help but look into them properly and realise what a rip off they were. Then you start to wonder if the whole shop was too...

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Anonymous Coward

Re: "consumers stay away .. avoid dogged selling of extended and expensive warranties"

12 years ago I attempted to buy a TV from comet for £1.5k. They spent 10 minutes trying to convince me to take out extended warranty at which point I told them to shut up or lose the sale. They lost the sale.

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Re: "consumers stay away .. avoid dogged selling of extended and expensive warranties"

I didn't realize just how much of Comet's profit came from the extended warranty rip-off - although (according to the article) it made £56M (on a turnover of £2B), that included £54M in warranty sales, which has a huge margin compared to the hardware sales.

You could amost call the hardware business a loss-leader for the warranty one, so when the latter collapsed as people got wise, there wasn't really a hardware business in any real sense of the word.

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Re: "consumers stay away .. avoid dogged selling of extended and expensive warranties"

It's not just the extended warranties - it's the hard selling of peripherals, such as Monster cables that puts people off. My parents were conned into spending £80 on Monster HDMI cables by Comet staff. When they asked if cheaper cables were available they were told that cheaper cables would ruin the quality of the image on their new HDTV. Sadly, they didn't tell Comet where to stick their cables and walk out of the store. Instead they paid up.

When I found out I hit the roof and got on to Comet HQ - eventually getting to the then CEO. It was only his personal intervention that got a refund for the unwanted cable and an apology. Yet Comet continued to aggressively promote Monster over no-brand cables that were just as good.

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Anonymous Coward

Re: "consumers stay away .. avoid dogged selling of extended and expensive warranties"

Couldn't agree more! We went into Comet to look at TVs a while ago. I asked a question about some models and the guy completely ignored my question and spent 10 minutes trying to flog us some ludicrously priced monster cables. We walked out and straight into the loving arms of Amazon. Flip side we bought a hoover a few months ago from the same shop and not only was the price comparable to online but the sales assistant was actually quite helpful. Some you win...

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Retailers have to change. They dont have a monopoly on consumers wallets anymore. As proven time and time again, unless they adapt, they will be finished. Comet could have survived and thived, but they, like may other retailers, are stuck in a past mind set. Adapt or die

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Reminds me of several other industries out there which are currently being dragged kicking and screaming out of the 20th century.

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Anonymous Coward

It was bought to be asset stripped. Same will happen to Game. Some murky dealings must have gone on in the background, no company sells itself for £2 and then 'gives' £50m to cover 'liability'.

I do wonder sometimes if a bit of laundering took place.

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actually they do. Jaguar for one. MG too. If done properly it absolves them from debt for a fresh-ish start. The 50M was to cover "possible eventualities" and was most likely held by parent company as a bond anyway (so written off their books a long time ago).

However, if the turnaround company turns out to be an asset stripper then this is a bad call.

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A trend, not a case

There's little point in examining Comet as a simgle instance and saying "this went wrong, they did that badly, there were the following external circumstances ... "

The simple fact of the matter is that high-street electrical retailing in general is dying off. It starts with the smallest and least well run - but inevitably progresses to the larger, more resilient outfits. The reason: people just don't feel the need to walk into a store, be ignored or get bad advice and then have to wait at home for a delivery - when they can just go clickety-click in their sitting rooms and THEN wait at home for a delivery. Safe in the knowledge that distance selling regulations will absolve them from any mistakes due to poor choices.

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Anonymous Coward

Re: A trend, not a case

I only use the high-street stores to physically look at the goods, after that I order them off the internet. This isn't limited electrical goods, it applies to most things I buy so I don't think it is just the electrical stores that will have problems.

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Re: A trend, not a case

The reason: people just don't feel the need to walk into a store, be ignored or get bad advice

Apple stores seem to get it. Lots of staff who knows what they are talking about and they make the sale right in the shop too so you don't have time to regret while waiting in line to pay. Too many retailers focus only on lower prices and even lower operating costs which always gives drab shops, staff that cannot be trusted with condiment management at a fast-food joint due to health & safety issues and "Make Money Now" scams like extended warranties. The "most-valued-customer"-experience is just about the only advantage that the physical shops have over the internet and most are managing to throw even that away!

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Re: A trend, not a case

I think Apple stores are a pretty unique case. People have generally made up their mind they want an apple product when they go in and they can't get it cheaper elsewhere. I'm sure other stores would love to be able to follow their lead, but they'd just go to the wall fast with incredibly high overheads. The main difference between employee's in the apple store and PC World is the uniform.

As for the article, Click and Collect is a must in my opinion. The only reason I wander onto the PC World website is because I can get the product cheaper than in-store and pick it up on the way home. Perfect for those "I need this right now, I can't possibly survive another second without one" moments.

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Angel

Re: A trend, not a case

I'd say John Lewis are a pretty good case of how to do it right. I bought a Samsung TV of them several years ago for not much more than it would have cost online.

Great delivery, not only turned up but rang before, offered to set it up ect. Also when it inevitably stopped working two years later due to blown caps I just rang them up, man comes to pick it up next day leaving a comparable replacement TV, and returns it fixed within a week.

Now if anyone asks for advice where to buy a TV I tell them John Lewis.

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to buy a TV

A couple of years ago I went to comet to buy a TV and failed. (And still don't have one).

I went to comet with the express purpose of buying a TV and didn't manage it. One has to ask what happened!

First, the sales guy said I shouldn't buy a TV based on the quality of the picture on display in store, instead I should explain what I wanted and trust his recommendation.

I understood why he was saying this because apparent quality will change between watching over-compressed sky news or a blue ray DVD; but I could still see if the artefacts were crisp, and I still wanted to see.

The real problem seemed to be that comet were incapable of displaying a TV to best advantage. Their sales guy understood that and tried to be helpful.

But the store display strategy prevented me from buying. No doubt Curry's are the same, so I'm still using a 23 inch monitor to watch DVDs. (I don't buy blue ray anyway)

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Re: to buy a TV

As a general rule, it's pot luck whether the TV or Monitor is adjusted to suit the lighting in the store. And, as you say, the quality of the input channel can be dodgy.

I did have a good experience with Currys, as my elderly father needed a new TV, and I was able to combine a website that showed useful pictures of the remote with being able to take him to see it. It went well.

That maybe suggests how the surviving retailers can hold their own. They have to combine internet and physical shops in useful ways.

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Stop

OpCapita didn't fail

They succeeded in what they set out to do - make a big profit from Comet. Whether that was through successful trading or closing down was irrelevant to them.

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Anonymous Coward

Re: OpCapita didn't fail

Yep another business shafted by an asset stripping VC.

Who said Gordon Gecko was dead ?

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Re: OpCapita didn't fail

'Who said Gordon Gecko was dead ?'

Didn't he just stand for the Republicans?

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Stop

- No stock on site.

- Unhelpful, and sometimes just plain incompetent, staff.

- Pushing warranties that have "con" written all over them (sometimes costing more than the product you bought over the first year, let alone anything else).

- Nothing of an anywhere near reasonable price.

When I only visit your shop because I have to (my ex- was a mystery shopper and we use to audit such places for correct stock / pricing on occasion, as well as the normal "buy something, return it next day, then tell them you're a mystery shopper" job), and when I spent most of my time in that shop listening to the incredibly atrocious lies that you tell customers in order to sell them everything you can, that's when you're going to start to disappear if you don't do something to fix it. Honestly, most of the staff in the shop wouldn't know what a random feature you picked off the product description was if you trained them for another year just on that.

To be honest, I'm not surprised Comet is the first out of all the big names, but I will be surprised if it is the last. Soon to follow: Currys (already absorbed Dixons), PC World and - maybe - even Maplin (though they usually have someone on site who knows what they are doing, most of the sales staff are Comet-rejects, and their prices are basically "price * random * 2" from what I can tell, and their biggest saving grace is a half-decent online store). I haven't been in a phone store for years, but I suspect that most of those suffer the same problems.

If you own a shop, I need to be able to walk in, feel comfortable, find someone who can convince me I can trust them and that they know what I need, find such suitable products, pay a decent price for them, and walk out with the product same-day if I want (or schedule delivery for some reasonable time-frame for much larger items). That's pretty much 99% of retail. Comet failed on almost all of it, and some other stores are not far behind.

The fuss about credit insurance, VC, etc. is really just the problems that occurred *AFTER* they got into trouble, when people stopped relying on the local electrical store for all their white goods etc.

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"and - maybe - even Maplin"

Maplin are already down the tubes. I went their some years ago to buy some 2x20-way IDC headers and they gave me a blank look and said they had no idea what I was talking about, before leafing through the catalog and telling me there was no such thing.

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Anonymous Coward

Working in the IT department for a piss poor small retailer that is next in line for the administrators, I see everything that is going wrong here without being able to do a thing about it. I wish our MD would read the second to last paragraph in Lee Dowlings post. That absolutely hit the nail square on the head. Well said. Trouble is, our MD never listens to other points of view and he always thinks he is right. I wonder if the management at Commet were equally as blind to their inevitable fate.

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They didn't even stock 74-series logic when I last asked. I buy components on eBay.

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Maplin has changed a lot.

Maplin have changed a lot since it was the place for tools and components. It started out mail order, and I sometimes wonder if that side works well in the retail parks and their sheds. But it is far from a total loss. If you remember the old days, it doesn't look so good now.

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Alert

The Comet Syndrome

In PC world the other day. No iPad minis in stock (only scratched display model they were not to keen to let me fondle). No Kindle Paperwhites even on display, never mind in stock. Stock spread around a rather large floor space with big gaps in. Not very inviting.

Next?

There is a lot of retail space out there that could be converted into affordable homes.

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Re: The Comet Syndrome

I remember the Maplin of the past too, but in some places it's still there. The problem is that selling one NE555 a month isn't profitable to stock such things all separately or even the time it takes the assistant to dig one out.

I can understand their shift in their physical stores (stuff that people are likely to wander past and get, rather than go hunting for obscure component X and hope they have it), but they still like to pretend that they can do the technical side too. The mail-order side handles the more esoteric orders pretty well, but the pricing for small orders can be a problem.

I do remember when most of the Maplin catalogue (which used to be free!) was circuit diagrams and specifications rather than disco equipment and toys. Maplins moved with the times a little though - not perfect, but they realised what would happen to somewhere that was *just* a niche electronics supplier in the high street and adapted. You have to give them credit for that, though how long they can keep it up remains an open question.

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FAIL

To be fair Lee

Normally they had plenty of stock, but never where it should have been on the shelf, god help anyone who asked how much should this be as they would point to the price tag in front >_<

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Meh

Re: The Comet Syndrome

I've been in a few Maplin stores. Look in the back for a sort of "trade counter" type area. That seems to be where all the small parts, cables, IC's are.

Main shelving is generic "PC stuff".

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Vic
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> Maplin are already down the tubes.

I bought something frmo them a couple of years back. I had to order on-line (they had no stock) to be delivered to a local store.

I picked the box up and took it home. the kit was DOA, so I returned it.

Maplins would neither refund nor replace from the store; I had to wait a fortnight for the refund, then re-order.

So I don't buy from Maplins any longer.

Vic.

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Just overstretched really?

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The one advantage that physical retail has..immediate availability

Last time I went into my local Comet retail store I was shopping for a slimline dishwasher, being the impatient arse that I am, I wanted it to take away. They had 3 in stock TOTAL, and the 3 were all the budget brand. the display range was about 25 models+.

One of the last competitive advantages for physical stores is instant availability, take away now, yet Comet failed to capitalize on this single advantage. If the customer walks in, selects a model, then gets told it will be 8-10 days for delivery, of course they will go home and order it from someone who can deliver it next day. Having a very small selection of take home today items is pretty much useless unless you are very crafty with model selection, which in my case they clearly were not.

Having a shop isn't a bad thing in today's world, but you need to build your model to capitalize on its unique selling points, not try to out-compete the on-line environment by being an advice/selection centre with piss-poor fulfilment.

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Re: The one advantage that physical retail has..immediate availability

So if they had 25 models on display and 3 stock units for each, that's 75 dishwashers out the back.

Repeat for fridges, cookers, and the rest, and multiply by the number of stores, and that's an entire warehouse of stock per store, with the cost of rental space, credit for the stock, and possible losses on items that never sell, just on the off-chance someone wants to take away a big item.

How often do people do that? Not often, I'd guess.

Reality is the delivery items are kept at the manufacturer's stock depot, which may not even be in the UK. Or they're built to order.

Which means that unless you want to prod before buying, you may as well shop online, because delivery times will be similar.

White goods stores are basically a catalogue you can walk around in. It's really, really hard to imagine how they could be more than that now.

There's possibly a small market for high-end domestic consultancy[tm] where stores provide a complete kitchen experience[tm]. But most people buy on price, and stores are currently a good way to destroy value, not add to it.

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Re: The one advantage that physical retail has..immediate availability

That's how Comet started in the late 1960s. They traded out of an old textile warehouse in Leeds which was packed floor-to-ceiling with boxes. There was nothing on display, make your choice elsewhere then just collect the box. Their prices were *way* lower than the high street, plus they sold real hi-fi (Quad, Armstrong, Leak et al) at a discount which was unheard of at the time.

Shame to see how things turned out.

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Re: The one advantage that physical retail has..immediate availability

Being a person to whom if it works then it's good enough (form follows function), I've ended up getting most of the white goods I've needed to buy recently (mainly washers and driers) from our local Co-Op.

OK, you often only have a choice of 1 or 2, but they take are prepared to sell the display model if they don't have any 'out back', and give a discount and full warranty if you end up with the display model.

Walk in (even quite late at night), see what they have, check whether it should do the job, go to the till, get the duty manager paged, purchase, and take out to the car, often being helped by the manager themselves! It's that simple (helped by the fact that we've got an MPV).

You have to put up with a small choice, and the brands that they stock, but so far, we've always got something that will do the job! I know that will not suit everybodies shopping needs, but it works for us.

In reality, not having devices available in stock is a direct concequence of too much choice. As pointed out bu a previous poster, it is simply not possible to keep several instances of every item if you have a large range being displayed, especially when it comes to white-goods.

In some respects, I would prefer to have guaranteed availability in store of a smaller range flagged on the display, with other items on display carrying expected delivery information. This makes sure that immediate availabillity can be part of the customer decision up front, rather than making it something you have to initiate a dialogue with the sales person in order to find out that they have.

The other thing I find amusing when looking through the spare parts listings for white goods is how many of the different brands are built in the same factories using the same parts, and only differ in cosmetic detail. It would be so much nicer to not have the same device with a different brand confusing the potential customer and cluttering up the display in these sales-warehouses.

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Unhappy

Re: The one advantage that physical retail has..immediate availability

"In some respects, I would prefer to have guaranteed availability in store of a smaller range flagged on the display, with other items on display carrying expected delivery information. This makes sure that immediate availabillity can be part of the customer decision up front, rather than making it something you have to initiate a dialogue with the sales person in order to find out that they have."

This sounds *very* pragmatic to me but of course that means *senior* management (at HO level) have to do some actual *thinking* about what to stock and what to hold centrally. Such *hard* choices on the pittance they are paid (yeah right).

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Re: The one advantage that physical retail has..immediate availability

"So if they had 25 models on display and 3 stock units for each, that's 75 dishwashers out the back."

Then you dont sell 25 models in the shop! Or segragate "display for order" and "available now". That way you dont piss your customers off. I remember shopping in a place in Preston called apollo 2000. This place did a roaring trade - the reason was the item on display was the item you took. The showroom WAS the warehouse. No messing about and they haggled too. Bought pretty much all my white goods from there till I moved away.

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FAIL

Re: The one advantage that physical retail has..immediate availability

Indeed, I see no reason why this kind of "home electricals" shop can't offer "Next day delivery" on pretty much everything, with "Take Home Right Now" on a small selection - clearly marked as such.

Ok, if you live too far away from a major city then next-day can't happen, but you wouldn't need many depots. We do next-day for most of the country on goods of similar sizes from just one depot - ok, higher margin goods but still.

Argos, John Lewis and Amazon do 3-day home delivery on white goods, while holding a much greater range of products. Comet didn't appear to do that.

I rather suspect that Comet didn't actually hold any stock of many of their lines, and was trying to buy from their suppliers after the customer purchase as that's the only way I can think of to justify a 2-week lead time. It was certainly impossible to get a replacement for a failed unit in a reasonable time both occasions it happened to me - ended up with refunds and bought replacements from John Lewis, much faster.

The Comet staff were also really pushy and rude, so I decided never to go back - and I laughed when I saw my local Comet being boarded up earlier this week.

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FAIL

Really a surprise?

When you run a store with staff who know nothing selling overpriced goods?

We were replacing our fridge last year and looked at one with an inbuilt water dispenser and a big label on the front that says "pure filtered water" (or words to that effect) so we ask a chirpy store droid whether that includes limescale removal.

Cue a 5 minute trip to ask someone.

"No it doesn't just impurities"

"Oh like what?"

Cue an expression on her face that suggested we should know that our water is horribly impure and should always be drunk filtered.

"So do the filters need changing"

"Oh yes" she beamed "we have a subscription plan to sell you a years supply of filters so you don't need to worry about running out for £x" a horribly inflated price.

To top it all online they had the same fridge as a "special online only offer" with a slightly different product code for about £200 less. Are you surprised you're out of business when you treat customers like mugs?

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Thumb Up

Re: Really a surprise?

Online only offers are a rather quite good idea, you just roll up with a print out from their own website, get a close look at the product, tell them to match it in the shop, and walk away with whatever it is you're buying. They can't really argue against matching the price as delivery would cost them more compared to you leaving the shop with it and that shop would lose a sale.

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Re: Really a surprise?

"When you run a store with staff who know nothing selling overpriced goods?"

Indeed. On the occasions I have been in there to consider buying things, I've tried asking the person-from-that-department the differences between two similar products, and their help has consisted of reading out to me what it says on the specification sheet taped to the products. Well, thanks, I can read for myself.

When I was looking for a new fridge/freezer earlier this year, this even confused the salesdroid as the make and model was the same, except for two additional letters on the product code, and an extra £100. Everything else was identical. Since I clearly wasn't just going to buy it, he went off to the back room to "find out", and after half an hour still hadn't come back. So I went home and bought one online.

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Anonymous Coward

Tried to buy a TV

I went into my local comet a couple of years ago and was ready to buy a new TV. The store was pretty much empty apart from me and I asked if they could match the price of another retailer who was a little bit further away, NO was the answer, I drove to the other place and bought it there.

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Meh

They'd become mere showrooms for Amazon

The typical costs of the white goods on sale forced consumers to be savvy. Here's a thought - what would happen if the rest of this gang - Currys, PC World etc all went the same way? Amazon would *have* to open retail stores - probably in the same premises.

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Re: They'd become mere showrooms for Amazon

Curry's is PC World ( or vice versa ) . So who else ?

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Anonymous Coward

Amazon

Also known as "the elephant in the room". Even non tech-savvy people I know just order a lot of their electrical equipment stuff on-line now (or buy it in Tesco with their weekly shop, but that's another story). Cheaper, no pressure sales, you can return stuff if you changed your mind (ever try doing that in Comet?) and next day delivery on most things.

I believe this is what's known as "failure to adapt" and no amount of "should have done this or that financial thing to build confidence" is going to help with that, except maybe prolong things a bit.

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Re: Amazon

you can return stuff if you changed your mind

In Sweden, they just look the thin over and zap the money right back into the credit card. They only ask if it is broken and you want a replacement or the money. So, I tend to buy most complicated items like computers, clothes and HiFi in the physical shops rather than faff about with returning mail order. Most physical shops here have a complimentary web shop with the same goods and the same prices. So you can get it Now by going to the shop or wait and get it by mail.

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Anonymous Coward

I agree many shops have just become a way to browse before buying online but it also works the other way.

I recently bought a new Dyson, searching the internet for the best deal which was amazingly at Currys. Ordered for a pickup in store and 30 minutes later was vacuuming (well OK the wife was vacuuming). This is how physical shops need to compete, price and service.

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Anonymous Coward

More competition and less buyers. Comet was the place many went to buy white goods and with less first time buyers and more competition from Apollo 2000 and others it just didn't have enough sales.

I've even seen my local Co-op supermarket selling the odd washing machine from time to time.

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Headmaster

More competition and less buyers

* Fewer * buyers

Thank you!

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