On March 1, 2021, computer retailer Paradigit closed its four remaining physical stores in the Netherlands. The company will now operate online only, making it the last in a long line of computer stores that closed their doors. Over the past decade, computer stores have virtually disappeared from the Dutch shopping streets. How did this happen? And what does it mean for the future? We will discuss these questions and more in the coming weeks in this series about the changing retail market in the Netherlands.
The end of an era
With the departure of Paradigit from the shopping street, the golden age of computer stores comes to a definitive end. In the nineties stores like Mycom, Dynabte and Vobis popped up everywhere. They were successful in sales, but also a source of advice. “Online was not yet as widespread at the time,” says Digital Commerce professor Jesse Weltevreden. “Back then consumers still knew little about computers, but the hype was there. Everyone went to the store to get informed.”
The customer will figure it out
That period in time is over. Nowadays, a consumer often knows more about a specific product than a store employee, partly thanks to online communities such as Tweakers and Hardware Info. This development accelerated in the early zeroes. More and more information and advice became available online, meaning that people informed themselves before coming to the store. Or they ended up buying from web shops, which are able to offer more competitive prices. In any case, the advisory role of the store staff was largely lost. They also noticed this at Paradigit at the time, says general manager René Axmacher: “Customers really needed you in the early years, because in order to understand computers, you needed knowledge and expertise. That has changed; the computer as a product has matured.”
Location, location, location
Due to the economic crisis of 2008, many small shops either went out of business or were bought by the chain stores. Around that time, however, making a profit also became increasingly difficult for those larger players. Margins continued to shrink and cutbacks were made on qualified personnel. In addition, computer stores’ premium locations in city centers started to work against them. In the 1990s the location was important for visibility and traffic. Twenty years later, the high rent acted as a financial noose. From 2012 onwards, one bankruptcy followed another. According to Statistics Netherlands (CBS), 42 percent of all physical computer stores were closed in 2017, compared to ten years earlier. This includes the former giants Dynabyte, Mycom, iCentre, Dixons and the physical retail branch of Paradigit.
It’s all part of the circle of life in the shopping street, according to Weltevreden: “You can see other sectors rise and fall. In the 1960s and 1970s fur shops disappeared after legislation. After that, CD stores and travel agencies went out of business. Now it’s gold exchange offices, e-cigarette stores and phone shops. The shopping street is always dynamic.”
Moving business online
Seeing physical stores closing around them, retailers shifted their strategy online. Mycom and Paradigit renewed their web shops and focused on providing service in a handful of remaining stores.
Computer manufacturers also played a part in the closure of physical stores. They don’t want to show their wares in stores anymore, says Paradigit commercial director Thom Rijsterborgh. “There are 200 different Lenovo laptops for sale. It makes no sense to put them in the store, because they all look the same. Manufacturers believe that it’s better to inform customers online about their line-up.” And so the shop floor became digital. Because the remaining physical stores were only making losses in early 2021, Paradigit decided to pull the plug.
Looking to the future
According to Rijsterborgh, Paradigit is doing so well online now that the stores could have remained open. But for what use? The stores’ revenue model no longer works. “Stores are sentiment, they are no longer a necessity,” says Axmacher. “We look to the future and believe we should focus our attention on our online business. Even the service we provided in the shops has now moved online.”
This article came about thanks to this analysis by Tweakers editor Stephan Vegelien.
Going from offline to online is not easy. Next month we will look at this transition, the opportunities it offers and the many pitfalls on the way.