Last night, it was announced that HMV was to appoint administrators to run the business as it was no longer viable on its own, putting the jobs of over 4000 people who work there at risk. HMV is the last remaining music store in the UK, as over the years Tower Records, Track Records, MVC, Borders and, most recently, Zavvi and Woolworths (to name a few) have all met a similar fate.
Thinking back, the last time I went into HMV was over two years ago, ironically enough to buy some headphones for my iPod, so I could listen to all of the music that I’d bought online. Which is one of the major challenges that HMV faces – many people are now buying music downloads rather than physical CDs, and music downloads in the UK are dominated by Amazon and Apple’s iTunes.
Sure, HMV does sell music downloads and owns 50% of online retailer 7digital, although it’s not as popular as its rivals and tends to be more expensive. But then HMV actually does pay its fair share of taxes in the UK, unlike some other businesses, and its prices are probably higher as a result. Supermarket competition is also a big factor, as Tesco, Sainsbury’s, Morrisons and Asda all sell music and DVDs in their larger stores.
But people still buy CDs. It’s hard to give an MP3 to someone as a gift – especially at Christmas – and there will always be those who prefer to own physical objects. Downloads are great until you realise your in-car CD player doesn’t have an iPod adaptor, or your computer’s hard drive gets corrupted and you lose all of your music files.
How much of HMV will exist in future remains to be seen. It has around 35% of the UK’s CD market and quite a lot of its stores are profitable; hopefully once the failing stores are closed then the business will be able to continue trading, as happened to GAME recently. GAME is an interesting example; in Bradford, through its mergers with Gamestation and EB Games, it ended up with 3 shops within five minutes walk of each other. And this was a pattern repeated across many other towns and cities. Now it generally just has one store and seems to be doing okay. It’s sad news for the staff laid off from the stores that closed, of course, but at least it didn’t disappear forever.
But other recent high street failures haven’t had such a happy ending. Last week, camera retailer Jessops went into administration and within two days had closed all of shops for good. Unfortunately Jessops were in a hard market; few people buy compact cameras anymore, as more and more people have smartphones which can take almost-as-good photos, and have the ability to share them on Facebook and Instagram straightaway, rather than waiting until you get home and empty your memory card. And independent camera shops seem to be holding up the top end of the market, especially with second-hand lenses and cameras. Jessops seems to have disappeared into the widening gap between the two.
Robert Peston, the BBC’s business editor, is quite philosophical about HMV’s collapse; in essence, it’s a sign that banks are letting almost-dead businesses fail, to free up money to lend to those that are doing well and growing. That’s not good news for the people working for these ‘zombie’ companies but a sign that, in time, things will get better.
Whilst changing shopping habits, with a move to digital downloads, are one of the reasons for HMV’s problems, another big problem for all retailers is that many people just don’t have much disposable income nowadays. We’re only just out of a double-dip recession, but last year our economy was bolstered by the Olympics and so it’s possible that Britain will be back in recession for a third time since the credit crunch later this year. Public sector pay is increasing at a measly 1% – less than the rate of inflation – and MPs voted to do the same to benefits. Unemployment isn’t as high as it could be but the fall of Jessops, and Comet just before Christmas, has resulted in thousands losing their jobs just recently. So to me, the economy is also to blame, and by extension those in charge of this country’s economic policy as well.
I’m near the end of this post, but before that I’ll come back to the topic of Bradford. In Bradford, HMV is on Broadway, a street that should, by now, lead into the new Westfield Shopping Centre, had it been built (construction will hopefully start later this year). It’s one of the few shops left there; GAME closed, as mentioned earlier, and children’s clothing retailer Adams closed down a couple of years ago. Jessops was around the corner until last weekend. What was once one of Bradford’s main shopping streets barely has anything left on it, as more and more struggling high street chain stores fall by the wayside.
I really hope that at least some of HMV’s stores stay open. It would be a shame to lose such a big name, especially as it’s the last of its kind.
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