Music and entertainment retailer HMV has been plunged into administration after racking up debts of £176.1 million, making it yet another high street casualty to yield to the current economic climate. The grim news will have a profound impact on the 4,350 individuals employed by the company and for music fans around the UK who are bracing themselves for the loss of yet another iconic music outlet.
As Deloitte prepare to conduct the administration process, analysts are already questioning the impact that e-commerce has had on this high-street giant and how the change in the consumption of music has affected not only HMV but all retailers in this particular sector. Despite having an online store in addition to the 239 stores that HMV operate in the UK, the surge in digital music and video content sold mainly through Apple iTunes has been cited as the main reason for HMV’s gradual decline over the years. The company have already been downsizing for some time after selling its live entertainment arm and Waterstones book store. However, competing with digital downloads, online marketplaces and supermarkets selling the same goods at loss leader prices has proved to be too much with consumers now offered cheaper and easier ways of shopping for entertainment. No longer accepting gift vouchers from customers, (buyers can claim the money back from debit/credit card issuer using chargeback) Deloitte have stated their intention to keep all the HMV outlets open while seeking potential buyers
Famed for its association with the music industry, HMV is also renowned for being a DVD retailer although this area of the business has also come under threat from these same competitors not to mention the emergence of on demand broadcasting services. Lovefilm, Netflix, and Sky On Demand again offer consumers an instant product at a cheaper price than a hard copy, and once more undercuts HMV’s business model by giving consumers instant purchases at lower rates.
The face of entertainment consumption has changed and while this may be for the better in terms of technology, price and instant availability of music and films, it has come at a cost in terms of jobs and the layout of high streets and shopping centres. Whether this is the beginning of the end for large entertainment stores is yet to be seen although it is yet another indication of the importance of incorporating digital and e-commerce in a modern retail business plan.