E-Street To Chalk Up Against The High Street Supermarkets

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This is in part another success for e-street to chalk up against the high street.Ultimately, for sales of DVDs and CDs it could not compete for pricing with the pure on-line retailers supermarkets were also able to undercut them is further evidence, if any was needed following Jessops demise, of the difficulties faced in particular by high street retailers trying to compete against the purely online traders. HMVs other critical problem, which makes it distinct from Jessops, was for its business model to keep pace with changing technology and trends in public consumption of music. It missed its chance to join the digital downloading revolution and has not caught up.It highlights the challenges faced by retailers with substantially fixed overheads trying to adapt fast enough in a rapidly changing market. HMV is a victim of a systemic problem for large parts of the retail industry sales are decreasing against a minimum viable costs platform and lenders patience can only run so far. We should expect more of these throughout 2013. Darina Kerr, real estate partner,Dundas Wilson(and former HMV shop assistant during her student days), looks at what went wrongStatistics are bleak. Shops are closing at increasing rates. According to a survey by PwC and the Local Data Company, in July and August 2012, 32 stores closed a day and in one particularly gloomy five day period in 2012, more stores closed than in all of 2011. And although 60 of the UK population visited HMV last year, that wasnt enough to save it. Footfall doesnt mean cash flow. A shop on every high street is as out of date as a Dire Straits LP at a time when 30 of music and entertainment is bought on-line, and music itself is a declining market. And, while HMV had reduced store numbers from 285 in 2011 to 247 shops in 2012, that was still 247 stores more than its rivals Amazon and iTunes rivals who dont have to pay millions in rent, maintenance costs and business rates every year. The fact that customers are shopping less with their feet and more with their fingers has hastened the demise of a long list of retailers in recent months JJB, Comet and Jessops have followed Habitat, Zavvi, and Woolworths. Mobile shopping was hailed as the Christmas success story but its downside is the resulting pressure on bricks and mortar stores. As a nation we have moved from the high street to the istreet. According to the British Retail Consortium, while UK retail sales over Christmas were up 0.3 from December 2011, online sales were up a staggering 17.8. And, with the number of tablets found under Christmas trees this year, next year is likely to see this trend grow even more, particularly for those shops and products we may not traditionally have associated with the internet. Teenagers dont rush to record shops on a Saturday afternoon to buy the latest singles. They download them from iTunes or watch them on YouTube. Gangnam Style by Korean rapper Psy wasnt watched 1bn times on YouTube, it was played in the background as kids use YouTube as a virtual jukebox while surfing the net. The way we consume music has changed, and films and games are following. Even HMVs 2012 Annual Report acknowledges that they expected the audio market to fall in value by 20 in 2013. HMV tried to change
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