HMV collapse – is digital killing the high street?

by , Technology Editor Technology 15 January 2013
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The sad news that music and video store HMV has gone into administration is a further blow to the struggling high street. With online shopping and digital music on the rise, was HMV’s demise inevitable?

HMV logo with Nipper the dog

I used to love popping into HMV. Its packed stores were chock full of albums, DVD box sets, video games and gadgets, and I’d wander down to the Oxford Street flagship store during lunch to pick up a CD and sometimes catch a live performance from a band with an album to promote.

HMV was music – part of our mainstream entertainment culture that introduced millions of people to a vast catalogue of music that provided the soundtrack to our lives.

Its ‘Nipper’ dog and gramophone brand has been a fixture of Britain’s high streets for over 90 years. Like countless others, it was where I bought my first ever album, fell in love with music, and as a kid would spend birthday money building a music collection that is still with me today.

Digital music moves in

Only, today, that music collection is digital – and it’s digital that is slowly killing the high street star.

Online sales of music, DVDs and video games, cameras, tablets and gadgets are soaring. In the first two weeks of December 2012, we spent over £4.5bn on online purchases – money diverted from the high street. This change in consumer spending makes stores such as HMV, and last week Jessops, ever more vulnerable to collapse.

Shoppers are increasingly turning to online stores and digital downloads – and I’m one of them. I buy my music through iTunes where I can get a 90 second preview of a song before buying. I buy gadgets from Amazon or Play.com, where I can shave pounds off prices charged by the likes of HMV. Online shopping is cheaper, faster and easier – and that’s hard to compete with when you’re chasing consumer spend.

I like shopping online, in the middle of the night from the comfort of my home, rather than battling through crowds to line-up at HMV’s tills like a line of shuffling shoppers checking into an airline. Prices are cheaper, digital products are always in stock and I get them immediately, and for less money.

The high street’s swan song

HMV could have – ten years ago – embraced online and the changing patterns of shopping. Instead, it dug its heels (and foundations) on the high street, and so missed the boat.

The irony is, as HMV faces an uncertain future, that many blamed the rapid growth of  HMV and Jessops for decimating independent camera and music stores. Now, the rise of online shopping, with its convenience, cheap prices and accessibility is seeing us turn our backs on them.

It’s a depressing trend that is going to claim more scalps on the high street over the years. Our high street is increasingly sickly, and electrical goods and entertainment stores are particularly at risk.

It’s also personal. My children are now likely to discover their own love of music, not by flicking through album covers in a shop, but through iTunes and YouTube. And that’s a real tragedy.

31 comments

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Do you have any HMV gift vouchers? So far, vouchers are not being accepted, although this could change.

If you need advice on your rights, read our guide on what to do if a company goes into administration:

http://www.which.co.uk/consumer-rights/buying-services/company-going-bust-qanda/

If you’ve paid by debit card you may be able to claim through the MasterCard and Visa Chargeback scheme, as long as it hasn’t been more than 120 days since paying on your debit card and making your claim. You can read more about Chargeback here:

http://www.which.co.uk/consumer-rights/sale-of-goods/your-rights-when-paying-by-credit-card/chargeback-on-credit-and-debit-cards/

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Sue

Very sad to hear about HMV. My daughter works for them. They tried to keep going on the High Streets but we have let them down by buying at supermarkets, on-line etc. They didn’t stand a chance. They won’t be the last and then High Streets will die and be no more. It doesn’t help that the councils charge so much for their car parks!

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malcolm r

HMV is another casualty in a hard commercial world. They were not philanthropic organisations, they failed because their business plans failed. CDs and DVDs are generally cheaper from online suppliers and more convenient to buy, so why support others out of sentiment – their management failed, as with other companies that don’t keep up with the times.

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nickbaker

We’re talking about this on the podcast. One question – will the “browsing” experience you used to get in a record store ever truly be replicated online?

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malcolm r

Nickbaker – quite right, you cannot replace the browsing experience for a lot of things you buy – CDs, DVDs, books, clothes, shoes, furnishings – and many other things. This is the downside of online shopping. The cost of sending items back when they don’t fit or aren’t suitable is set against the cost of travelling to shops. We will rely a lot more on recommendations. Some outlets will never be eclipsed by online, because of the need to go and try before you buy.

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Laura

“will the ‘browsing’ experience you used to get in a record store ever truly be replicated online?”

It’s called youtube.

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Ludiger Harris

Such a moving piece Matt, thank you. I remember HMV vividly. It was a truly grand place and I used to frequently shop there with my arms and hands, buying all sorts of products which they used to sell on their shelves and cabinets with my cash, and later debit and credit cards. Such a great shame and I wish all concerned nothing but great happiness and luck to all concerned.

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Rudiger Harris

Well said that man.

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tpoots

HMV, to me, was a bit of a lost soul. Back in the day it served a much needed purpose and caused music lovers to unite. The change in music styles, rise of digital and streaming services, and a lack of direction from management has meant that HMV has become less and less relevant in recent years.

I won’t deny it, HMV is a great shop for TV lovers, music lovers and film buffs alike as you really can find everything under one roof. I suspect however that this is part of the problem.
HMV stores are generally twice as big as they should be and have loads of redundant, aging, stock lying around. The layout’s generally weren’t great and you’d be overwhelmed through the categorisation and vast choice. To me they should have had a consultation into their shop units a long time ago in a bid to cut down on their rising rental costs as well as a look at the stock they were selling.

Additionally, I could be wrong, but I never saw a ‘click and collect’ service advertised which would have helped shoppers like me who honestly can’t be bothered weaving through endless browsers (who ultimately wouldn’t buy much) to get to what I was trying to find. We know from Argos that this service is successful, so much so that they are reshaping their business to rely upon it more.

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Bruce Abbott

The high street does not have to suffer, we have a solution that bridged the gap between the High Street and the internet and maximises the ROI of those who sell / promote on line as well as on the high street. What we need to do as consumers is to adopt an ethical and responsible fair trading approach to decide where ‘we want our money to go to’ both online and offline to help support UK businesses, local communities and save British jobs. Please help us to support the British High Street by visiting: http://www.savethebritishhighstreet.co.uk/

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malcolm r

The world changes and we – consumers and businesses – need to deal with that change. I will use high street shops where it is in my interests, balancing service and attraction against convenience, and travel and parking costs when appropriate. However I am not prepared to subsidise them – they exist to make a profit, not as charities, and their business models needs to be robust. I did a lot of online shopping very successfully (choice, price, convenience and delivery) at Christmas as usual – from smaller UK outlets as well as Amazon.

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Rob

>> iTunes and YouTube… And that’s a real tragedy.

Why is that a tragedy? Youtube offers a great browsing experience, far better than looking at album covers in HMV. Just search for a band you like, watch one of their videos then follow Youtube’s suggested related videos for an audio visual exploration.

Disclosure: I’m 30 so have grown up with the internet. But I also spent hours and many pounds in HMV as I discovered music in my teens.

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clarioner

It IS very sad about HMV, as the last true physical music media shop on the high street, apart from the indepedents. But most of us that romanticise about this, and remember how we once shopped there when gorwing up, and the SAME people who just compare prices online and usually go that route. WE are calpable in their demise each in our own small way.

But your article is also inaccurate. HMV DID embrace online trading (as well as have stores)… it has had a full e-commece website for years, and been successful in this respect, AND often HMV’s own online prices were below that of their shops, in common with many other companies. I don’t see a distinction here between HMV and say John Lewis, or PCWorld – all of whom have a presence both online and in the high street.

Where they DID miss the boat, is they did not give buyers a reason to go to the stores. Every business in this economy needs to stand-out, if possible it needs a USP (Unique Selling Point) – it needs to be different or better in some way.

With JL this is customer service & warranty support. With PC World/Currys I truly believe they are only still here now because people want to go a SEE and TOUCH some of their products (not all). They also want to see RANGE of products, which they “believe” PCW offers. There is also the “what if it goes wrong” scenario, where they draw comfort in knowing they can take it back to the shop.

With music, and video this is not so.. non-one need to touch it, you can preview the tracks online, and there is no after-sales service element. What HMV needed to do, was find another reason why buyers would want to go to the shops, or they should have started closing shops a long time back and switch totally to Online only, if only to save the business.

It’s not all roses for Amazon though – they are making massive losses, something like $247 million in the last quarter on turnover of $13 Bn. They have also come under fire for tax avoidance, and have tax protection in the USA which won’t last forever no doubt. how long can that continue?.. Other like Play enjoy Channel Ireland tax-free status to help keep prices low, but long before that loophole is closed?

This won’t be the last big name to fail, IMO in the next 18 months we will see some other “generic” retailers go. I say watch out BHS, Debenhams, WH Smith – everything you sell is available online and cheaper, and with free & easy returns even cloths don’t need to be touched or tried on these days.

My 6 eggs.

Thanks for the comment – we’ve awarded you our Comment of the Week; http://conversation.which.co.uk/consumer-rights/hmv-blockbuster-administration-bust-gift-vouchers-comments-opinions/ Lots of other HMV comments our featured this week too.

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alan1h

I too will miss going to HMV, I have spent happy hours their browsing the Cds and DVDs and building a collection. I also realize that internet shopping is inevitably changing shopping habits.
What I do resent though that the demise of HMV and other shops is seriously exacerbated by tax avoidance on the internet. I have heard on the radio and read in the newspaper that Amazon’s losses are artificial as an aid to avoiding paying tax in Britain. In addition the HMV shops (as opposed to the internet) had to compete with internet competition based on avoiding paying VAT, often through the Channel Islands, and this avoidance is still going on. How can any shop compete with a competitor selling at a twenty percent discount?
I shall remain very angry about all this tolerated tax avoidance, and hope Which will campaign against it

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Sue

I think you have hit the nail on the head as they would say alan1h. How many companies do avoid paying their taxes and VAT I wonder. Those who do pay up cannot compete with those who don’t whatever their strategy. I also hope Which will look into this.

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malcolm r

I believe the Channel Islands vat free concession on low value items (that’s why multiple ordersd such as printer ink they were posted separately) has now been stopped. Is that correct?

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Laura

I have a great deal of sympathy for the thousands who face unemployment, and agree we should be worried – very worried – about the dwindling prospects for young people, when public sector jobs also seem to be contracting.

I do not, however, feel particularly nostalgic about the loss of HMV: as one born in the mid-80′s, I still remember when small independents were being systemically undercut by these very entities (HMV, Woolworths, Clintons).

I particularly remember the kindly man who ran a small toyshop – despite desperately slashing his prices, he was unable to compete with the chain store’s economies of scale/advertising/practise of paying minimum wage.

I suppose he was also unable to compete with the convenience – in Woolies shoppers could buy their toys/music/sweets/gifts in one place. Until supermarkets started beating them at their own game.

As stated, it’s a terrible blow to the employees and to our economy – but is it surprising that these chains were victim to the harsh realities of the market that they once coldly exploited? Personally, I would much rather support small, local independents than for-profit chains that often exploit both producer and employee: this applies to online shopping, too.

Maybe as consumers, we need to start supporting the companies that put the most back into our communities – in taxes yes, but perhaps there are also other ways for businesses to contribute? Giving all unsold stock to local food banks/providing space to non-profit projects – or how about making it easy for local people to sell their products on the shelves of their high street?

I get the impression that I’m not the only person who feels like this?

Also, I wonder: If local musicians had been regularly invited in to HMV stores to play small sets and sign merchandise, could this have boosted sales? If people enjoy browsing HMV, why not sell them a latte or milkshake while they’re at it (this is what bookstores already do, after all). Why not provide a social space inside music shops? It’s funny, because there’s nothing that coffee chains do that HMV couldn’t have done – with the unique selling point of their musical heritage. If they had been offering free wi-fi in these hybrid coffee/music shop, couldn’t they have used this to sell online singles? Just some thoughts…

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Bruce Abbott

You have hit the nail on the head, it is all about jobs for the younger generation and local communities. We have a news article going out soon in our local newspaper detailing exactly that. If you would lke to comment on and support our cause then please visit our blog:
http://savethehighstreet.blogspot.co.uk/2012/12/is-brtish-high-street-is-under-attack.html

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malcolm r

Bruce, having looked at the link I don’t know what you really suggest as an answer. Is it that we subsidise high street traders – either directly or by somehow forcing us to buy from them and not from cheaper sources? Subsidy in the past simply lead to lack of enterprise and inefficiency.
Surely the high street traders need to adapt to the world as it is. I bought a dishwasher from a high street trader, but online – a good deal, presumably profitable for the trader.
I agree HMRC needs to address the tax issue, although difficult with international companies.

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wavechange

Bruce

The high street shops have got to offer something that makes people want to use them. It might be possible to cut parking charges and promote park and ride schemes, but the shops need to compete. Unless I know what I am buying I am prepared to pay a bit extra rather than buy online, but I am not going to pay substantially more for anything.

I agree that we need to tackle the problem with large companies avoiding taxes, but this has been well publicised and hopefully there will be a successful conclusion, though as Malcolm has said it might not be easy.

I might tolerate inadequacies of smaller high street shops but I will always complain about poor service from larger organisations and online retailers. At the moment I am engaged in a dispute with Amazon and one of their traders. Unless people keep traders – large or small – on their toes, there is a risk of declining service and poor value for money.

I won’t sign your petition but I would be happy to support those who are concerned about large companies breaking the law or abusing the fact that they have a substantial share of the market.

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Bruce Abbot

Well there is no petition as such, what I am aiming for is as you say is to encourage the high street business to engage more with the consumer and to offer as good as if not better deals.

So long as we are in recession Amazon will remain king as the consumer engages in minimum spend. So there begins the spiral downwards. Problems is governments are reactive not proactive and by the time they respond, it will be too late unless we as consumers adopt the policy of saving jobs by choosing to only buy from UK businesses. I do not want to paste our website info here otherwise it spoils this thread but if you type into Google: ‘ save the British high street ‘ you will find our domain which explains fully our intensions.

I am resolute in the belief that we need to help small businesses and at the same time to try get the British consumer to think British and to ask themselves:

1. When I hand over this money – where is it going to?
2. Is it going back into the UK economy?
3. Is it going back into my local community?
4. Will this help to save jobs

Amazon reported a turnover of 3.3 billion from the UK, that is a lot of money being moved out of the UK and into the pockets of shareholders that only care about little else. Word finances are in a very bad way and it would appear that Governments, Banks and shareholders do not have the desire for change while their cash flow remains or does remain with regards to banksters as they find every means possible to squeeze us all.

As consumers we can and should be able to changes this and ‘Which?’ is in a very position to get the ball rolling.

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wavechange

Bruce

Thanks for the additional information. As far as I am concerned, it is up to the high street businesses to find ways of encouraging me through their doors.

I live near a city and probably use high street shops more than most people, though I am not prepared to pay silly prices. You might find me outside a shop comparing prices on my tablet, and if the shop is not charging too much more they will get my business. My main reason for preferring shops is because it is easy for me to go back to shops if there is a problem. Look at the appalling customer service offered by certain online traders and you will see why some of us like shops.

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malcolm r

Bruce, we should not hamper UK business (including high street shops) by unfair costs – whether direct through business rates and taxes or by poor and costly parking provision. Equally, those businesses must offer a service that consumers find acceptable, including price. Many do, others need to follow. I cannot use my hard-earned money to subsidise other businesses whose motive is profit – why should I?

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Bruce Abbot

My message is: Save the British High Street and Save Jobs. Once the high streets go then the complaint of no work will be the same as closing the door after the horse has bolted. With regards to the big players, once they have complete autonomy over retail then that is when they can (should they chose to do so) monopolise prices.
We all chose where to buy, I just want to help small businesses by charging less in order to help maximise their profits to combat the dominance of online retailers such as Amazon. Of course commerce is all about profit – you and I cannot get away from that, it’s what has made the world tick for centuries. The problem now is that there is little or no control over this undercutting maximise profit, worldwide offshore and world wide web tax avoiding mindsets from stripping the economy and high street dry. Even some domicile businesses are avoiding tax and vat by selling online. Combine this with local councils (as mentioned in your thread above) applying local car park taxation / fines and the government clawing back business rates as well as a massive welfare population that will only increase does not leave much left in the pot. It is without question that if a million businesses go under over the next 5 – 10 years that this will have a devastating effect on our economy: no jobs, no income and less tax for the government equals a huge welfare deficit larger than the UKs GDP and a very long recession.
As consumers we have a choice, live in the now without consideration for the future or spend £2 – £3 more and keep our hard earned money in the UK to safeguard jobs for our children.
Here is my solution based on the discussion: is digital killing the high street?

If I have missed something out then please add to the list or offer constructive criticism to achieve the end goal and that is: ‘What is best for Britain to prevent digital from killing the high street?’.
1. An internet licence to trade online and must be registered through companies house. This will clear up the conmen who are not paying UK taxes and vat and who are directly aiding the demise of the high street.
2. Apply profit tax to overseas businesses or a UK internet tax / licence. If they do not like it then go somewhere else. This would be far more beneficial for HMRC and UK businesses in a bid to stop the haemorrhage of billions leaving the UK.
3. Local councils to be forced by legislation to have three days per week free of any car park taxation / fines ( yes I know, but these are the real titles).
4. The government to ease business rates or to subsidise / reduce business rates to ZERO depending upon number of employees or based on profit / loss figures. The higher the profit the less they pay in business rates (this will help shops to be more competitive with their prices and to become more efficient). Or if based on the number of employees then bench marks of 2 – 5 employees would help the small business to expand before paying full tax. This would encourage businesses to take on more employees ( perfect for apprenticeship schemes).
5. Shops to become more interactive with today’s technology ( A solution Hootsmart provides ( sorry about the plug but it’s true) ).
6. Shops to stay open until 8pm – great for after work shopping, currently supermarkets are cashing in on this huge income stream which again does not help the local community.
7. Politicians to become proactive and work together instead of cheap political point scoring at the expense of ‘not thinking what is best for the UK’.

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malcolm r

How about shops forming co-operatives to share, for example, administration, purchasing, maybe premises, staff, internet trading supplementing high street trading. In other words, help them develop a better business model that can cope with consumer trends.
As soon as you start helping with, effectively, subsidies you perpetuate existing practice – just as happened with some industries. Supermarkets, like department stores, have been with us for years, but have still not decimated those good smaller traders who attract us. But they have weeded out those who could not change.
Street markets still survive, so there is clearly a consumer demand for meat, fish, green grocery and specialist foods from other than the big outlets.

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Bruce Abbot

I like the comment: internet trading supplementing high street trading.
That is exactly what needs to occur and again sorry about the plug but we are developing a high street app that will do just exactly that as well as providing a platform where each small outlet shares the cost to be able to compete with large companies that have deeper pockets.

It will be a sad day if the high street is reduced to coffee shops, grocers, beauty pallor’s, solicitors, car forecourts (but even they are being forced out by the Super carports). Where will local councils get their parking revenue as less commuters travel to their local shops.

Should this happen then no doubt the next move by Amazon (bear in mind they have a tax free incentive and the purchasing power) to open Amazon leisure centre’s and really bury the high street. If not Amazon then no doubt some other tax avoidance offshore company or domicile company will. Actually, the supermarkets have already started, you can buy just about anything now.

Will we be a nation sitting at home, booking everything online delivered to our doors with 10,000,000 unemployed and governments having to ask for taxes with the superrich playing monopoly with a nations money. Maybe that is the way ahead, one huge corporation controlling the our economies… not a pretty notion at all? I worry about jobs and how the lack of will affect local communities and the country as a whole.

There is one message that needs to be heard and that is to educate the consumer to THINK about where their money is going to. Collectively the consumer can be and should be in charge. But when the day comes of having no choice at all – will that be too late? I do not think so because the path we are on now cannot possibly work in the long run.

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wavechange

Bruce

Rather than trying to compete with online traders, which will always have a competitive advantage even if they pay their taxes, I think we should be looking at new opportunities where the shops are the only option or have a strong advantage.

Coffee shops have done well in recent years and there is no competition from online traders. With many people sitting watching TV and drinking cheap alcohol from supermarkets, there is plenty of opportunity to entice people out of their homes. In view of current unemployment and financial uncertainty, it would be wise to steer clear of anything costly but the fact that a large proportion of the public is obsessed with communication by phone etc. suggests that there may be good opportunities to engage with them and keep the high street alive. If we just try to help struggling shops going, it could be a slow, lingering death. New ideas and investment are needed.

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Johnny dee

Growing up in the late sixties early seventies spending a couple of Saturday morning hours in my local
Record shop browsing lp racks with my mates was great time spent. Nobody mourns the demise of these shops but national company now that’s a different matter while I feel for those employees who
Lost their jobs I really don’t give a dam about a company whose greedy attitude led to thousands of
Independents closing. I say save your tears for the small shops forced of our high streets by rampant
Capitalist companys whose first and only thought is their own bank balances. As for online shopping
What did everybody expect, it’s progress and will eventually close all shops, there is nothing more constant than change if shops wish to survive they must embrace the Internet or go bust it’s that simple

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Richard Thorndycroft

Just one correction that I would like to raise. HMV do have an on line service, in the Channel Islands, which I have happily used to order CDs & DVDs from my home computer (as I have a disability that prevents me from going ‘window shopping’). I actually prefer it as I can ascertain if an item is available & if so get it delivered through the post. Additionally, the Channel Islands don’t charge VAT, for which I’m very grateful.

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Malcolm R

Richard, this VAT loophole for goods under £15 was declared illegal in March, and unless an appeal has been successful (which I have not heard) the Channel Islands can no longer avoid charging VAT. My printer ink used to come this way, posted individually to avoid VAT.

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