HMV enters administration
HMV has announced the appointment of an administrator, with poor Christmas sales and the continued growth of online music sales pointed to as a major factor for the collapse of the former giant.
The 239 stores in the United Kingdom and Ireland will remain open for now while the administrator decides what to do with them; however the store has announced that gift vouchers will no longer be accepted.
HMV, short for His Master's Voice, began in 1921 and became one of the most successful music and film retailers in the United Kingdom. However, the rise in popularity of online sales through retailers such as Amazon, Play and more recently subscription service Spotify has seen HMV profits falling year on year. It is believed that poor sales over Christmas was one of the major factors in the firm's decision to appoint an administrator, but financial problems began some time ago.
Amazon success threatens high street music
Black Friday deals saw a new online shopping record set in November of 2012, with online retail experts estimating almost £200m was spent at online retailers such as Amazon in the run up to Christmas.
Even without these discounts and increased shopping activity over the festive period, the average online spend every day in the UK is £157m. With such considerable income every day, it is unsurprising that high street retailers such as HMV have struggled to compete. The HMV website currently does not say anything about these developments, however there are dramatic discounts as the company looks to sell as much stock as possible.
Kleon West, business development manager at theEword commented: "Many experts believe that HMV acted too slowly when it was clear that online retail was the future. By failing to establish their brand online at this time they allowed Amazon to take control of the market, leading to these steadily decline sales and financial issues."