HMV has retail stores worldwide and has been seen as the main retailer for music and video - until now that is.
So what the hell happened? Is the recession to blame along with the Government for not doing enough to save businesses from failing? Or is technology bringing down retail giants to their knees?
Personally, I think both have had a part to play. The Government hiked VAT up from 17.5% to 20% raising prices and increasing the cost to run a business. This rise in VAT was frowned upon by many, but the Government stood their ground and raised it to 20%.
Recently, the Government announced plans to raise VAT further to 25%, which could mean more well-known businesses could end up knocking on the administrators door, putting more people out of work. It would also mean less money in the customer's pocket as fuel would become more expensive amongst other household bills.
However, this has yet to be given the green light as the announcement has angered many MP's and members of the E.U. have actually spoke up telling the Government to lower VAT and not raise it to help move the economy. But as per usual, this plea has fallen onto deaf ears and the Government continue on to put us back into the recession.
In saying all that with the growth of technology, faster broadband and cheaper online retailers - is there really any shock value to the news of HMV going under? Not really, no.
I personally found HMV to be expensive on a lot of its goods. For example, last year I bought the Alien Blu-ray box set for £18 in Tesco. It was also the same price in other high street and online retailers who sold it for around the same price. However in HMV, you could buy the same box set for £40. That's a big difference, but in their defence, HMV have had decent sales on such as 5 Blu-Ray discs for £30 and the more recent blue-cross sale knocking 25% of its displayed price.
Unfortunately, these sales haven't helped the company from going under because the online market is under cutting their competition with ease.
What high street retailers should be doing is taking on these cheap online retailers head on and match their prices. At present, customers would be willing to wait three days for a item which they bought a hell of lot cheaper than what they could in a high street store. If a high street retailer matched or under cut its online competition they could see a rise in profits as people would most probably opt to make their purchases in store rather than waiting those three days.
However, with faster broadband speeds now available in the UK, a lot of people are preferring to download their music, games and films rather than buy a hard copy. Why? Space saving is one reason with no CD or DVD cases cluttering up room space. As for other reasons, well, shopping from home is the big thing now. People would rather buy online in the comfort of their own homes, plus you can shop with non UK online retailers being able to buy a product not available in the UK.
Overall then, are we really surprised to see well-known high street retailers disappear? I think not.
