Capping off a painful year, the holiday season is proving cheerless for the British high street. HMV, the music retailer that’s been in business for almost a century, said today (Dec. 28) it was calling in administrators from KPMG.
HMV is a prime example of shops clearly struggling with changes in consumer demands. In the age of Spotify and Netflix, HMV still relies heavily on sales of physical music and DVDs. Paul McGowan, executive chairman of HMV and its owner, Hilco Capital, said sales of DVDs, a “key sector,” were down 30% over Christmas compared to last year. It’s the second time HMV has called in administrators in six years. This time, 2,200 jobs across 125 stores are at risk.
McGowan blamed a “tsunami of challenges” facing the British retail industry, including government business tax rates, but said poor sales over Christmas made the situation unsustainable.
Landmark names in retail, including Marks & Spencer and House of Fraser, haven’t been immune from the problems roiling the industry. The first half of 2018 saw the largest net decline in stores on the British high street in five years, according to research by PwC and the Local Data Company. Major chain restaurants on the same high streets also are rapidly closing.
The holiday season started off in a ditch. Asos slashed its profit forecast earlier this month after a shoddy November, and traders promptly wiped more than £1 billion off its market value. Just days earlier, shares in Bonmarché plunged 40% after the womenswear company cut its profit forecast and CEO Helen Connolly said the retail environment was “significantly worse” than during the 2008-2009 recession.
The signs worsened from there. Retailers desperate to attract customers offered mega sales on Boxing Day, but foot traffic still declined for a third consecutive year, according to industry specialists Springboard.
Even if HMV can stage another turnaround, the company, like all of British retail, still faces many challenges next year as the Brexit deadline hits. Forecasters expect the UK economy to slow down next year, hardly creating a strong foundation for a rebound in consumer confidence and sales.