Noted British music retailer HMV has entered administration for the second time in six years, putting 120 stores and 2,200 jobs at risk, due to a "tsunami of challenges" including sales collapsing over the Christmas period.
"During the Christmas trading period the market for DVDs fell over 30 percent compared to the previous year…such a deterioration in a key sector of the market is unsustainable. HMV has clearly not been insulated from the general malaise of the UK high street and has suffered the same challenges with business rates and other government-centric policies, which have led to increased fixed costs in the business. Even an exceptionally well run and much-loved business such as HMV cannot withstand the tsunami of challenges facing UK retailers over the last 12 months, on top of such a dramatic change in consumer behaviour in the entertainment market," said HMV executive chair Paul McGowan.
The company first went into administration in 2013 — it was eventually saved by Hilco, a restructuring firm known for 'winding down' failing businesses. It marked the calamitous end of a short but seismic period of decline for HMV, which since its founding in 1921 had been the UK's premier music retailer — its empire went global in the 1990s with the opening of stores throughout Europe, North America and Asia.
The rise of media downloading — then streaming — has threatened entertainment purveyors the world over, while 'bricks and mortar' retailers in every sphere are threatened by online resources such as eBay and Amazon. In the UK, a worsening economic outlook and declining pound have also hit consumer spending significantly.
Wider Tale
HMV's precipitous fall from grace is a microcosm of wider structural issues in the British retail sector. Figures from Retail Research indicate 38 UK retailers failed or are failing (facing collapse) in 2018.
High profile failures include Evans Cycles, long-established bicycle and sporting accessories supplier, which went into administration at the end of October after failing to agree terms with potential partners such as Halfords.
It was nonetheless immediately bought out of administration by Sports Direct, although it's clear not all of the chain's 62 stores and 1,300 employees will be retained.
Likewise, House of Fraser, the upmarket department store established 1849, went into administration in mid-August due to lack of funds. It was eventually bought by Mike Ashley, owner of Sports Direct, Flannels and Lilleywhites. He will apparently attempt to save 80 percent of House of Fraser's 59 stores, and most of the chain's 17,500 staff in the process.
Toys 'R' Us, the UK's largest toy and children's products supplier, went into administration in February after failing to find a third-party buyer, after its US parent entered Chapter Eleven bankruptcy in December 2017. The trigger for the UK wing's collapse was HM Revenue and Customs attempting to collect millions in unpaid VAT. In the process, 105 stores faced closure, with 3,200 staff facing redundancy.