HMV enters administration
16 January 2013 - 10:40 by Mike Price
HMV, which is one of the UK's best known high street retailers, has had to call on Deloitte to administer its affairs, after talks to salvage the chain failed this week.
The company had been hoping that the various entertainment firms which supply it with many of its products, including record labels and film distributors, would be able to sustain it for a little longer. Unfortunately no agreement was reached and now around 4,500 jobs hang in the balance.
The administrators will continue to keep HMV trading during a period which will effectively see a new owner for the struggling company being sought.
This news comes just a few days after camera retailer, Jessops, went under, representing yet another dark period for British high streets.
HMV had been in financial dire straits for two years and was being impacted because of sales being siphoned off to competitors offering safe shopping online, as well as the growth of digital media distribution.
In spite of this, HMV still played a major role in the UK's media market, accounting for about a third of all CD and DVD sales.
Of course, as we have entered the age of the iPod, the iPhone and online streaming services like Netflix and Spotify, HMV's business model has become increasingly untenable.
People are choosing to access products and services which it previously championed via a broadband connection and safe shopping online, not by heading out to their local store.
HMV established itself with its own e-commerce site, but it did not become competitive enough to take on the likes of Amazon.
A poor period of Christmas trading was the last straw for HMV and even a 25% price reduction across all products, enacted last week, was not enough to pull it back from the brink.