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HMV administration leads to high street concerns
HMV has been announced as the next big name high-street retailer to face administration.
The largest British CD and DVD retailer is now facing closure, with more than 4,200 jobs at risk at the 238 stores nationwide.
The news will affect South Essex, which has large stores in Basildon’s Eastgate Centre, Southend High Street and two outlets at Lakeside Shopping Centre in Thurrock. Vouchers and gift cards will no longer be valid following the announcement.
HMV is the second victim in a matter of days following the news that Jessops stores had gone into administration last week, before closing all stores on Friday.
David Burch, the Director of Policy at Essex Chambers of Commerce, says he fears for retailers that don’t have an effective online delivery system and says that those who dont adapt their business model could face a difficult 2013.
He said: “It is so dissapointing to see high-street retailers suffering. Administration and liquidation are words that are never pleasant to hear. HMV have been synonymous with music for generations and I think the high street will feel their loss.
“Such large chain stores are still very popular, despite the boost of online sales, and if people know a store such as this has closed it is possible surrounding shops will suffer as there won’t be the same amount of footfall. We don’t want that knock-on effect. Shops have to adjust to the consumers purchasing habits and those who don’t face a very difficult time.”
Morrisons shows the power of online trading, having recently seen a downturn in its figures with a 2.5 per cent drop in like for like sales in the run up to Christmas. It is the only one of the ‘Big 4’ not to offer a home delivery service.
Mr Burch said these statistics show the influence of virtual shopping.
“Many high street stores were built with the premise of people walking past and buying goods on the off-chance. Hopefully this is not the start of a trend but it is never the less worrying. I do believe that using the internet effectively is crucial to the future of high-street stores longevity.”
HMVs boss Trevor Moore warned before Christmas that the entertainment group was in trouble, and concerns were raised last week after they announced a month-long sale, with a 25 per cent off sale on much of its stock.
Deloitte has been confirmed as the administrator of the 92-year-old business as they try to find a buyer for the some or all of the businesses although store closures are expected. HMV was turned down after it asked for a £300million injection last week to pay off its debt and fund an overhaul of the company’s business model.
Town leaders have announced their sadness following the closure of HMV but say it is not all doom and gloom.
Basildon Council has announced large scale changes to the town centre as part of the £1billion masterplan and Southend are also planning investment in the area.
Tony Ball, Leader of Basildon Council, said the closures of Comet, Jessops and potentially HMV meant the council was work harder than ever to bring more people into the town centre.
“We have been saying for some time that high streets have to change and that’s what we are trying to do. The town centre needs to offer more in the way of leisure as retail stores are being squeezed by internet shopping success.”
“Every retail business in the borough must be under pressure and it is up to us to support them by offering more for people. Restaurants and cinemas are just some of the options that could bring business back to Basildon.”
The most recent figures from the British Retail Consortium showed more than one in 10 shops were empty in October, the worst since the survey began in July 2011.
Dawn Jeakings, chairman of the Southend Town Centre partnership, said she is hopeful for the future of Southend’s shops, having secured funding for Southend which will see £2.7million invested in improving services to the town centre and sea front over the next five years.
“It is certainly a tough time for high street sellers and we are sorry to hear the news about HMV going into administration - especially coming so soon after the news about Jessop's and our thoughts are with the staff effected. We hope that the store on Southend High Street will be affected.”
“The funding for the town centre is vital at this time.”
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