HMV into admin tomorrow. Who next?

[SK1NT]

Such a sad day for the British retailer and i do fear for a lot of other stores. I thought HMV failed as they missed a trick with the online market... however hearing about play also struggling confuses me a little...

I regularly use to love to go into the Kingston HMV and have a look at the films and buy something i liked the look of. With online buying i simply go to a site and buy what i want the browsing aspect isn’t there.

I really don't like how the high street is going... scary times...

did you know... Nipper the Dog was actually buried in Kingston and there is a plaque marking his resting place. The alley nearby is named 'nipper alley' with a special HMV sign.

 

[beorhthelm]

What will these core high street and large shopping centres sell then? There is only so much coffee one person can drink. Job creation is a rather important role of the high street and it is the best way of keeping communities alive by circulating your hard-earned, locally. This should not be underestimated.

the shops will be those in demand. if thats coffee shops, clothes retailers and a branch of Amazon Collect, so be it. shops do not exist to create jobs, that is a nice secondary effect, and it doesnt matter much if its the current shops or new shops does it?

 

[spring hall convert]

Someone asked a question about the venues that HMV own.

As I understand these were bought by a private equity firm last year, with the intention being to raise capital to keep the other side of the business going, it doesn't appear it went that well.

 

[KZNSeagull]

the shops will be those in demand. if thats coffee shops, clothes retailers and a branch of Amazon Collect, so be it. shops do not exist to create jobs, that is a nice secondary effect, and it doesnt matter much if its the current shops or new shops does it?

It does not matter no, but I do not see a whole host of people lining up to fill the empty shops in the high street at the moment. Empty shops do not create jobs and do not keep money circulated locally.

Amazon do not make a profit, so why will they open loads of collect branches? They will have to increase their prices substantially to make it worth their while, surely. As a volume business based on selling loads at little margin, there must come a time when their investors say "give me a decent return for my money". I don't understand what they are trying to do - perhaps you can enlighten me?

 

[Westdene Seagull]

Owned by Arcadia. Secure unless Green loses interest.

I wouldn't be quite so sure. Over the last 18 months BHS have desperately being trying to slash costs. This has included making redundant numerous staff including directors ( one of who is a friend ). They have a large footprint of expensive leases and no real brand identity any more. Rough times ahead for BHS IMHO.

 

[spring hall convert]

There's a bit on 5 live at the moment with some dinlow that bought HMV vouchers for Christmas. Given the trouble all elements of the high street are in, who in their right mind bought vouchers for Christmas this year? Idiots.

 

[SK1NT]

 

[beorhthelm]

Amazon do not make a profit, so why will they open loads of collect branches?

if they werent making a profit, why the fuss over their corporation tax? they've made a large profit in the past and recent change is due to buying up companies and other investments. "Amazon Collect" was just thrown in there to show an example of a new shop that might come along to fill a market. fwiw, i can see a franchise model where there would be low cost to build out the network and cost savings on postal deliveries shared between themselves and the franchisee.

 

[Shropshire Seagull]

How busy will the coffee shops be when all the other shops are closed?
I can see having a coffee compliments the shopping trip now, but who would go into own just for a coffee?

 

[strings]

I have heard the argument today (it may even be posted here - I haven't read the whole thread) that this is a good thing in the long term. Firstly is shows that the banks have the confidence to take a loss - for the past few years HMV and several others have only survived because the banks have been too scared to cut their losses. HMV going bust can be seen as a sign of confidence among the banks.

Secondly, one of the experts on the BBC News website has written a piece trying to explain that historical recessions teach us that before the marketplace can fully recover, all of the slack needs to be removed - i.e. the weaker businesses need to fall so that stronger businesses may emerge in their place.

I'm not sure whether I agree with these arguments - they are not things I have ever pondered in the past - but I thought they are interesting viewpoints.

It also seems that some of the HMV business will survive. This is because some, not all, of the stores were profitable. In addition to this, there is a lot of people in the music and film industries that believe stores such as HMV are important for their own industries to survive (people don't browse amazon, they simply search for what they want to buy, and purchase it). Therefore there may be some short term support from the film and music industries to entice a buyer for the successful HMV stores.

 

[beorhthelm]

How busy will the coffee shops be when all the other shops are closed?
I can see having a coffee compliments the shopping trip now, but who would go into own just for a coffee?

do you not have any women in your life? men go to pub, women go to coffee shop. (i know i'll get into trouble for that. its in jest... women can go to pubs too now).

 

[strings]

There's a bit on 5 live at the moment with some dinlow that bought HMV vouchers for Christmas. Given the trouble all elements of the high street are in, who in their right mind bought vouchers for Christmas this year? Idiots.

My facebook feed seems to be half-filled with people posting pictures of the now useless HMV vouchers they got for Christmas. Clearly there are a lot of dinlows out there...

 

[KZNSeagull]

if they werent making a profit, why the fuss over their corporation tax? they've made a large profit in the past and recent change is due to buying up companies and other investments. "Amazon Collect" was just thrown in there to show an example of a new shop that might come along to fill a market. i can see a franchise model where their would be low cost to build out the network and cost savings on postal deliveries shared between themselves and the franchisee.

The corporation tax issue is the principle, rather than reality. I read that had they been paying tax in the UK, they would have paid something like 300m in tax in 2011/12, based on UK turnover in excess of 8bn quid. That is not a big margin. Hence why I don't understand where they are going.

Cannot see collect points myself. People like the convenience of having stuff delivered - hence one reason why High Streets are dying. They are too busy/lazy to go shopping, apparently, hence the rise of Supermarket home deliveries etc.

What they may have to fill is the gap in the market caused by customers not being able to view products in shops anymore, before ordering them on Amazon, which is what a lot of people do at the moment.

 

[spring hall convert]

My facebook feed seems to be half-filled with people posting pictures of the now useless HMV vouchers they got for Christmas. Clearly there are a lot of dinlows out there...

Or alternatively you are aquainted with alot of people who have friends/relatives that would have a problem identifying the difference between their backside and their elbow.

As it happens I suspect they'll be alright, if a buyer is found, I suspect they could do without the bad press and ill will.

 

[Northstander]

I feel sorry for the staff but the higher management i have no sympathy!!

these people were willing selling gift vouchers with the awareness that were in the shit, day light robbery in my opinion!

This is the wake up call for everyone, avoid gift vouchers/IOU's, I will never buy them again.

 

[KZNSeagull]

Secondly, one of the experts on the BBC News website has written a piece trying to explain that historical recessions teach us that before the marketplace can fully recover, all of the slack needs to be removed - i.e. the weaker businesses need to fall so that stronger businesses may emerge in their place.

I'm not sure whether I agree with these arguments - they are not things I have ever pondered in the past - but I thought they are interesting viewpoints.

It also seems that some of the HMV business will survive. This is because some, not all, of the stores were profitable. In addition to this, there is a lot of people in the music and film industries that believe stores such as HMV are important for their own industries to survive (people don't browse amazon, they simply search for what they want to buy, and purchase it). Therefore there may be some short term support from the film and music industries to entice a buyer for the successful HMV stores.

The historical recession is true, but I don't think it works anymore when the main competition are huge internet based businesses selling in volume at low profit. I am not an expert, but I do not think that it is a coincidence that this massive high street recession has occurred in the internet age. What the answer is, I have no idea.

The final point is a very valid one - people browse in shops then order what they want on Amazon etc. Once the shops have gone, who fills that gap?

 

[GingerBeerMan]

The corporation tax issue is the principle, rather than reality. I read that had they been paying tax in the UK, they would have paid something like 300m in tax in 2011/12, based on UK turnover in excess of 8bn quid. That is not a big margin. Hence why I don't understand where they are going.

I think you may have missed beorhthelm's point. If Amazon had to pay 300m in tax, they probably made profits of over £1bn, but previously someone said Amazon wasn't making a profit, but beorhthelm said they must be otherwise they wouldn't have had to pay tax.

 

[beorhthelm]

The corporation tax issue is the principle, rather than reality. I read...

something incorrectly. taking the mid points in this article, its was estimated they made approx £300m profit on aprox 8bn sales in the 3 years prior to 2011, based on the numbers they gave to the parliamentry select committee and SEC filings. you only pay tax on (reported) profits. if you're still unsure, see their share price, its not of a company where investors worry about the revenues and margins.

Cannot see collect points myself. People like the convenience of having stuff delivered - hence one reason why High Streets are dying. They are too busy/lazy to go shopping, apparently, hence the rise of Supermarket home deliveries etc.

you maybe interested to hear that the supermarkets and some others are doing buy and collect services, order online and collect from store. for some its better to pick up a pre-ordered items, than have to be in for a delivery of anything larger than a CD/DVD.

 

[KZNSeagull]

I think you may have missed beorhthelm's point. If Amazon had to pay 300m in tax, they probably made profits of over £1bn, but previously someone said Amazon wasn't making a profit, but beorhthelm said they must be otherwise they wouldn't have had to pay tax.

Fair enough, but they don't always make a profit and if they do, it is not much based on their turnover. Amazon UK - 74m profit based on sales of 3.35bn in 2011. Amazon US $274m loss on turnover of $13.18bn in Q3 2012.

 

[KZNSeagull]

something incorrectly. taking the mid points in this article, its was estimated they made approx £300m profit on aprox 8bn sales in the 3 years prior to 2011, based on the numbers they gave to the parliamentry select committee and SEC filings. you only pay tax on (reported) profits. if you're still unsure, see their share price, its not of a company where investors worry about the revenues and margins.

Thanks for that. I found some other figures just now, quoted in post above.

If my business made loss after loss year after year, even though I was gaining market share, at some point the investors are going to want a serious return on their investment. Which is what I do not understand. They appear to be investing in a business that will come good financially eventually - sooner or later they are going to get fed up waiting, surely?