by Carps
http://www.itsafamilything.co.uk/
HMV was part of the fabric of the British high street but – like Woolworths, Jessops, Currys, C&A, Ethel Austin, Borders, Virgin Music and a slew of lesser known names – at some point in the last decade time caught up with its business model. A lot of people speculate as to why it failed.
Here are my thoughts.
- Tax
I don’t want to sound like a stuck record on the subject, but the last 15-20 years has seen a steady increase in running costs for business. National Insurance was blithely increased from 10% to 11% by Gordon Brown back in the day and he was loudly cheered. For a company with thousands of employees though, that quickly means a few million extra quid. Chuck in the equally casual rise in VAT from 17.5% to 20% and who’d a-thunk it – economics 101 comes into play: supply and demand change as prices rise. - Energy Prices
No. It isn’t a merely function of higher wholesale prices. The price of energy is largely determined by Government policy – particularly subsidies to ‘renewables’, but also on exploration taxes, various duties and so on. Racheted up over several years on top relatively high wholesale prices, it becomes more expensive to keep those nice high street neon lights running. Those costs come to you the consumer in the form of higher prices. And seeing as you have less money yourself in the first place because of higher energy prices, then the effective is a double whammy that stifles demand on the high street. - Parking
Another familiar bugbear of mine. Whether stupidity is compulsory for councils or whether it results (as per) in some obscure EU directive or other, free parking has vanished from the high street. A trip to town now routinely results in you having to find £7 in coins. The motive of councils is ostensibly to raise money and to encourage the use of public transport, but in fact it just means you stay at home more often which is cheaper and more convenient than both. - Personal Selling/Buying
Anecdote: for under a fiver I recently bought Jaws 3, a phone cover and Silence of the Lambs. They were delivered to my door. I paid no VAT on these purchases. The sellers weren’t paying employment taxes or running expensive front of house. In fact, they were people like me who have a massive inventory of ‘stuff’ lying around the house and are either going to chuck it in the bin or flog it on eBay for nowt. Taken across the country, there are probably billions of books, CDs and DVDs that will eventually get sold by people who don’t want them to people who do. Amazon Marketplace and eBay will make pennies from each transaction, but so what: it costs them even less to facilitate and is thus profitable. - Corporation Tax specifically
I’ve mentioned this before too, but if you tax a business at a certain rate for being based in the UK and it can equally happily run its UK business from overseas and avoid tax, then it will. HMV, stuck unhappily and inescapably on the high street and rooted in Britain, could never compete with Amazon who can move their taxable HQ wherever is most beneficial. Again, those who complain about this miss the point: it’s just a fact whether you like it or not. Either you encourage people to base themselves in Britain and contribute to employment and all the benefits that brings, or you encourage them to locate in Malta. - Technology
Times change. Maybe 200 years ago we’d be lamenting another 4000 farm labouring jobs being lost because of the invention of the seed drill. The fact is that analogue formats for music, film and books alike are dying the death of a thousand cuts as people replace it all with more efficient storage means – i.e., digital. It may be that this alone will undo ALL music shops in the end. - Demographics
All of the above point makes HMV and similar businesses seem alien and weird to a new generation of customers. “You want me to either pay £3 on the bus or £7 in parking to visit a store that is more expensive, has less choice and no search facility to buy my music? Shut up Grandma!” Never exposed to the joys of a good record shop, it’s not in their blood and they don’t even place sentimental value on buying there – much less any actual cash value. The next generation will find it all amusingly quaint that we once had to go look manually through a fancy warehouse to find our Ned’s Atomic Dustbin records.
Solutions
The Government won’t do any of the following, so it’s a moot point, but if they were genuinely interested in saving jobs and the high street they’d slash corporation tax to encourage companies to headquarter here. They’d end subsidies to certain energy sources and hack away at the duties on other sources. They’d cut parking fees. They’d lower VAT. They’d reduce business rates.
They won’t. Prevailing ‘consensus’ in our crony corporatocratic political cartel is against all of these things. Vote Labour, Lib Dem or Tory they will merely tinker with the margins until every business here has been eaten alive by China and the internet.
The argument against this is loss of revenue for the exchequer. Well, I’d rather have 4000 people in employment, paying tax and spending their wages than 4000 more people on the dole, wouldn’t you?
Still. No need to listen to me. I’m just a nobody and not one of the cunts currently intent on ploughing the country into the fucking sand.
