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Friday, December 14, 2012

Will Amazon be the Last Record Store?

I was walking up Oxford Street yesterday and thinking about the record and book shops that used to be there. Two HMVs, two Virgins, at least one Our Price, Borders, Books Etc, Waterstone's and some other chains whose names I've forgotten.

Now there's just HMV and yesterday they reported that they were likely to breach their banking covenants in the New Year.

The theory of Last Man Standing goes that when a market is cleared out it remains possible for one large operator to make money. If HMV were the last music retailer on the High Street it could do OK. It doesn't look as though it's going to work out as neatly as that.

While I was thinking about that I learned that Amazon aim to get a margin of just 1% across its business. I'm no business analyst but surely that kind of strategy can only work if you get mind-boggling scale.

The way your way cool new internet is panning out makes me yearn for the ways of the old-fashioned retailers. Like Tesco and Sainsbury.