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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.

7 comments:

  1. Last Record Store? Or just Last Store? How many people will have signed in to Amazon to do their Christmas and not felt the need to go anywhere else?

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  2. whoops, 'Christmas shopping'...

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  3. Ive given up using amazon. If I cant source stuff locally I find it on amazon via an independent trader and go direct to the website. Amazon is not only killing out high street, it depriving out welfare system of the £s those independent traders used to pay in.

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  4. I think that all major chain stores operate on that basis David.

    Tiny margins demand demand massive and non-stop sales that's why companies like Comet go into administration quite suddenly.

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  5. My memory is that High Streets all looked the same in the 1980s and let's be honest,we didn't really need to look at and feel book covers and CD cases to buy them. If a High Street now is full of cafes, pubs, clothes retailers and a few esoteric food-shops (okay a lot of charity shops), is that worse than passing exactly the same Our Price as in every other town? And they never had what you wanted anyway.

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  6. Fair comment. I feel no affection whatsoever for HMV or any of the big record chains... the only record shops I remember are the really esoteric outlets like Rock On in Soho Market - otherwise it's always been pretty much a commodity business... loved the records, for sure, but the outlets? Rarely so much...

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  7. Amazon won't be the last record store. Unfortunately that honour will go to iTunes.

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