THERE were warnings before Christmas that as many as 140 retailers were in danger of collapse this year, but few expected such an avalanche before the first month was out.
HMV’s demise so soon after Comet and Jessops is now affecting the wider economy. The property sector is worrying that a flood of vacant shop premises will have an impact on values and rents. As for job prospects, retail is a big employer and the biggest in Scotland. In particular, women and young people will be deeply affected.
There is some respite in today’s figures from the Scottish Retail Consortium which show a small year-on-year rise, but inflation more than takes account of the uplift in sales.
There are still big successes – department store groups John Lewis and Debenhams remain in good health – but the casualties are mounting and the high street will be a different place as a result.
One common thread to those collapsing firms is a failure to adapt to changing shopping trends. JJB Sports had too many stores and the wrong stock. HMV has been described as out-priced and out-dated; too slow to adapt to the download and streaming revolution and to online trading. The company, a fixture in the music business since 1921, has a 23 per cent market share compared with Amazon’s 22.4 per cent and iTunes’ 18 per cent.
Ultimately it was brought down by the refusal of its suppliers to provide £300 million of additional funding to pay off its debts. Without a new financial package in place, it was doomed.
Any buyer will need to make a leap of faith. Turnaround specialist Hilco is among those mentioned – it has already had some success with HMV Canada. Private equity firm Apollo has also been linked with a move and recently bought a stake in its debt.
Record and film companies want to maintain a high street presence for hard copy sales, but the consumer has other ideas. The record store is fast passing into history – or at best, into the boutique end of the high street.
Banks keen to embrace new code of conduct
banks are trying to restore public trust following a long list of scandals and their main lobbyist is calling for a professional standards body and a code of conduct that would allow for rogue bankers to be struck off.
Anthony Browne, chief executive of the British Bankers’ Association, wants a Banking Standards Review Council that could be given powers to “blacklist” individuals – in a similar way to the General Medical Council’s monitoring of the health sector.
More effective policing of the sector has been high on the agenda since the tripartite system failed to spot the financial collapse in 2007-08.
As a result, the Financial Services Authority is being carved up and its powers shared among new bodies and the Bank of England.
One danger to be avoided is the creation of too many authorities, which could present an opportunity to pass the buck.
Browne’s suggestion, made to a parliamentary commission this week, could be seen as a timely intervention amid reports that US investment bank Goldman Sachs had been looking to delay bonuses to avoid a higher UK tax rate (it has since backed down). As Browne himself admitted, such a manoeuvre would not have helped restore trust.