HMV administration underlines shift in high street trends

For those monitoring the company's progress, HMV's administration this week won't have been a complete shock; the firm had been struggling to pay down its debts and meet agreements with its banks for some time. But its final collapse has highlighted broader trends within the retail sector.

In the past two months, three massive UK retail companies have hit difficult times: Comet, Jessops and HMV. If all three companies shutdown their premises, there will be in the region of 600 empty retail spaces on British high streets, marking a significant change to the retail landscape.

This trend looks set to gather pace as interest rates creep back up and investors run out of patience, leaving those companies that don't have a solid business plan at a very real risk of collapse. The number of empty shops on the high street will no doubt be pushed up further as this continues and retailers consolidate their assets and sell-off under-performing outlets.

Matthew Hopkinson, director of retail information provider the Local Data Company, told the Financial Times that this mix of factors is leading to one of the highest retail vacancy rates on record. The previous all-time high was 14.6 per cent, but this is fast creeping towards 16.5 per cent as 2013 shapes up to be an even harsher year than 2012.

But it needs to be noted that not all the failures are due to the economy. HMV in particular has been criticised for failing to update its business plan in time to keep pace with the massive changes in music distribution as consumers moved towards cheaper sources online. Jessops has also struggled with a change in the photography market and the development of cheaper technology, while Comet is thought to be a casualty of the trend among purchasers to research a product on the high street but buy online at a cheaper price.

It's clear from this group that the internet is having some major changes on the retail world. In fact, research from Verdict found that this year, the internet will account for about £1 of every £8 spent in the UK. Britain is clearly one of the biggest online shopping nations in the world and retail businesses are finally having to face up to this fact, or fall by the wayside to become fodder for more innovate business owners to snap up and turnaround.

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