The Last Giant...

Music and film retailer HMV last night called in the administrators as it becomes the highest profile chain to collapse during the current economic malaise.

Around 4,500 jobs are at risk at the 90-year-old retailer after its board called in Deloitte as administrators following poor results over the crucial Christmas trading period – when it traditionally makes most of its sales.

Best known for its Nipper the dog trademark, HMV has failed to find a way through difficult economic conditions and fierce competition from supermarkets.

It has been struggling with debts for just over two years, and while banks have revised the terms of their loans it was thought to been handed a lifeline after its suppliers, including Universal Music, EMI, Warner Brothers and Disney, were handed shares in exchange for improved commercial terms.

But those firms were said last night to have refused to agree to provide additional financing to the retailer, leaving it with few options to find the extra resources needed to keep trading. HMV's website was still advertising its 25% off sale for thousands of products on Monday.

The chain, which opened its first store in 1921 on London's Oxford Street and still owns the world's biggest record shop there, had been attempting to shift out of films and music and into accessories such as headphones. But it had not been enough to counter the decline in conventional sales. Simon Fox, then chief executive, jumped ship to Trinity Mirror last year to be replaced by Trevor Moore, the former boss of Jessops, the camera retailer which itself collapsed last week.

Jessops closed its 187 shops for the last time on Friday and made 1,370 staff redundant. It is one of several high street names to go to the wall over the past year, including the electrical retailer Comet, clothing chain Peacocks and JJB sports.

HMV is arguably the highest profile name to collapse during the prolonged economic downturn and altering shopping habits that also forced Woolworths out of business five years ago, at the start of the banking crisis.

Ironically the collapse of Woolworths had initially helped HMV, which enjoyed a peak in sales shortly afterwards, before the competition escalated from supermarkets and online retailers.

A weak economy in the run-up to Christmas has exacerbated the woes of retailers struggling with business models overwhelmed by technological changes such as the explosion in camera phones, which destabilised Jessops, and the explosion in internet downloading which undermined demand for CDs and DVDs at HMV. With consumers less keen to spend over the key festive period, which is a make-or-break time for struggling retailers, Jessops and HMV have been unable to prove to their financiers that they have a viable business model.

Last month in the midst of the Christmas trading period HMV had warned that the tough trading conditions meant it was already struggling despite having installed a new management team in Moore and new finance director Ian Kenyon.

It remains to seen what the impact will be on the film companies and record labels which rely on its 247 stores for their sales. Despite its troubled position, the retailer still sells 27% of all DVDs and Blu-Ray discs and 38% of the physical music market.

I was so sad to hear the news last night! HMV has always been the most important high street store in London for me (no surprises there!) and I really hope that the chain wont close (or at the very least that they will manage to keep open the flagship store on Oxford!).

It used to be so much fun to shop in London - HMV, Virgin, Tower and all the second hand shops in Soho seemed to be filled with treasures and it would take days to go through them all. Now, if HMV falls (and takes Fopp with it), there is nothing left for music lovers in one of the biggest cities in the world, except for a few second hand stores, unless you fancy trips to supermarkets!

HMV currently sells 38% of the physical music sold in the UK - and the last time I checked, a big part of the population still wants albums on physical formats. Vinyl has been making a big comeback as well over the last few years and I flat out refuse to believe that people will want to turn their backs completely on actually OWNING something besides a bloody computer file. The quality of an MP3 is never going to be the same, so people are buying much inferior product (and if they want an album on MP3 they can just buy the CD and rip it to MP3).

I have never, and hopefully will never buy an MP3! I don't really know how much cheaper it is to buy an MP3 album vs physical and I don't care. But I do know that I would stop buying music if the physicals went out. For example, I have supported Madonna for more then 25 years, buying every release that I could get my hands on. Her latest single was not released on any physical format, and therefore I did not buy it (and neither did anyone else, apparently).

I don't think anything can take away the feeling of browsing in a record store. The problem with HMV is that the prices were often way too high, so people would browse in the store and then go home and order the same thing on Amazon for a much lower price. I do the exact same thing over here - I never buy anything in the pathetic excuse of an overpriced record store we here, I just browse and order from Amazon. (BTW, over here well over 90% of music sales are on physical formats. Sadly it is mostly Icelandic music, since people seem to want to buy that crap and just steal everything else!).

HMV has been standing for 90 years and I refuse to believe that this is the end. They do need to make some massive changes and probably close down a lot of stores, but if they could offer more competitive prices I think they could continue to stay in business. At least I hope so!