Updated: Tue, 15 Jan 2013 12:30:00 GMT | By Damian Clarkson, senior editor, MSN Money

Q&A: HMV administration

A look at what the collapse of Britain’s last major music retailer on the high street means for you.


Image © Retuers

HMV has become the latest high street casualty as it announced last night it was calling in the administrators.

Britain’s last major high street music chain held talks with its banks over the weekend but failed to secure an emergency rescue package.

As a result, the company announced on Monday that it had ceased trading on its shares with immediate effect and would be appointing Deloitte as administrators.

The collapse comes just days after camera retailer Jessops suffered the same fate, indicating that the challenges being faced on the high street are far from over.

Here, we will explain what exactly has happened at HMV and what it will mean for you.

How did HMV end up in this position?
In truth, the demise of HMV has been a long time coming, as it was squeezed by online giant Amazon and supermarkets offering cut price music and DVDs.

Analysts claim the chain was simply too slow in getting involved in the digital music market, while it was always going to struggle to compete on a price basis against the might of Britain's supermarkets.

So HMV has collapsed – what happens next?
HMV issued a statement saying that “it is the intention of the administrators… to continue to trade whilst they seek a purchaser for the business."

So stores have opened as normal today. However, it will be a surprise if we don’t see at least some store closures in the future. At present, HMV has just under 240 stores across the UK and Ireland.

Are vouchers still valid?
HMV has confirmed it will not be accepting gift cards or vouchers. Unsurprisingly, the decision has outraged customers, many of whom will have been given them as Christmas presents but not yet redeemed them.

However, don’t throw your gift cards in the bin just yet. Ultimately it is up to the administrators to decide whether or not to honour them and, while HMV’s customers are obviously not their main concern, there’s a small chance they might change their mind.

You lose nothing by holding on to them for a little while longer.

And what about extended warranties?
If you’ve purchased an extended warranty through HMV for a device, the news is far more positive. This is because HMV's warranties are actually provided by a third party - Allianz Insurance - meaning they are still valid.

What does this mean for their staff?
HMV employs more than 4,000 people, who are all facing an uncertain future. As we mentioned earlier, it’s likely that we’ll see store closures and, with it, job losses. However, it must be stressed that nothing is certain at this early point.

Will HMV disappear from the high street altogether?
There’s a good chance it will remain. Although it has debts, analysts predict that around half of its stores could actually be run at a profit. What’s more, HMV is an instantly identifiable brand and that will no doubt attract potential buyers.

Expect to see someone willing make a bid for at least part of the business.

Will HMV hold a fire sale?

The store’s directors have said this will be a decision for the administrators.

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25Comments
15/01/2013 19:38
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I think it's discusting that they do not honour gift cards they've had the cash for them. It's just a form of stealing from people. Even if someone jumps in to save them, people like myself would not use them because they have taken cash from me and all I have to show for it is a white plastic card which is of no use.

 

15/01/2013 16:10
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They could cut the amount of stores they have by two thirds and that would mean keeping the shops in key cities and locations and they might just survive. They need to look at the market and customer base as well because the majority of people who buy physical CDs etc are the over forties. HMV has ignored this market for some time now
15/01/2013 21:36
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if the shops matched internet prices people would still buy in shops!
15/01/2013 18:32
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I think what people aren't realising is that this isn't solely because of illegal downloads, which is what the majority of Facebook statuses I've seen have been suggesting. This is because of technology progression. The move from CD to mp3 (whether legally or illegally acquired) is the same as the move from vinyl to CD. It's how the world is moving, and if people can buy a song from inside their home that takes up no space anywhere other than their mp3 device, against buying a piece of plastic they have to store...they're going to go with the CD. Same with DVDs. Would you rather have 400 DVDs cluttering up a room of your house, or have them all stored on your computer/iPad/iPod etc.? Of course the number of jobs that will be lost is terrible, and that is what's really happening here. But it's literally the way music and technology is moving forward. There will be people still buying CDs, of course, and in 30 years they'll be the same hipsters who today buy vinyls from record shops. So it's not like we're making CDs completely obsolete. But you can't battle technology progression just to save jobs.

15/01/2013 16:35
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The issue I think hmv has it is that even with sales alot of the stuff they sell , can be got cheaper online so for alot people especially in this day and age with price increases on alot of items and some people not being able to get work , it is ideal for people to get what they want at the cheapest price. Which is something i feel HMV are sometimes unable to compete with
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There was a time when local retailers were just that, small, locally run and owned shops. There were independent record shops in most towns and cities. Chain stores and retail parks killed off unique and interesting city centres and high streets. Nobody seemed to care. The supermarkets in particular expanded into every market possible and destroyed a lot of businesses. Governments did nothing. Now the government say they want to revitalise the high street, help the retailers. It's a bit late. Online companies and technology is doing to the likes of HMV, exactly what they did to local shops. The government are just sore because they can't make as much from companies like Amazon. Again, tough! Taxes never seem to benefit the general public anyway. Buy cheap goods online and don't worry about it. Don't get me wrong, I do have sympathy for the ordinary employees who will lose their jobs. Anyway, goodbye HMV. TESCO NEXT! (hopefully)
16/01/2013 10:26
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cant belive they wont be accepting gift cards i have 2 of them worth £40 which i got given for christmas. ive always shoped in hmv for music. ive never downloaded music from the internet i like going into shops and pick what i want and have a good look round.

 if hmv knew they were going into administration why take money off people.

15/01/2013 20:17
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"His Masters Voice", how very sad that this has happened, may be, just may be they will be saved, but with the age of downloads and internet buying how can they compete.

Another retailer bights the dust.

15/01/2013 17:00
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Mind you, HMV were late with their postal\online offerings. However, perhaps people should have bought more from HMV rather than from tax dodging cheats like Amazon
16/01/2013 12:08
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Wanda's right, I was sold a gift card at three fifteen on monday afternoon for my nephews birthday as i was unaware what was coming. By the time it had arrived in the post the next day they'd announced it was worthless, then later the same day took the money from my credit card for the gift card anyway whilst telling me in the store it couldn't be used!!! Surely it's dubious ground legally regardless of the company's predicament?

 

15/01/2013 22:25
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They're knackered, it's Deloitte. They will give them the bullsh1t about how they will be trying to save what they can to sell as a going concern. You even get it writing, not to worry. It's a load of b*ll*cks. Comet had people interested in buying, but it was never good enough. Unless that's just because it was for that Jackson fella. I sincerely hope they do manage to save some of it, for the few who would keep their jobs, but I wouldn't hold my breath, sorry.
16/01/2013 16:04
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I love to clutter up my home with music. It's always there. You do not own a download. Anything you buy from Itunes you do not own. But a record or CD is yours for life.
15/01/2013 18:31
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They should shut the stores that was loosing money early on would cut over heads cost.

I know the supermarkets can sell DVD at £10 or £14 they must buy them in bulk they

still make a profit on then,plus you can buy then on line theres load web site out there

cheaper tha HMV web site. 

17/01/2013 18:09
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I say to everyone who has a gift card you should all get together go down to an HMV store whilst their still trading and take the items totalling to the amount on your gift card and just walk out the shop because really HMV ARE STEALING FROM YOU.
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Strange really, record companies forced us to end vinyl as they wanted it gone. They stopped making vinyl records forcing us to go over to CD and now years later it is consumers who are driving the market by preferring downloads. I am not surprised at all. I often used to go into a record shop and often the record I wanted they did not have in stock and vinyl singles were deleted so quick after being released. Downloads I can get online and mostly for free include records I honestly wanted to buy 30 years ago but were deleted far too soon. - My music collection now has really rare items I could not get for love nor money years ago!!
17/01/2013 04:41
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Why is it that people have still not learnt that vouchers and gift cards are the first thing shops refuse when closing down why not start buying postal orders they are much safer
16/01/2013 11:22
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what do they expect the prives they charged  the last time i went to my local store in oxford was 5 years  a go asked for a cd the staff were so rude i came home went on line to amazon and when i want cd or dvds thats were most people go thats propley the reason they gone to the wall
15/01/2013 17:47
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simple fact is that hmv like a lot of comp[anies just do not understand the modern download world, and that includes music, video and computer games, and it is a fact that the cosole is dead and that smart phones tablets are where the future lies, even pc's have a stronger games base than the consoles, and that is due to the download ability
15/01/2013 18:30
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I am afrade it is about biss modle not  resonding to its custermer.

Shame to see them go.

Another cash of the lack of lending from the banks it used to be the small company but they have found other ways of getting finance.

Big companys will now have to do the same

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