By Melissa Higgs.
In the first article of our new Focus on Finance Series, Melissa Higgs, the Co-Chair of the The Future of Finance Network discusses the impact losing high street Goliaths such as HMV has on local communities.
Another month, another high profile high street chain calls in the administrators. This time HMV. The news won’t come as a shock to many in the town centres that HMV offered CDs at far above the market rate to. Job losses and eroded wages have meant that spare cash is harder to find than a rare 12” record in the 90s. The intelligent and user-friendly business models offered by Amazon and iTunes have resulted in the gradual decrease of HMV’s market share. HMV is a victim of its lack of ability to change and listen to consumers when it’s doing something wrong and outdated. HMV is reminiscent of the coalition government in that respect.
Like many large “zombie businesses”, HMV stopped being profitable and hasn’t managed to change its course. Despite securing almost the entire market after the demise of Zavvi, Virgin Megastores, and much earlier on, independent record stores, HMV has failed to transform its business strategy to one fit for survival in today’s rapidly changing and competitive consumer space.
But HMV is not alone. Woolworths, Comet, Jessops, Clinton Cards, Borders and Blockbusters are just a few of the high street Goliaths whose loss will negatively affect communities they once served.
The effect of communities is not felt in whether they will be anywhere to buy a copy of Lady Gaga’s latest album, or rent a Ryan Gosling weepy, or in the faint nostalgia of flicking through 2 for £10 hardbacks. It’s much more severe than that. It’s in the empty shop fronts – depressing indicators that no new business should open in its place for fear of similar failure, and the betting shops filling the gaps in their droves, occupying retail spaces in the most deprived areas.
Areas hit by large scale unemployment, including that resulting from shop closures, are most likely to be feeding Fixed Odds Betting Terminals (FOBTs). According to Fairer Gambling, the profit made by betting shops from the 50 poorest constituencies was just over £173 million in 2012. The new occupants are sucking the life out of communities, and bringing with them the antisocial behaviour associated with addiction.
Labour needs effective policies to deal with the scores of zombie retail outlets which are likely to fall over in the next two years. The chain stores that our high streets have come to rely on are rapidly diminishing, and with them, communities and jobs. We need to decide whether to prop these outlets up with government funds or whether to encourage service based outlets, community centres, or even pop-up art galleries to occupy these spaces. There is even an option for councils to take temporary lease ownership and let them for free to start-up businesses and charitable organisations.
Another decision to be made is how to ensure that banks and administrators are not just making the best of bad debts when they are called in to assist. Real investment in transforming failing business models should be encouraged, rather than a focus on cutting costs for the eventual break up of assets. Banks need a policy of early intervention, with a requirement to look into the social impact of a large business falling over. A One Nation relationship between banks, local authorities and industry means working to ensure that town centres are places where people feel safe, employment thrives, business owners are confident that consumers want to invest their money and debts can be paid back responsibly.
The Future of Finance Network is running a series of events this year looking into what the next Labour government should do to ensure that our high streets can be a positive element of the economy – please contact Melissa Higgs, thread convenor at FinanceNetwork@youngfabians.org to get involved.
Melissa Higgs is Co-Chair of the The Future of Finance Network.