2011 REVIEW: High Street Horror Story

There’s no hiding from the fact that 2011 has been a year to forget for retailers.

The bleak news on the High Street kicked off with troubles at HMV. The situation was made worse by over-zealous press predicting the imminent demise of the entertainment retailer – which issued three profit warnings in as many months.

HMV managed to renegotiate its banking facilities, but needed help clearing its debts and was forced to sell off Waterstone’s for 53m, and its Canada chain for just 2m.

The Waterstone’s sale was a turning point,” HMV boss Simon Fox told MCV in May. We went through a very tough restructuring, but thatis behind us.”

GAME Group has also struggled. Since the start of the year, the firm’s share price has dropped 91 per cent.

Meanwhile, US giant GameStop closed both of its UK shops.

It hasn’t just been a struggle for the specialists, though. Supermarkets have found it difficult, with Tesco reducing its non-food headcount. Dixons and Argos-owner Home Retail Group have reported flagging sales, too.In November, Best Buy announced it was pulling out of the UK, while Comet was sold off for just 2.

But for all the gloom, not every aspect of retail is in the doldrums. GAME and GameStop have reported a significant increase in digital sales – primarily via the sales of digital cards.

The story online has been more positive. GAME Group relaunched both its GAME and Gamestation websites in September, while Asda parted company with The Hut to launch its own online offering.

As GameStop departed the High Street in July, it entered the UK online space with its own website. The site has been making waves with gamers through a string of temporary deals. And these online giants are currently enjoying a booming Christmas. Amazon sold 3m items during Cyber Monday on December 5th, while IMRG and Kelkoo both estimated that 13.5bn will be spent online over the Christmas period.

But for all the festive cheer, many of these online giants have a challenge to overcome in 2012. The UK Government will close the Channel Island tax loophole in April, which the likes of Play, Amazon and The Hut have been exploiting for years. It could mean higher prices for certain items, namely DVDs and CDs.

This year, retailers have had to work harder than ever to find new revenue streams. They have expanded into digital, launched multi-channel offerings and closed loss-making stores.

Could 2012 see a recovery? A lot is riding on the launch of Vita and Wii U. But with the economy continuing to stutter, it will prove to be another challenging year for retail.