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7 December, 2005

I'm no economist, but...

Something's been puzzling me.  If traditional high street retailers are anticipating another very poor peak season this year, whereas their online rivals seem to be on their way to a record performance, why don't the high street chains seem to be even trying to compete?  Why are CDs and DVDs so much more expensive in, say, Lancaster's branch of HMV than from, say, Amazon?

I can appreciate that the requirement to rent, dress, staff and stock shops will boost prices. I can particularly understand that this will be significant for an individual small, independent shop, but a company the size of HMV has the advantage of bulk buying and its own supply network, so the magnitude of the price difference between HMV and Amazon makes limited apparent sense. An extra pound or so would be reasonable, yet the average price of a mainstream current or back catalogue CD album seems to be around £16-17 in HMV Lancaster and around £10-11 at Amazon. Why even consider buying from HMV?

Wouldn't it be better to make deep discounts (I mean routinely, on all items, not one-off sales of excess stock) and maximise sales at break-even prices, rather than alienate customers and create a section of the population who'd no longer even bother to visit HMV? They might be offering wonderful bargains at this very moment, but I wouldn't know, as I've already been driven away by their usual prices.

Comments

HMV have recently moved their online store offshore to Guernsey to compete better in the online market. Their online prices are substantially cheaper than their instore prices - in fact, in some cases HMV.co.uk has been several pounds cheaper than any of their online rivals. And they do a 10% student discount online too.

Posted by Neil T. at December 7, 2005 03:38 PM

Moving away from the HMV situation, I was quite impressed with The Officer's Club sale. Some decent prices, I picked up a pair of jeans for 10, something I might expect in Matalan or in the January sales but not on the high street now.

Posted by Jan B at December 7, 2005 04:10 PM

Neil: Not really relevant, mate! I'm only talking about the high street shops, not web stores operated by the same companies. Or are you saying HMV's high street prices might be a deliberate attempt to run-down that side of the business? Interesting point.

Jan: High street stores may have worthwhile one-off sales (though I've noticed that some of the reduced high street prices are in the same range as standard online prices...), but I mean that retailers might benefit from reducing their standard prices, on all items, permanently something like 4-5 off every full-price CD in HMV (not those already reduced in a sale).
Personally, I tend to shop at the Army & Navy Store in Manchester's Tib Street rather than The Officer's Club in the Arndale Centre ;) but I'm not aware of such an extreme price difference between off- and online clothes retailers, so I suppose I'm mainly directing criticism at the music & video retailers.

Posted by NRT at December 8, 2005 12:13 AM
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