UK high street music retailer Zaavi (formerly Virgin Megastores) has suspended trading on its online store due to the collapse of Woolworth’s, which owned Zaavi’s distributor EUK. Negotiations are underway to secure a buyer for EUK. The UK music industry has got to hope that happens soon. Don’t underestimate how important a quarter this is for the music industry. Sales have of course been declining for years in in major markets, but the credit-crunch driven recession we’re entering could be a make or break for music sales.
There is a decent chance that the credit crunch will be a fillip for music sales. This is because many people will have less money to spend over Christmas, or will opt to spend less because of fears of financial insecurity in 2009. Thus many people could chose to buy cheaper presents such as CDs, DVDs and books rather than higher consideration items such as consumer electronics. But for this to work, consumers need to be encouraged to buy, they need the special offers to drawn them in and most importantly the retail channels for them to go to. In the UK we currently have one of the key mass market retailers out of the equation (Woolworths) and now the online presence of one of the high street stores out of action. The odds are Tesco will turn this to their advantage but the net impact would be overall lost UK opportunity, even if Tesco increase their market share.
But “what about digital?” you might ask. Firstly, digital is a long way from meeting the needs and wants of most CD buyers, particularly those who typically buy infrequently and largely in the Christmas period. Gifting an iTunes gift card just isn’t the same as wrapping a CD to put under the tree. Aunt Mable isn’t going to buy Tom an iTunes voucher, she can’t be expected to understand what format works with what device. She’ll go for a book or a DVD instead.
So the music industry needs this Christmas to be big. And in the UK it needs all the retail outlets it can get.