- Is iTunes to blame for the death of HMV?
- Has the iPhone 5 led to the closure of Jessops?
- How can the high street compete with Internet shopping?
- Apple's retail success: What can competitors learn?
- The future of shopping
The recent failure of UK retailers such as HMV, Jessops, Blockbuster, Game, Comet and Play.com, and reports suggesting that 600 shops closed last year, have raised the question of what's to blame for the high street's struggles, and some are pointing the finger at Apple.
Struggling chain HMV's estimated debt was about £176 million, and has now been bought out by restructuring specialist Hilco. It's not clear exactly where Hilco will take HMV in the future, but it's likely that a bigger online presence or prices that can compete with Amazon and supermarkets will be needed in order to give the chain a hope for long-term survival.
Hilco is also thought to be in negotiations with Jessops' administrators about acquiring the brand. Jessops was forced to close all of its 187 branches in January, leaving 1,500 out of a job. It looks like Jessops might be making an online comeback in the near future, however, with the company's website now displaying a message which reads: "new website launching soon."
Already an online retailer, Play.com has announced that it will become marketplace only from March due to the UK government's closure of a loophole for transactions under £15 from the Channel Islands, which meant the Jersey-based site could sell CDs and DVDs without paying VAT. The added costs mean that the site would be forced to increase its prices, leaving it unable to compete with the likes of Amazon.
In January, rental store Blockbuster placed its UK subsidiaries into administration, and last year, Game entered administration, closing 300 of its retail stores, but managed to report better-than expected revenue over the Christmas period.
In December, electrical retail chain Comet closed its 236 stores after failing to recover after entering administration.
Despite the struggles faced by all of these entertainment and technology retailers, Apple certainly doesn't seem to be having any trouble on the high street, with an average of $1.25 million in revenue made every week from Apple's retail stores in the first quarter of 2013, up 52 per cent from the previous quarter.
Digital downloads are killing physical copies
In June 2012, digital music downloads outsold physical CD and record sales for the first time, and there's no doubt that Apple's iTunes has contributed to the increase in digital format's popularity, therefore playing a part in HMV's decline.
Plus, the lack of an optical drive in Apple's newest Macs means transferring music from CD to iTunes, and ultimately to an iOS device, is becoming more difficult. (An external USB SuperDrive is available to buy from Apple for £65, though).
But Apple isn't the only company encouraging digital downloads. Amazon offers MP3 downloads, and has recently rolled out an MP3 store for iPhone and iPad, and personalised music streaming services such as Spotify are also becoming an increasingly popular alternative to buying CDs.
According to the UK music industry trade body BPI, almost one in five (19.6 per cent) of music buyers now buy only digital music, ditching the high street all together in what's been described as the "digital music switchover," reports the Guardian.
"There has rightly been a lot of focus in the past few weeks on high street music retail. That will continue – we must do all we can to serve music fans who love CDs and vinyl," said BPI chief executive Geoff Taylor.
"But as well as great music stores, Britain is blessed with a world-beating array of digital music services, which fans rate very highly for ease of use and value for money. And this is just the beginning," he added.
BPI says that services such as Spotify, Napster and last.fm are contributing to the rise in streaming music, a market which is now worth more than £49 million annually to British record labels, accounting for 15.2 per cent of digital income.
In total, UK customers streamed more than 3.7 billion songs in 2012. We also bought approximately 30.5 million digital albums and 183.3 digital singles, says BPI.
"The change has been seismic. And it continues," said Taylor. "Market growth and digital innovation are dynamically intertwined, meaning the next 10 years should be equally as game changing and thrilling, as we look forward to the impact of 4G-connected TVs and in-car streaming on the horizon."
Digital downloads span further than just music too, of course. iTunes offers digital downloads of television shows, films and books, while Amazon also has its Kindle products. Catch-up services and other services like Netflix and Love Film mean customers don't need to leave their houses when they fancy watching a new movie.
NPD Group has ranked iTunes as the top 'Internet Video On Demand' provider, (which doesn't include the streaming services such as Netflix), reporting that Apple provides approximately 45 per cent of online video rentals. Amazon is estimated to account for around 18 per cent of online video rentals through its Instant Video service, placing it in a distant second place.
These factors, plus the ability to download Xbox and PlayStation games straight from the console and the advancements in mobile gaming, mean HMV, Blockbuster, Game and Play.com, all examples of retailers who offer DVDs and games in physical copies, are facing fierce competition from an area that is growing rapidly.