Music and DVD retail chain Fopp went into administration yesterday (June 29th), and all stores were closed with immediate effect. The full story is at the BBC website here.
Although the usual story of downloads affecting CD sales was reeled out, it seems that Fopp’s main problem was bone-headed management at the highest level. In a retail sector where everyone else was tightening their belts, the company was proceeding on a huge expansion programme. Just five years ago there were fewer than a dozen stores throughout the UK – nearly all in Scotland. By yesterday the figure had reached 105. When the Music Zone chain went bust six months ago, Fopp bought out all the stores. In Glasgow this included the newly opened store in the old Tower Records premises on Argyll Street, which was immediately closed. It was open for such a short time, that I never even went inside – how much money was wasted there?. The financial strain seems to have been too much, and the company simply ran out of cash.
Most of the existing stores continued to be busy and make a profit, but the company was spending money it didn’t have, and when it couldn’t get any more credit, the inevitable occurred. I feel for the staff who have not only lost their jobs, but have been told that they will not get paid for June. It is just another example of incompetent corporate management by people who seem to think that borrowing more and more money to pay existing debts is a viable way to run a business. It’s all fine and dandy until someone says “no more”. No doubt the people who created the mess will have protected their own assets before the crunch came, and will hardly be lining up at the nearest soup kitchen. For their 800 victims things will be a little tougher.