Another “Bricks and Mortar” reduced to rubble.

First we reported on the demise of Blockbuster, then the bankruptcy of Borders. Prior to those, Sam the Record Man and A&B Sound closed their doors. Yesterday, the Financial Post published an article claiming that HMV would be closing their Canadian stores.

All of these stores had one thing in common; they sold products from physical locations (bricks and mortar) that were easily digitized and delivered electronically over the web. Perhaps because of long term leasing agreements, they did not react fast enough to competition from such vendors as Amazon and the Apple Store. Revenues fell, but costs did not. Losses led to more debt, revenues did not recover. Business plans were changed many years too late and the inevitable happened.

There are other companies that will face similar challenges in the next few years. Any company that relies on selling entertainment products that are, or can be delivered in electronic format will disappear. It is far less expensive for consumers to shop online than it is to go to a store in person. With the pending releases of new and improved tablet computers, expect to see more books being delivered online.

We’ll go out on a limb here and make some bold predictions. Chapters/Indigo will scale back or abandon their Coles brand which occupies expensive locations in shopping malls. Rogers will begin closing their movie rental outlets. The remaining Virgin Megastores will close. Even large retailers are likely to scale back their offerings. We noticed that the Fred Meyer outlet we visited last week had removed their music/movie department. Walmart and Target can’t be far behind.