After a year of store closures and slumping sales, U.K. music retail is attempting to stave off meltdown with a host of new in-store initiatives.

The long, wet summer has seen some seismic shifts in the market, with the traditionally buoyant albums market hitting its first big slump of the digital era. Sales are down 10% year on year in the first half of 2007, and three major independent chains -- Music Zone, Fopp and ChoicesUK -- are either going bust or entering administration, which is basically the U.K. equivalent of Chapter 11.

"It's the first time we've been hit on all sides from everything," says Paul Quirk, co-owner of independent store Quirks Records in Ormskirk, Lancashire. "Digital, the lowering of prices . . . and consumer confidence in music retail is at its lowest level for a while. It's really difficult out there."

With the specialist-chain market now essentially reduced to HMV and Virgin Megastores, online outlets and supermarkets are driving down CD prices, which in turn is punishing retailers' margins. Specialist retailers sold CDs at an average price of £9.32 ($18.70) last year, £0.75 ($1.50) less than the previous year, according to the "Audio Visual Trak Survey" from London-based global market research company Taylor Nelson Sofres, published in the BPI's 2007 Statistical Handbook.

CDs bought online-from businesses not lumbered with rent overheads-cost the public an average of just £8.50 ($17) in the same period, while supermarkets, which often use music as a loss leader to attract customers, charged £8.83 ($17.71) per CD.

"The model doesn't provide us with a return. It is at meltdown for the specialists," says Quirk, who also serves as co-chairman of Britain's retail association ERA. "There's probably 200 [independent stores] closed or closing [in the last five years]. Often they're not going into administration or bankrupt, but they're choosing not to renew their leases and to retire or move into another business."

However, retailers who spoke with Billboard identified many potential lifelines for music retail.

Click here to read the full article, including how retailers are enhancing their offerings and buidling better retail environments, how digital products are playing in to the metamorphosis and more.

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