One reason Tower Records couldn’t keep it going was the tiny margins in the music business. I was a product buyer at one of the stores, and typically paid $10.35 to $10.70 for $15.98 list albums. New releases sold for $11.99 or $12.99 in the store, which with $10.35 removed doesn’t leave much. Walmart, Target, and other such stores started pricing new releases below the price I paid for them, so there was no way to compete with them.
What kept Tower in business was selling independent labels and catalog titles at full list price. But in late-2001, Tower was unable to repay it’s quarterly operating loan, then a second. The contract with the bank stipulated that when that happened, it was entitled to take over the operation of the business, which it did. They decided to demand 365 days "dating" (the time allowed for payment for product) from all distributers: we get your product in June of this year, we don’t have to pay you for it until June of next year.
The majors could afford to do that, but the Indies couldn’t, and some immediately refused. I was prohibited by the bank from buying from the Indies who refused, and instantly knew that would be the downfall of Tower. It took a few years (long after I left), but that’s exactly what happened. Without Indi product to sell, what did Tower have to offer? Higher prices on major label releases?!