As of the 15th January 2013 HMV may no longer be
the last man standing in entertainment retail on the high street. After months
of difficulties and after the company had to warn investors in December that
the group expected to face a solvency crisis by the end of January, the brand
finally fell.
Record companies don’t want to see the business fail as it
could signal the death of physical CD and DVD sales with no high street
presence left to sell them, as despite the rise of digital, physical format
sales still make up three quarters of the entertainment market.
Customers have also been left out in the cold as it was
announced HMV could no longer honour gift cards and vouchers. It left many with
useless bits of plastic instead of a present that for many could have been used
to purchase that album that could be cherished forever, or that DVD to be
enjoyed on a cosy evening in with the family. Instead the situation lead to
instances of irate customers taking things into their own hands – my favourite
example being the grandfather who, after having his grandson’s gift card
refused, simply took the games he wanted to purchase straight out of HMVs
Dublin store promising to post the worthless gift card to the store in return.
Since then, Deloitte, the company dealing with HMVs finance
during its administration has vowed that from 22nd January it will
start allowing customers to use vouchers for purchases once more. However, how
many customers will now have discarded their gift cards?
So why did such a long-standing part of our high street
simply crumble as it has?
I believe the key reason is down to the slow pace in which
HMV adapted, expanded and moved the business forward, neglecting key trends in
the entertainment market until other competitors had entered and established
themselves first barricading HMVs offer when they finally caught up.
A prime example is the surge in popularity of digital
downloads. Back in 2003 when iTunes lead the way for mp3 downloads, HMV should
have clocked the potential in the new format, as it did with CDs replacing
tapes, and tapes replacing vinyls etc. However it took until 2010, after even
online competitors such as AmazonMP3 had been launched two years earlier. Had
HMV grabbed hold of digital way back in 2004/5, the business would have had an
extra source of revenue giving it more time to contemplate the problem of
declining physical product sales.
Furthermore research has suggested a revived interest in the
vinyl format which has created successful businesses out of many independent record
stores, but that yet again passed HMV by. While some larger stores may stock
popular vinyl records, vinyls are not supplied in all stores owned by the
chain, and HMV has missed the opportunity to build a new customer community
through new and independent music that could hook customers into store and
convince them that they may discover their new favourite band.
Of course the competition in physical and digital sales from
huge online stores such as Amazon and from supermarket chains offering chart
entertainment is possibly the biggest problem still facing HMV. They can’t
compete price-wise and it’s proven unsuccessful to try, but if HMV is bailed
out, there is still a lot of opportunity out there for the brand given they
finally accept change and catch up in the market quickly.
Sources:
Why Did HMV Fail? 2013. Descrier. http://descrier.co.uk/uk/2013/01/why-did-hmv-fail/, accessed 21/01/13
McCartney, J. 2013. HMV fell victim to our temperamental love
affair with brands. The Telegraph 19th Jan 2013. http://www.telegraph.co.uk/comment/9812776/HMV-fell-victim-to-our-temperamental-love-affair-with-brands.html,
accessed 21/01/13
King, M. 2013. HMV backtracks over refusal to accept gift
vouchers. The Gaurdian 21st Jan 2013. http://www.guardian.co.uk/business/2013/jan/21/hmv-backtrack-gift-vouchers,
accessed 28/01/13
Clancy, R. 2013. HMV will honour gift vouchers. The
Telegraph 21st Jan 2013. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9815074/HMV-will-honour-gift-vouchers.html,
accessed 28/01/13
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