Tuesday, January 15, 2013

HMV - How the Mighty Vanish...

Just over ninety years ago, Sir Edward Elgar spoke at the opening ceremony of a huge shop in Oxford Street. The Gramophone Company had decided it was time for a retail presence, and His Master's Voice, or HMV as it came to be known, was born. Now it looks as though the business is in its death throes. Yesterday, with a heavy heart, I blogged about the demise of Jessops Today it gives me little pleasure to repeat the eulogy for another former high street behemoth.

As I wrote yesterday, and has been well documented by retail experts, it's no real surprise that high street shops are going down like skittles. What I do find surprising, and not a little galling, is the failure of their management to react to changes around them. They carried on, Canute-like, as the waves of downloading and internet retailers washed over them.

Twelve years ago, I was in discussions with HMV managers at the Oxford Street shop. They had developed a system that allowed customers to make their own playlists from an immense database of music, and burn their own personalised CDs in the shop. They had a bank of half a dozen computers and several dedicated staff in the basement of the shop, with a huge display as part of trial. As a consumer journalist, I was invited to try the system out and report on it. Although it was clunky by today's standards, it was something no-one else was doing, and I was impressed. However, the project was cancelled after only a couple of months, as managers feared that if people could chose their own music one track at a time, they might stop buying single-artist CDs. What a pity. HMV had a chance to be a pioneer and they rejected it.

So what could HMV have done to avert the crisis? For one thing they could have embraced online sales much more enthusiastically. They could have created a huge buzz around new releases, with queues stretching along high streets. They could have moved into concert promotion. They could have offered free wifi in stores, with samples of songs and free downloads as part of the service. They could have held competitions for new bands. They could have developed an app with breaking music news and special offers. They could have done a whole lot more to make HMV a cool brand that people wanted to be associated with.

But they didn't. How the Mighty Vanish.

5 comments:

Ayd Instone said...

I predicted this over two years ago in my blog and like you offered suggestions on what could be done. I still maintain that if they have tried to take advantage of their high street presence and turn themselves into a music experience hub instead of a poor man's Amazon, they might have just done it.

Have a look:
http://aydinstone.wordpress.com/2011/02/10/why-hmv-will-die-and-how-they-could-have-survived/#comment-2234

Paul Sloane said...

Good article. I posted a blog on this subject here:

http://www.bqf.org.uk/innovation/2013/01/15/hmv-jessops-and-comet-the-victims-of-innovation/

Alan Stevens said...

Thanks Ayd and Paul - great blogs both!

Ian R McAllister said...

I very much agree with you coclusion Alan - a demise down to management. Oh, and their debt pile of £200M taken on to buy the company in a self-supporting Management Buyout.

Two years ago, HMV turned over £2Bn - last year that was down to just over £700M. This is a market which has become commodity, but one in which HMV still today owns 20% of the market share (so technically, still a monopoly).

In the USA, they have Chapter11. Effectively, legally its Administration in which the suppliers can't change their T&C's and have to keep supplying the organisation, but are promised payment for their newly suppied goods/services past that point. In Administration, the suppliers can pull the plug instantly.

If you remove the debt and close at least half the 230 stores (a core of 50+ would be the floor), and then implement even three of the ideas you mention, then HMV has a future. But that future is only found by reversing at least 3/5years of poor strategy, and accepting where the market is going long term

Anonymous said...

The fact is HMV have already tried most of the things on your list, which either highlights your basic ignorance and lack of research, HMV's ability to make them work, or that they're not good enough ideas to save the business. Or maybe all three.