Tuesday, 15 January 2013


Late last night, the news came out that HMV was going into administration. This year has seen a couple of high profile casualties in terms of retail business closures in the form of Comet and Jessops. These businesses were in administration for less than a day before closing. The situation is slightly different for HMV as they are going to continue trading while the administrators search for a buyer. This is of course bad news for the employees (some if not all) as all discussions of a possible “save” for HMV have included the closure of a large number of stores so there will be job losses. I think this move into administration and possible closure has been inevitable for some time unfortunately. As soon as they became the last big high street retailer of music and film, I have wondered how long they will last. I’ll be honest, they have lasted longer than I imagined, especially in the current economic climate. If HMV closes, it will be big news and it will have a dramatic effect on the future of the high street (in my opinion).

The high street will not just disappear when the HMV stores go but I do think the other businesses will suffer as a result. There are several different retail markets in an average high street which attracts different customer bases. When looking at it that way, the high street should do just fine without HMV. However, I can’t help but feel that with no major high street retailer selling music and DVDs, there will be fewer customers in the high street and the businesses there will suffer from a reduced footfall and as a likely result, reduced takings. Thinking about my own local high street, which already is in competition with Gunwharf Quays in terms of shopping and entertainment, without HMV, it is reduced to mobile phone shops, a book shop, fashion retail and places to get food (the market, places like McDonalds and shops like Tesco). Aside from that there are functional businesses there such as banks and opticians, but I cannot think of anything else there (I have excluded the gym I use from this list as I can’t imagine many people use the gym then go for a stroll round the high street). Taking this into account, I suspect the bulk of people that go into a high street will visit for one purpose and then when they have achieved that purpose, they will likely leave. There is no science behind this thought process other than opinion, but I believe that other businesses will suffer from a reduction in the number of people in the high street. It would be nice to see independent businesses open up in the high street to take over from HMV if it does cease to trade locally but I can’t imagine it happening. What I can imagine happening though is that people will shop more online. Online shopping has been growing year on year and I can’t see that slowing down. If HMV closes, it will significantly increase putting even more pressure on the high street. Fashion retail will likely survive this happening, but other forms of high street retail could lose out. The reason why I believe this is that people will always need to try clothes on before they buy.

Is it possible that this could have been avoided? In a word, yes. It is very easy to look back with hindsight at everything HMV has done and think “how did they not see this coming?” but that would be much too simplistic. One thing they should have done is something which this country should have done when the economy was growing and booming. HMV should have fixed their roof while the sun was still shining. What I mean by this was instead of investing money into HMV Live and buying Waterstones, they could have invested more into their online market, or reduced the price of their goods to the customers (it is all well and good running fairly regular offers like 2 items for £10 on older items, but for newer releases, it is important to be competitive). Instead of dedicating large areas to their shops to electronic items such as iPods and headphones, they could have made those items online exclusives and focused their high street operations completely on music and film. Consider this, if they advertised with their music in-store that they had great deals on MP3 players, CD players, headphones etc on their website, people would go there. When people visit the website, they find these great deals on items you cannot purchase at HMV stores, and they are indeed good competitive prices. With these items, you can even further the incentive by offering money off in-store when you make a purchase over a certain amount. For example if you buy an iPod from HMV as opposed to Apple, HMV will give you a £10 off your next purchase voucher. That may not seem much, but that could then encourage customers to go back to the shop and possibly spend more money. Doing that, you link the online business with the high street business and you create a happy customer base that may consider HMV as the go-to place for their music and film needs, as well as their music/film hardware needs. This is a hypothetical example which may not work in real life as well as it is works in my head, but I think rewarding customers instead of ripping off customers may be of benefit. I addressed the removal of headphones (amongst other things) from their shops. That to me has been a fairly big failure. Only once have I been in a HMV store and been able to try out more than 2 pairs of headphones as the others are broken. To me, that is a metaphor for HMV – broken.

HMV never really challenged the online retailers when they had the chance and they have suffered as a result. Their website I’d say has only really been good for a few years now. They never were a business I considered when it came to online shopping (for music and film, it was always CDWow, Play and Amazon). Today, I have gone on to the HMV website and pulled 5 examples of items and prices for comparison. The bulk of my comparisons will be between HMV and Amazon. Starting with a favourite artist of mine, Ginger Wildheart released a triple album via PledgeMusic earlier this year and then released a commercial release of 12 songs from that triple album, voted for by the people who had pledged. The 12 song disc, called 100% entered the midweek charts at number 9. The album dropped to 23 by the weekend charts due to the numbers available for physical purchase, and I think dropped out the chart completely not long after. The 100% album is available for purchase directly from Ginger for £10. However, people may not be aware of this and would go straight to one of the major music retailers to buy it. HMV is selling the album for £15 (and it has been seen in their stores for £18.99). Amazon is selling it for £11.47. The second example I have is from a much smaller band called Eureka Machines. Their first album, Do or Die is available from both HMV and Amazon as well as from themselves. HMV is selling Do or Die for £13 while Amazon is selling it for £9.26. Around £3.50 is not a massive amount of money by any stretch of the imagination, but why would you pay more for something when you could pay less? As a side note, Eureka Machines are selling both of their albums in a package for £13! That is the same price as HMV is selling just one of the albums for (you can get both albums from HMV for £25). I appreciate they are trying to make a profit, but that will lose you customers, especially where the cheaper option could be just a few clicks away.

Moving on to DVDs (I’m looking at TV DVDs here); HMV is again more expensive than their competitors. I quite like Louis Theroux documentaries and actually recently considered buying some of the box sets. Looking around, I found that one of the ones I was considering buying, The Odd, The Bad and the Godly, was on sale from HMV for £15. Amazon is selling the same box set for £8.49. Why on earth would you shop with HMV when you look at how much they charge over their competitors? The BBC Official Shop is also significantly cheaper than HMV for the same products. Just last year, a new series of Red Dwarf aired on the TV Channel Dave. It has since been released on DVD. HMV is selling the DVD for £15.99 and the Blu-Ray for £20. Amazon is selling the DVD for £13.49 and the Blu-Ray for £16.49. I ask again, why would you shop at HMV? Finally, I want to look at the bigger box sets, where you can buy every episode of the TV show in one box. For this example, I will look at Only Fools and Horses. A new episode of this show has not been on TV in some time (and I do hope there never will be new ones, but that is a different blog for a different day). HMV is selling the 26 disc box set for £49. Considering how much TV you are getting from this box set, without shopping around, I would say that is a fair price. A couple of clicks later and I have the same item up on Amazon...for £32. I’m sorry, but it cannot just be a case that HMV is paying that much more for their stock than Amazon is, it just can’t be.

There is one other factor which could be the cause for the demise of HMV. It is all well and good me pointing the finger at them and saying they are in the wrong just because of their pricing, but there is more to it than that. The world has changed since HMV launched. The major way people get their music now isn’t via going to the local shop and buying the CD, but by downloading or streaming the music. Downloading, both legally and illegally, really hit HMV along with other music retailers I’m sure. I am aware as a consumer that if I want to legally download music, I can visit the iTunes store or visit the Amazon MP3 store and pay roughly about the same amount of money for the music I want to buy (assuming I don’t want the CD). I am aware of other companies but they are the main two that I am aware of. I honestly didn’t know if I could do that from HMV. After a quick visit to their website, it turns out you can. But I think it speaks volumes that I genuinely didn’t know whether you could or couldn’t buy MP3s from HMV. Downloading music illegally has obviously had an impact on the amount of business HMV and other retailers have. But, while it is obviously illegal, it is easy to see why it is done. It is very easy to do it, and it is obviously cheaper (assuming you don’t get caught and fined!) Streaming music is an entirely different beast all together. I pay £5 a month for Spotify and stream music from them. That is £5 per month that HMV will never see because I may be able to buy one old album from them, but if I want to download 1 song, I’m probably not going via HMV to do so. In fact, if it is a song that I don’t actually want to own, just listen to, then chances are I will just play it on Spotify. I guess what I am saying here is that I have options for listening and buying music which don’t involve HMV. Could they have entered the world of music streaming? I don’t see why not.

What was the point of all of this? Well, to be honest, I’m off sick from work and I was bored. HMV going into administration and potentially collapsing is the major news story in the UK today so I figured I’d write something about it as my first blog for 2013. A lot of what I have written in this blog is my own opinion, and I have no idea if in the real world it would actually work. It astounds me though looking back with hindsight that more wasn’t done to steady the HMV ship when they had the chance. It amazes me that they seemingly didn’t consider online shopping a threat to their business model. It amazes me further that they didn’t worry about people downloading and streaming music. It worries me what impact their closing will have on the high street. I feel sorry for the 4000 odd people who could lose their jobs. They have been let down by a company that failed to change when they needed to most. 

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