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DMH - the techpreneur

David Murray-Hundley

HMV, a chance to learn and reinvent itself?

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It had the brand, it even had the technology, but it failed

Yesterday, I heard the news that HMV had gone into administration. As with stricken photography chain, Jessops, this story has been unfolding for some time and both a sad losses for our great British high street. Even more so for the people who will potentially lose their jobs. We wish them good luck!

My friend Simon Montford said ‘Adapt or Die’ and, in this instance he is right on the money. I saw for myself on the RACO project at Argos just how tough the retail world can be. Every per cent of margin, marketplace and cost matters.

Argos recently announced over the next five years it plans on closing or relocating stores and expects over a 5 year period 75% of its sales to be via the internet. Indeed it made another announcement that it does not want to continue with paper based gift vouchers, but move to electronic, and people being able to order via Wi-Fi in stores on smartphones. A clear attempt to move with the times and its consumers.

Given HMV’s situation in particular, you do have to ask though why they didn’t they change their game plan. Although if you looking at the board over the past six years, its current CEO is ex Jessops, the CEO before was ex Comet and we know what has happened to both those companies in the last 12months.

Looking at HMV as a brand:

  • A chain with over 90 years history
  • At one point had channels to market such as Waterstones
  • In 2008 they had Get Closer to compete in the iTunes space. The business was closed down in 2009, maybe to early for the market?
  • Digital brands such as hmv.co.uk and hmvdigital.

Up until 2006, it had a great market share. In fact, only as far back as 2002, it had probably the best market share in the UK sector, let alone other countries, which means they had audience, people ready to buy.

There is part of me that thinks they had forgotten their founding principle, their identity. Were they actually talking to their customers and asking them what they wanted? They tried to take a slice of too many pies with different acquisitions and live music, but hindsight is a good thing!

There is no doubt, that they became a target on so many different areas. iTunes showed us that we could browse and buy far more efficiently. Illegal download sites have a massive impact on the market, HMV’s CD sales in particular. Consumer products alone allowing us to listen to music digitally, made the outlook for HMV a very bleak one.

Add in improved broadband speeds and adoption into households, along with Sony Stores, Netflix and others available from the warmth of your living room on a Saturday night, it is yet again what the consumers wanted. Is there really any need to spend your hard-earned cash on DVDs and Blu-Rays anymore?

E-commerce sites such as Amazon and Play.com, have of course become a significant source of competition in recent years, especially for us consumers, who cannot be bothered to drive into a town, park, etc. Also looking at recent events with companies in the UK not paying tax, it makes you wonder if HMV was ever really able to compete.

What is disappointing is reading some of the opportunities HMV had back in 2007. There were reports that HMV had looked at interactive technology to increase store footfall and sort out the dire in-store experience.

Film studios had agreed to allow licensed stores to give clients access to burn DVDs while they wait and access to a limitless catalogue of movies. While I like iTunes, I always think it’s a bit of a lackluster experience, almost too good to be true. There is no anticipation if something is in stock or not and no hook which makes you buy 6 CDs rather than just the 1 you walked into the shop for.

Indeed I went to HMV back in 2004/2005 and spoke to them about allowing the consumers to come into a store, plug in a memory card or stick and purchase tracks instead of entire albums in their entirety, eventually looking at allowing phones and other digital hardware to purchase in store.

My thoughts had been around mobile phones at the time. I even presented a ROS model, which meant that there was the potential to push advertising as well as save money within the stores and moving stock. I was met with a very typical UK attitude towards change and informed that HMV was looking at developing its own solutions in house. It could have even adopted a simple model like Argos is about to do with ordering via smart phones in a much smaller store.

The brand is powerful. I truly hope that someone has the insight to not let HMV become something of the past. It is a brand that is crying out to be rebuilt, perhaps not overnight, but gradually and by focusing on just a few of the challenges in the online world and nothing else.

Gaming high-street stores, take note from what you have just seen! The same could be around the corner for you.

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