Some thoughts about why the once-ubiquitous music retailer is struggling yet again and some thoughts about their near-term future.
After another slow Christmas trading period, HMV have been busily stickering stock ready for a massive blue cross 25% clearance starting on Friday. The press releases on the matter have been relentlessly upbeat - hey, people love our January sales, so we’re serving them by giving them more of what they love! - but the chatter amongst retail analysts and music fans has been much more pessimistic. Many see this as the start of the end - a last-ditch attempt to raise some much-needed capital to try and pay off the next quarters’ loan covenants but, m’learned bloggers believe, is unlikely to happen. Administration cannot be far behind.
This is, of course, the company’s own fault. They were slow to deploy their web shop, slower still to offer any sort of download (opting to partner with another company rather than provide their own innovative service), slow to see the changes in the marketplace, slow to change their stores. The post-Zavvi increase in sales they experienced seemed to make them complacent; there’s no doubt that their big mistake was a severe lack of board-level innovation. They relied on still being a big physical media emporium rather than a company which looked at how attitudes and behaviors could change in the short term. Their last minute adoption of technology retail is an excellent metaphor for their shortsightedness. HMV could have been Amazon and Spotify and Netflix and still maintained a high street presence if only they’d innovated earlier.
The imminent death of HMV has been predicted multiple times over the past eighteen months, making the present hand-wringing seem like just another attempt to get all important page views. On the one hand this does seem pretty final - a fire-sale no matter how it’s dressed up is still a fire sale, and the constant warnings to investors show that the company’s in no fit state to continue as-is - but on the other hand HMV still has a lot going for it. It’s pretty much the only nationwide chain which sells physical media left (supermarkets excluded), the brand has huge recognition, and UK distributors now have a financial interest in the company succeeding.
That last element is the most troubling. If HMV does close over the next few months, the impact on the UK’s entertainment industry could be catastrophic distributors suddenly in the red for millions of pounds, meaning an inability to press or distribute new titles. When coupled with the loss of one of their biggest customers, this means that the big online retailers can demand ever more favourable terms and squeeze the entertainment industry ever further.
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But is this really a problem? The past decade has been typified by a move to the virtual - consumers like shopping at three in the morning, and if the CD they want is that much cheaper than the high street anyway why wouldn’t they order it from Amazon or Play? Beyond this, consumer psychology is changing - we’ve largely been taught that it’s ok to pay for virtual things like films and MP3s, and now we’re being shown that, for a small monthly cost, we can have access to as many of these virtual goods as we can possibly stomach. The trend has already moved from the physical high street to the online emporium, what is now happening is a movement again from online emporium to online subscription-based access. Give a man an MP3 for 79p and he’ll listen for three minutes. Give him a library for £9.99 a month and he’ll listen for life.
In this future world, the prospect of paying as much as a fiver for one album is pretty unappealing.
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Or so we might think. Though there’s definitely a trend towards the virtual, there are still very loyal bands of people who buy physical media. In the UK last year, 100.5 million CD albums were sold compared to just 30.5 million download albums. The sales of vinyl continue to grow too - 389,000 new releases were sold on the once-dead format last year compared to 337,000 the year before.
So there is definitely still a desire for physical media. Beyond this, consumers still have a real fondness for the HMV. Though there’ll always be the grumbling bargain hunters who don’t think that HMV sells stock anywhere near as cheaply as it should, a quick Twitter search for the company brings up a litany of teenagers not just proudly talking about the CDs, DVDs, and t-shirts they’ve recently bought but also happily talking about using their local branch as a meeting point.
And here is where HMV really missed an opportunity to innovate. They could have seized the technological zeitgeist and become a streaming behemoth but equally so they could’ve radically rethought what consumers actually want on the high street. Virgin flirted with adding branches of Costa to their Megastores but this was purely a ‘use the space’ strategy rather than a way to bring customers in and engage with them. The possibility of changing HMV into a cultural destination - somewhere to engage in new media and culture - could have been the revolution that HMV needed. Still sell CDs and DVDs, sure, but make it a place where people want to spend time and indulge themselves, to find something new. Latter-day HMV became a warehouse of cheap gumpf piled as high as possible, not a place of discovery. They wanted to ape Amazon’s “sell it cheap, sell lots of ‘em” strategy which, in a physical shop unit, isn’t really viable any more. Besides, aside from the reissue hungry music connoisseur, most consumers go to HMV for something new, not something they already know about.
I’m loathe to point to examples of places that I think are doing things “right” where HMV have failed, because there is no other national chain like HMV and the ideology of the little indie shop round the corner would not necessarily scale up to that level of company. Nonetheless, I’m struck when I visit Truck in Oxford and Rise in Bristol of how engaged I am made to feel - I want to sit and eat or drink, I want to browse their curated selection of CDs and LPs, I want to look at the clothes and books that they sell despite them not being what I was originally looking for simply because they’re placed alongside media that I love. Those shops seize my time and, ultimately, my money because they know how to cater to their audience.
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I accept that I am probably no longer in HMV’s key demographic. I appreciate the value of music and am quite happy to pay a premium if I think that the artist will get a bigger cut rather than pay £3 for something because it’s now £3. HMV’s audience right now may be that which compares their prices unfavourably with Amazon, but it doesn’t and didn’t need to be. Something that many towns lack - especially out in the provinces - is somewhere for young people to congregate and spend time. With their town centre location, ample space, brand name, business contacts, and cultural recognition, branches of HMV could have become a destination for a relatively affluent demographic.
As it is, come Friday morning, it’ll further cement its position firmly in the arms of the bargain hunter and little more.