HMV, which stands for ‘His Masters Voice’, has had a pretty tough time over the last few years. It seems, however, that business is well and truly back on track, having just confirmed that they will return to their original store in Oxford Street, London.
What does this mean though? Can his master use his voice well enough? Can HMV once again become top dog of the entertainment retailers?
High street entertainment retailers in the UK have suffered massively since the digital revolution, since consumers can now purchase everything they need simply with the click of a mouse. Not to mention that all of the big supermarket chains now have an entertainment section, enabling consumers to buy everything they desire in one place.
Some of the entertainment retailers we knew and loved are now long gone, just a distant memory for many. The first to disappear was Virgin Megastores. In September 2007, it was announced that the Virgin Megastores brand was to depart from the Virgin group after a management buy-out. All 125 stores throughout the UK continued trading and were re-branded, with the new name ‘Zavvi.’
Woolworths, aka Woolies, were next to go; a brand that claimed a 100 year high street presence, and was once one of the most popular music retailers. In November of 2008, Woolies went into administration, and by 5th January 2009 all 815 of their stores were closed, for good. The next to kick the bucket was Zavvi. On Christmas Eve of 2008, it was confirmed that they were to go into administration, just over one year after they began trading. The demise of Zavvi was put down to, the decline in CD sales, increasing competition from both supermarkets and online retailers, and (of course) the recession and credit crunch.
Despite the fact that HMV is still present in many high streets across Britain, they too have encountered a lot of financial difficulty. The real problems began after poor sales during the Christmas period in 2010. It was announced on 6th January 2011 that HMV would shut down 60 of their retail outlets within 12 months, as chairman at the time, Simon Fox, pledged to save £10 million in costs.
At the end of June 2011, records showed that profits were down 61% when compared to the previous financial year. From this point on HMV seemed to try anything and everything to keep their heads above water. They had pop-up gadget shops during the run up to Christmas, and even ‘bus stop shops’. To explain – promotional posters for new DVD releases were placed at bus stops containing a QR code. These codes could then be scanned on the consumer’s smartphone to take them directly to a website, where they could buy the DVD via mail order.
Regardless of all their efforts, HMV finally lost the fight and entered administration in January of 2013. All 16 of the stores in Ireland were closed on 16th January, while administrators continued in their search to find a buyer. Another 66 store closures were announced at the beginning of February, as the administrators published a list naming and shaming the loss-making stores, with intention of closing them within two months. Less than two weeks later a list of a further 37 stores due for closure was released.
On 5th April 2013 it was announced that Hilco, the company who owns HMV Canada, had bought HMV UK and would take it out of administration. Hilco took over with a 140 store plan, which would save around 2,500 jobs and actually re-opened some of the stores that had already been shut down. This dream was short-lived. 11 days later they informed staff that somwehere in the region of 400 jobs would be lost throughout the brand.
On June 11th, HMV unveiled plans to make a comeback in Ireland, by re-opening three stores; two in Dublin and one in Limerick. Rumours of HMV returning to its original store, located at 363 Oxford Street, London, also began to stir in mid-June. It was reported that Hilco chairman, Paul McGowan, had been in talks with Footlocker, who occupied the site at the time, with regards to the lease. HMV had operated at this site since the opening in July 1921 up until April 2000, when they moved to another store further down the infamous shopping high street.
On Wednesday 7th August 2012 Hilco confirmed that the rumours were true, that HMV would return to 363 Oxford Street.Chairman, Paul McGowan stated:
“We are thrilled to be returning to its original home at 363 Oxford Street and this reflects HMV’s renewed focus on going back to its roots and getting the basics right, providing the deepest range of entertainment products.”
In spite of the fact that HMV has made a comeback, they still do not trade online. As a result, the only way for customers to purchase their products is in store, unlike the vast majority of retailers in the market today.
According to recent figures; the number one entertainment retailer in the UK is Amazon, who dominate the market, with a whopping 23.4% share. Trailing behind in second place is Tesco, who account for 13.2 % market share. In third place is iTunes with 11.3%, which makes sense considering digital music sales are up by 12.5% over the past year. Following closely behind in forth place is Asda, with a share of 10.5%, and in fifth place, with 8.4%, is HMV.
Both Amazon and iTunes only operate online, indicating that online sales account for a huge percentage of all sales. In addition to this, the two supermarkets which feature in the top five also operate online, as well as in store. With HMV moving back into its original store, giving a renewed focus on “getting the basics right” the decision to solely trade in-store could be questionable.
Written by Connor Mackay