HMV goes into administration
Ninety two years after opening its first store, music retailer HMV has finally entered into administration. With 239 stores and employing 4,350 staff, it represents the end of Britain’s last major music chain. Music enthusiasts hope however, it will not signify the end of the HMV brand.
Where did it all go wrong?
Many experts believe that HMV was doomed the day the first digital album was download online. However, according to Verdict Research, HMV still represented 22% of music and video sales in 2012 which is not an insignificant figure by any means.
Real music enthusiasts who in the 70’s, 80’s and early 90’s would spend their Saturday afternoons spending hours browsing through racks of alphabetic titles believe that HMV’s marketing strategy
of diversifying into new market sectors was their downfall.
Today, much of the store space that was originally allocated to music has been taken up by DVDs, gaming, books, calendars, t-shirts, posters and novelty items. This move is considered by many marketing experts to, over a period of time, have alienated many of their previously loyal customers. Furthermore, as the major supermarkets have expanded their portfolio’s into the same product sectors, coupled with a shift towards purchasing entertainment products online, the marketplace has become saturated with suppliers.
Some marketing and industry analysts believe that had HMV re-focused their business 100% on music alone fifteen years ago they would have created a niche in the market, particularly with the likes of Virgin and Our Price going to the wall. Admittedly, they would still have had to cut costs, possibly occupying smaller retail outlets, but had they adjusted the business model they would probably still be here today. We can say that with some confidence, simply because many small independent chains around the globe are still delivering good financial results as we speak.
It is unlikely that the HMV brand
will cease to exist. It is more likely that the online brand will be bought and the website
will be re-launched on the back of a nostaligic PR
campaign. It remains to be seen however whether on the high street, the megaphone will continue to play loud music to the dog again.