26/01/2013

Could HMV be saved?

The long term answer is of course No. Future generations of music and film fans will have no experience of using a shop to buy either medium so in all likelihood the longest possible time a chain like HMV can survive is maybe ten more years. That being said it could be a reasonably successful decade if they get it right. At present it is still uncertain whether the shop will be able to continue at all. Hilco is the company that has bought HMV’ debt from the banks but their reputation is as asset strippers borne out by the way they dealt with previous acquisitions. Assuming they do decide to keep a large number of the current shops (there seems no way every one can be saved) what could be done to give HMV those extra ten years?


The biggest asset HMV has is the goodwill of the entertainment industry many of whom want the business to survive. Record and film companies make far less from the cut price likes of Tesco or Amazon and can see their profit margins shrinking if there is no separate High Street presence for their products. Yet they cannot deny the  changes to buying habits that technology has brought; to pretend nobody is drawn by Tesco’s prices or simply would prefer to download is not going to help. Beyond their financial woes, HMV’s biggest error was to try to appeal to the people who never go in there while alienating those who do. There is a whole tranche of people, in their 30s, 40,s 50’s, 60s with money to spend who would be more than willing to buy things they see while browsing in shops. They may also buy or download things online but are accustomed to walking around specialist shops as well. To stop them migrating to wholly online or supermarket shopping when it comes to music or films HMV has to offer a service they want.

The new technology area of the shop that has been growing has to go for the most part. These are the sort of purchases people do not make often enough to make them viable. In our HMV this area is like a desert few people bother with. Clearing this away will allow them more space to focus on their core business.


Is this a blu cross sale?
Along with the industry they need to work out a sliding scale of prices that is both realistic and competitive. They should be able to match supermarket prices and even most online prices now that it is harder for Internet companies to sell things quite so cheaply.  There will have to be an agreement that allows HMV to discount new releases to match the process of their online rivals. At the moment things seem to have to have been released several months for discount prices. One experiment that could work is new releases being heavily discounted for the first week only. The industry could also agree a sale or return for everything avoiding building up too much unsold stock but these agreements need to be flexible enough to respond to demand for a particular item. The government could play its part by legislating to ensure business rates are not pricing businesses of all sizes to the wall because we need business to help pull us out of the current economic mess.

The genre and format divisions HMV currently has – separating DVDs and blu ray, westerns from musicals, soul from pop-  need to go so we can just see all films, all TV and all music in  simple three sections of a shop. The labels are often misleading anyway. People can tell the difference between a blu ray and a DVD- putting them together might even encourage people to buy more of each. The message that you can play DVDs on a blu ray player is still not as widely realised as it could be. It is important to not only have a depth in range of older and classic material but to keep an eye on what’s going on. If The Mighty Amps have a new album out, lots of copies of their previous albums need to appear in the shop- when Inspector Moribund is back on TV, previous season box sets should be easy to find.

If people want to download something onto their phone or iPad or laptop there and then there should be the facility to do it in the store. If people don’t want to queue self service tills need to be available, Both these pods as we might call them to make them sound futuristic should be dotted at different points in the shop to use easily and avoid queues mounting in particular areas.

All new releases should be at the front of the shop, not just some select `Top 20` they have made up. And I mean all from the biggest films to the All New Crochet Dancing DVD boldly displayed again under the three headings. This might stretch from one end of the shop to another; it could be called What’s New. Just a thought.

More than anything the range should be broad enough for people to buy things in the shop rather than to have to order it online. The ability to have something there and then at a competitive price should not be underestimated. It might not be relevant to a 16 year old but there are generations who would be happy to continue to shop that way if the item was there in front of them.

These are just a few ideas, I’m sure people have their own. The point is that to simply write off a business because we can’t visualise it lasting forever is short termism that will never help us or our economy. Companies nowadays seem to point all their efforts at the young without realising that people  whose kids have left home for example or who have well paid jobs are far more likely to chance a random purchase than a teenager who will like what they like. This is the process that has fuelled shops like HMV in the past and could do so again.


 

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