HMV is saved!

It’s not often that a story involving a failing business has an ending that is at least partially happy but in the case of HMV this appears to be the case. The chain has another chance having been bought by a company called Hilco who will re-launch it shortly and will keep open more stores than was originally intended in what will be a portfolio of 141 shops. How much the public reaction To HMV’s woes swayed Hilco into their decision, announced yesterday, we may never know but it surely played some part. After all how many other big names have sunk in recent years without such a dramatic rescue? They will also have seen- as many of the public have- the possibilities that a strange turn of events have given HMV. Just a year ago, it looked like it had no future at all. Now, while no-one is suggesting it will last indefinitely there is every chance it can have a ten year or maybe longer run because of how some things have not turned out quite how experts predicted.

A few factors have converged to at the very least give the new look HMV a fighting chance. One is the seemingly everlasting recession which has even the least pessimistic forecaster suggesting we will be in austerity conditions for at least another four or five years. Secondly the government has taken a decision that is both prudent and sensible. Yes, it’s true amidst the general mess of its policies the coalition has managed to level the playing field a little in the entertainment industry by closing loopholes that allowed online companies to undercut high street shops.

They have been rather tardy with the decision and the previous Labour government could have done something about it but didn’t. Nonetheless the results have altered the dynamic.  For the first time since they went head to head HMV is able to undercut or at least match Amazon whose prices have been rising inexorably since the start of this year. Some other online players have given up which does further Amazon’s monopoly but also strengthens HMV.

The other major factor in HMV’s resurrection has been the goodwill of the film and music industry even if this comes from self- interest more than anything. They have become alarmed over the years by the decreasing profit margins that sales on the likes of Amazon, Play, Sendit et al have gleaned for them. Faced with the prospect of losing the last high street store selling dvds and cds they have been giving generous help the threatened chain by way of sale or return policies and reduced prices. Even the normally hard headed shop landlords have shown uncharacteristic sympathy. Better lower rents than empty shops.

  

The new HMV will have more of this and less gadgets

 

There is also the curious inaccuracy of predictions as to how consumers would behave. By 2013 it was more or less assumed that we would no longer buy physical product but would download everything, legally or otherwise. Yet down loading brings its own technical headaches and people of a certain age- say anyone over 30- still enjoy browsing in shops as well as online. We’ve realised too that it is too easy to part with hard earned and increasingly scarce money on a website whereas in a shop, standing there with the thing in your hand you are liable to make a more sensible decision. Plus online means searching for what you want; in a shop you stumble across something you weren’t even looking for and decide to buy it there and then.

Thus, people still buy dvds and cds; even blu ray has failed to fly in the way expected. If HMV fulfil their promise to re-stock the stuff people really go in there for; “"reclaim the space for an enhanced music and visual range" as they put it by getting rid of the gadgets that cluttered the place and which you could buy cheaper almost anywhere else, they could have a good run. In hard times, it’s good to celebrate the occasional victory and this feels like one of those. HMV’s new slogan is `we are entertainment`. Now they have to prove it.