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Paul Hudson
Paul Hudson CEO of Intersperience
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What can we learn about the loss of HMV?

This week the high street has seen another casualty – HMV. Last week we saw Jessops go out of business and before Christmas, Comet closed down. HMV hasn’t technically gone yet – it’s in administration, which means it’s in the last chance saloon and may never come out! And if it doesn’t, there won’t be a national music retailer left.

No doubt this will spur yet more column inches to be written about the woes of the high street. Some will use it as evidence for a really dire economy and some will tell us the high street needs to compete better with online. But what is really going on?

Let’s be practical – What lessons can be learnt from the latest casualty, HMV?

  • Be ready for disruption. Never underestimate the future impact of a seemingly small change today on your long term survival. HMV was guilty of not looking far enough ahead and responding strategically to market changes. Over a decade ago they were slow to react to Amazon selling CDs online. When Apple introduced the iPod and iTunes, they didn’t respond swiftly enough (although the whole music industry was slow). In short, it was evolution rather than revolution.
  • Be prepared to change your business model. HMV should have fundamentally changed it’s business model twice in the last 13 years – once to embrace online CD sales and second to embrace downloads. The book industry is an interesting example here: book retailers are now selling e-readers and some get a cut from every download onto that e-reader for its life. They are also bundling mixed format packages – selling a cut price book with a download of the same title (How bookshops could be happy ever after, The Independent). These give the consumer what they want – a mix of formats. HMV should have offered online CD sales long before they did and could have offered downloads packaged with CDs, but never did.


My blog about ecommerce explained why need to better embrace multiple sales channels. But what specific actions are needed for high street retailing?

  1. Make the shop a destination. Our research shows that people still value shops for convenience, speed and a nicer environment. So stores have to create an experience and a reason for visiting. This means re-thinking what the store is about.
  2. Encourage convenience. Change shopping hours to meet busy lifestyles, reduce parking or offer it free of charge, create park and ride schemes or arrange specialist shopping events.
  3. Improve service and advice. The downfall of Comet was attributed to poor service and advice. Meanwhile PC World has really emphasised this. Service is a differentiator and creates a reason to come into the store, making it a destination. Independent retailers should have an advantage with this.
  4. Independent retailers need to work together on multi-channel. On their own, they will struggle to compete with nationals when it comes to multi-channel: the online presence of nationals is hard to beat and takes a lot of investment, the convenience of ‘browse and collect’ is harder to achieve, harnessing the habit of using mobiles to price check very difficult etc. Independents need to realise the scale of changes coming their way and work together through local co-operatives and initiatives.
  5. Local support. This is needed to encourage independent retailers to work together. My thoughts are that the local Chamber of Commerce has a role in encouraging co-operation.

Consumers still love the high street – don’t let the latest casualty make you believe otherwise - convenience and a nicer environment are why they love it. If the future is truly multi-channel then the high street has a big role to play. But that role is changing and retailers need to respond.

1 Comments for "What can we learn about the loss of HMV?"

Rod Geoghegan

Metropolis Communications Metropolis Communications

Good points here, Paul, and well made.

There are other factors additional to the above that have contributed to the downfall of HMV. The make up of the retail estate is critical in terms of its' location, size and format. This is somewhat over and above the marketing/business model issues highlighted above. Retailers need to be located in the right place, with the appropriate store presence/size of unit. These can be backed up with an online/overnight delivery service to store offer similar to the John Lewis model which overcomes lack of floor space/warehousing. This is something retailers must consider - in the context though of having signed very long lease agreements. I have maintained for years that it is the sign of a good retailer to be both opening and closing stores - so if a location is failing, is the wrong size or needs additional traffic/footfall drivers then retailers should be considerably more agile addressing the necessary changes fast.

What do I see the high street looking like in years to come?

As millennials mature, attracting them offline and into store will be the big challenge realising they are so used to shopping online. The retail experience will change to account for this.

On HMV - which been around since the 1920's - for the business to survive for another centuary (post administration, as the pundits are forcasting) in a physical format may mean taking a new approach to retail and I forsee a move - over the coming decades - to both retailers sharing their estate with other complimentary partners (similar to the Costa Coffee in Waterstones approach) and new format shopping centres/malls with much smaller stores but many more names - each offering the offline experience backed up with online that achieves the economies of scale and offers competitive pricing. When you look back at the haydays of Kensington Market in London, it is ironic that this is conceviably the future rather that the past. The back bone of successful retail decades to come will be online with physical presence appropriate to consumer requirements.

I see changes also to the telecoms/electronics sector - and opportunities. EE have multiple retail presence following the brands' merger and this has to be unsustainable - be it from, at least, a stakeholder/shareholder angle. Why are shareholders not querying having two stores 100 yards from each other? Likewise, Dell Computers of old had a small number of retail units - a prime example of the opportunity to forge a high street presence using very limited size (and economic) backed up by online.

If retail is now a physical presence with an online offer appended (of which there are some considerable successes), retail of the future will be akin to Ocado opening corner stores. They created and mastered the business online then go on to create a local presence optimising size and location.

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