HMV lines up tablets, festivals and paraphernalia
“You can’t wrap a download for Christmas,” HMV Group chief executive Simon Fox noted yesterday, as he signalled that it will not completely abandon the CD format. But you can slip an iTunes gift card into an envelope, which HMV accepts well enough, as it stocks them. Is there any product on its shelves so representative of its capitulation to the imminent end of the physical entertainment product?
By Christmas, a quarter of the floor space in 150 HMV stores will be dedicated to consumer electronics, from high-margin accessories like headphones and iPod speaker docks to rising markets like tablet computing devices. Racks devoted to CDs and DVDs will be scaled back as part of a grand re-fit – the Dublin Grafton Street store already resembles HMV’s blueprint for future stores, with Dixons-like tables of electronic paraphernalia in the prime ground floor area where once the music A-Z was located.
There will be mitigating factors in this evaporation of the physical entertainment market: gifts, the penetration of Blu-ray and 3D and sales of pre-played games all help counteract the trend. But it is technology products, which currently account for 8 per cent of HMV’s sales, that are its future, Fox has decided. One in five pairs of headphones bought in the UK are purchased in HMV, though its current market share of MP3 players and speaker docks is a less impressive 5 per cent.
By 2014, HMV wants 32 per cent of its sales to come from consumer electronics. By this point, it expects CDs, now a quarter of sales, will decline to 15 per cent, while sales of DVDs and other visual entertainment units, now 44 per cent of turnover, are expected to drop to 30 per cent. It also plans for a greater focus on links with live music events – festival shops, in-store performances and ticket deals are all lined up in its calendar.
Electronics retailers have not been having a wonderful time of it lately either, of course, and HMV Group’s presentation to investors effectively sought to assure that HMV is not and has no plans to become Harvey Norman. Its stores will not be located out-of-town, nor will they have “counter-only” service, the group said. Instead, they will have a “fun, young, ’buzzy’ urban store environment” – which is more or less code for hipster staff, softer lighting and more of those handwritten staff recommendation notes.
HMV has attracted plenty of criticism for not waking up to the download reality fast enough, but it remains the last specialist CD/DVD retail chain standing, for which it deserves some credit. But after a downbeat year in which it lost share in various declining markets, it will be hoping that the tempo of sales quickens pretty fast. If it doesn’t, its pink lettering and red sales balloons will disappear from the streets for good.