HMV finally forced to face the music about its future
When Sir Edward Elgar opened the first HMV store on London’s Oxford Street in 1921, the Guardian report at the time enthused about the “spacious and attractive” building, which it described as an “interesting example of the super-shop of today”.
The report continued: “The bright young men from the country will come to Oxford Street to learn all the fine shades and nice feelings of their profession – how to satisfy varying music tastes, how to pronounce the names of foreign musicians, and generally to understand what they are selling and the idiosyncrasies of those who buy.”
If only the modern-day HMV management had managed to understand the idiosyncrasies of the music and entertainment market, and the revolution in buying habits in recent years, then perhaps the company might have been able to avoid becoming the latest casualty on the high street.
HMV’s collapse comes just days after Jessops, the camera retailer founded in 1935, became the first large-scale retail casualty of 2013, shutting the doors of its 187 shops after falling into administration. Just before Christmas, 79-year-old electrical retailer Comet also shut up shop for good, with the loss of 7,000 jobs. Like Jessops and Comet, HMV has been hit by the dramatic change in buying habits brought by the internet, the supermarkets and the explosion in the downloads market.
Past managements of the business badly misjudged the impact of the digital revolution in music and entertainment; even when the penny eventually dropped that the market had changed forever, they failed to move quickly enough. HMV was constantly playing catch-up and its customers – including those who are all sentimental now that the administrators have moved in – simply switched to online rivals.
Retail history is littered with the failure of legacy retailers with famous names and instantly recognisable trademarks, such as HMV’s Nipper the dog. There has been an outpouring of regret at HMV’s fate, but shopping is an unsentimental business and customers will go where they get the best product at the best price.
Predictably, HMV stores were exceptionally busy yesterday as news of the retailer’s collapse spread. Lunchtime shoppers crowded into the branch in Islington, London, some stopping to sympathise with staff or to reminisce about happier times browsing through its record collections on a Saturday.
Most had made the trip to the store for entirely unsentimental reasons, however: to bag a bargain. As one customer waxed lyrical about record sleeves and listening booths, a harassed assistant politely made his excuses and returned to the tills. “The ironic thing is,” he said, “we’ll probably go over sales target today.”
Beating sales targets is not something HMV has done much of over the past few years. In the City of London and among retail experts, there was no surprise that the 92-year-old business had finally given up the fight.
Struggling under a mountain of debt and dwindling sales, HMV has long been regarded as one of the high street’s dead men walking, a belief reinforced before Christmas when management warned that they expected the company to breach its banking covenants in January.
The future for staff at HMV’s 230 or so branches, including 16 in Ireland, is bleak. Most of the company’s 4,000 employees will lose their jobs, although there is a chance that a radically slimmed down version of the business might survive if a buyer can be found.
HMV’s suppliers – the big music, film and games companies – have been supportive until now, but refused to provide the £300 million (€362 million) lifeline it requested.
However, there remains a market for physical film and music sales and it would be in the interests of suppliers if HMV were to retain some form of presence on the high street.
Potential buyers include restructuring firm Hilco, which owns HMV Canada, and Jon Moulton’s private equity firm, Better Capital, but any deal would involve only a small proportion of the stores.
The squeeze on consumer spending has not been helpful to HMV but it is too simplistic to see it as a victim of recession. Its problems have long been bigger and more fundamental than that. As one retail analyst said yesterday: “The writing was on the wall for HMV since the day someone first downloaded a digital song.”
* Fiona Walsh writes for the Guardian newspaper in London