Business was slow to react as mood music changed
ANALYSIS:The problem for HMV is that it saw the writing on the wall but didn’t do anything about it. While the company did try to cut its costs and losses in recent years by getting rid of the Waterstones book chain and divesting itself of its live entertainment subsidiaries, it was too little, too late.
Entertainment products have long been HMV’s stock in trade and contributed to the growth and success of the company since it first opened a shop on London’s Oxford Street in 1921.
Over the past 10 years, though, the mood music has been about online sales and services.
The days of buying physical product – be it a DVD or a CD – have been slowly drawing to a close as punters choose to download or stream what they want to hear or see.
This change in consumption habits may have made kings of the likes of Amazon and Apple but it caused havoc for those whose business model depended solely or largely on physical sales.
HMV was traditionally where people went to buy that new U2 CD or TV series on DVD. When people decided they preferred to acquire these items digitally, the likes of HMV were scuppered.
They may have had an online offering but HMV was always associated in people’s minds with the bricks-and-mortar shops.
As HMV continued to stand on the high street, it watched as fellow music chains such as Virgin, Our Price and Tower disappeared into history. The independent shops also vanished, bar a few niche outlets catering for specialist tastes.
The day of the catch-all entertainment store seems to be over.
HMV’s woes are not just bad news for its 4,500 employees (nearly 300 in Ireland), however, who will now be facing uncertainty about their future jobs as well as the ire of consumers coming into the shops in the coming days with a fistful of €20 vouchers.
For the record labels and film companies who supplied HMV with CDs and DVDs, these are also testing times.
These suppliers needed HMV to remain open as the chain was one of the few remaining physical outlets for their products. Indeed, HMV accounts for 27 per cent of all DVD and Blu-Ray sales, and 38 per cent of the physical music market.
Suppliers and their employees now face an anxious wait to see what happens to HMV and if they will get paid for stock sold in the busy run-up to Christmas. They will also be watching to see if a potential purchaser for the stricken chain emerges.
Whoever that new owner turns out to be, you can bet they’ll be looking seriously at the online operation.