HMV, life back in the old dog?

So are HMV flourishing under their new owners, Hilco?

Well, you might think the answer is yes.  There are positive signs such as returning to TV advertising in cooperation with music, games and film companies and moving back in to the original London store which is HMV's spiritual home – 363 Oxford Street was opened by Edward Elgar in 1921 and is where Brian Epstein took The Beatles rejected Decca audition tapes to be cut on to 78 rpm acetates. So superficially it would all appear rather rosy. 

But my guess is, it probably isn't. 

Even though Hilco managed to buy HMV's debt for a fraction of it's value, take the chain private, close loss making stores, make considerable redundancies and negotiate beneficial terms with suppliers, who are desperate to keep a shop window on to the High Street, they are up against it. Let me give you some insight why.

Christmas is the time of year when HMV traditionally achieved 80% of their sales in a four to six week period and made back the losses they had accumulated during the rest of the year. If you tried going in to an HMV store just before Christmas five or six years ago, you could hardly squeeze inside the door, as people stocked up on piles of DVD's for Christmas and bought countless CD stocking fillers. However try popping in to one today and you will find customers decidedly thin on the ground. I have it from one HMV source that DVD sales are a whopping 30% down on last year, and last year's figure was a dramatically low one.

Here are my three big reasons why Hilco are really in a rush against time to make their money before HMV goes in to its final death throes.

1. Unlike Canada, where Hilco has successfully and profitably run the HMV chain for some time, a new piece of Ofcom research recently revealed that British online shoppers are the world's number one, and that's by a long way! Canadians don't even rank in the top 10.

2. Beyonce's launch of her new album has not only been a case study in the power of social media influence, breaking the conventions of a normal record launch, it has also been a digital only iTunes exclusive (and their fastest selling album ever). Not much business for HMV there then and indicative of the way the world is moving.

3. The growth of Netflix has been staggering with their shares up a gobsmacking 440% over the past twelve months. With 40 million subscribers and counting where are they growing fastest outside the States? You guessed it, the UK.

Now HMV may feel they can build up sales in other areas such as clothing and electronics to replace the losses in music and film but I'm afraid it just doesn't stack up. They may also think that the brand has such resonance with so many people, it can successfully be moved online but I'm afraid they are too late to the party and haven't got the financial clout to compete with Amazon. And by the way, that brand resonance is distinctly of the nostalgic variety and no longer has the currency it once did.

I hope Hilco can keep it going. I still know some very talented and loyal people who work at HMV but I'm afraid the clock is ticking and it's one minute to midnight.

I was CEO of the agency which handled HMV's advertising for over twenty years and know the history well of how they got where they are today. Other posts:

http://www.philipbeeching.com/2012/08/why-companies-fail-rise-and-fall-of-hmv.html

http://www.philipbeeching.com/2013/02/life-after-hmv-trip-down-high-street.html

http://www.philipbeeching.com/2013/04/can-hilco-save-hmv.html