Brand Strategy / Marketing Strategy / Opinion

3 things HMV’s staggering incompetence teaches the rest of us


HMV is in trouble.

And their marketers are making it worse.

Here are the three mistakes they’re making, and what other marketing professionals can learn from them…

Marketing Week’s Rosie Baker reports that HMV, a “beleaguered retailer”, are launching a Blue Cross Sale event to prop up their January sales figures.

And that this activity comes on the back of their “The Big Sale” activity post Christmas which, at least in my local store, sees up to 70% off products, multiple purchase deals and so on.

This is probably the worst move that the retailer could make – and here are the reasons why.

One – All HMV seem to do these days are sales.  And they’re even failing at that.

They’re competing in a price-driven race to the bottom where they deep discount items to try and woo cost-conscious consumers through the doors.

However, in every single HMV store that I’ve been to, the pricing structure is completely shot to pieces.  You can find the same DVD at three different prices.  You can purchase all of the James Bond films more cheaply that you can a boxset with a few of them omitted.

The listening posts, such as they are, rarely work nor do they hold the store’s inventory.  I’ve been to several HMVs where I’ve been thinking about purchasing an album, tried to find it on the listening post (bear in mind that I’m holding the disc in my hand) and found that it’s “Out Of Stock” or “Not Available”.  Invariably, I put the disc back.  Sale lost.

What’s even better is that (so I’m very reliably informed) you can pay MORE for products through their website than you can on the shop floor – perhaps this is their strategy to get people into the physical estate… Ridiculous.

Go to their website and you’re greeted by a red page with “the big sale” splattered across it.  This does NOTHING for the brand’s catalogue, aside from accelerating the race to the bottom.

How this Blue Cross Sale will actually be any different to the inconsistently applied regular sales is unclear.

Two – there’s no added value.

Yes, customers come through the door on price, but they’ll stay on added value and a decent instore experience.

I’ve written before about how HMV love stacking their DVDs in piles on the floor.  I’ve heard reports of staff going to restock the shelves and just chucking the products onto the floor – remember, these are things that people are going to BUY and pay money for.  A little care to avoid cracking cases would be appreciated.

The instore experience is generally awful.  Happy shoppers browse and buy, but in HMV, all I see are people wanting to get out or hunting from sale rack to sale rack like demented hyenas after a sniff of blood.

There’s no instore narrative to guide you around.   There’s often no space to move either – aisles are rarely more than two people wide.

And don’t expect any real music, film or technology lovers to work there either.  In my experience, all you get are sales people who know where the products are, but not WHAT the products are nor why I might wish to purchase them.

Stressful places don’t make for financially lucrative shopping experiences.  Adding value with a decent instore layout, knowledgeable staff and excellent customer assistance would transform the business.

Three – this is the REAL KICKER – the Blue Cross Sale.

“A spokesman for the brand says the activity is will “freshen up” its promotional activity and make HMV “stand out on a high street already crowded with sales”.” (Source: Marketing Week’s story)

Where do HMV find their marketers?  Do they EVER go outside of their special little HMV branded bubble and into the real world?

No, they don’t.

I’m going to prove this in three ways:

A) What are these images for?

debenhamsbc

Blue Crosses.

You’re right.  Of course.

The first one is for Debenhams, who have run their Blue Cross Sale events for as long as I can remember.

The second is for the Blue Cross pet charity.

Both have substantial brand recognition and contribute to the crowded marketplace that HMV wants (need) to avoid).

B) Google “Blue Cross Sale”.  I dare you.

Oh look, Debenhams.  House of Fraser. Pontins. Superdrug. Lifestyle Ford. Park Holidays (caravan vacations). West Orchards. The Frame.

Do I need to go on?

Both points one and two run mind-buggeringly contrary to helping “HMV stand out on a high street”.

If you’re going to “stand out” don’t do what your competition does.  Do something DIFFERENT.

C) And here, I’m sorry to say, my rage finally boils over.

Think of HMV’s brand.  What do you get?

Black.

White.

Pink.

Not blue.  Nowhere in their entire brand palette, is the colour blue.  Not instore, not on their till receipts, not on their website.

So why in all seven levels of branding hell are HMV holding a BLUE cross sales event?

Pathetic.  Absolutely pathetic.

This is brand suicide.

In fact, I predict that HMV will be off the UK high street by October this year if they don’t kick their marketers hard where the sun doesn’t shine and get them thinking sensibly.

(Or, better still, fire the lot of them and draft in someone who knows what they’re doing.)

So, what can we learn from HMV’s mind-blowingly terrible business and marketing plans?

Firstly – if you’re in trouble and have to deep discount, make sure that you apply this consistently throughout your entire estate.

Don’t let you customers find things priced differently in the same rack.  Because all they’ll do is pick up the cheapest one and leave the more expensive ones for the next consumer (who will go somewhere else).

And don’t, for goodness sake, let your customer buy something in one store which they later find even cheaper in another.

Be completely consistent and look to maximise the value of the customer as they enter your estate.

Secondly – look at what the rest of the marketplace is up to.  And by marketplace, I don’t mean your category rivals.

Look at everywhere else that the consumer might go and spend some money.

And then differentiate your offer.

Don’t, for god’s sake, run a Blue Cross Sale because everyone else is doing it.  That won’t help you stand out.

Thirdly, and finally, understand your brand.  Whatever you do should run in accordance with your brand principles, ethics and identity.  HMV had proven that they don’t know anything about their brand by using ‘blue’ as their sale colour.

Hell.  I’d be over-joyed if they had the ‘Dog’s Bollocks’ sale.  At least that would be somewhat contiguous…

So, there we have it.

Faced with staggering incompetence at every promotional level, I give HMV 10 months before they collapse into themselves.

But we can learn from their mistakes.  We can see what shouldn’t have been done, and what must be done.

Sadly for the brand, it’s an expensive lesson they’re providing for the rest of us…

Neil Hopkins is a Marketing and Branding Theorist at heart, and a Marketing Communications Manager by day. His blog – interacter – is the primary location he shares insight and information relating to marketing, branding and advertising strategy.
You can follow Neil on Twitter, circle him (like an escaped bull) on Google+ or track him down in any number of other ways.

Featured image is copyright Leo Reynolds and found on Flickr.

If you enjoyed this post, you’ll also want to read some follow-up thinking from Hilton Barbour on Challenger Branding and why if you’re marketing to the middle, you may end up as roadkill…

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48 thoughts on “3 things HMV’s staggering incompetence teaches the rest of us

  1. Unfortunately you are completely right.

    As a music lover (old school, still playing the black stuff) HMV has been a no-go for a while now. Seems to be a dumping ground for DVD/BluRays that we can all watch on Sky or Netflix etc at the touch of a button, or games that I can now purchase direct from Xbox live or PSN.

    Rather than becoming the de-facto store for buying quality music in multiple formats and maybe providing some good stuff to play it on ( instead of the utterly pants plastic iPod docks and headphones) they would have had the support of music enthusiasts, of which there still seems to be a fair few of us around.

    Instead they seem to feel more like Pound Land these days. I for one will be sad to see them go if they do, but despite sentiment I find it very difficult to spend any money with them

    • I’m with you on the black stuff – love my vinyl collection (even if most of it does stop at about 1974…)

      You’re right about the Pound Land feel – I hadn’t made that layout leap. I do wonder whether they simply became too big, lost their challenger brand thinking and got complacent.

      There’s a huge musical and film loving community out there and I don’t see the business tapping that – even through their loyalty card which seems pretty pointless to own from what I can see (my other half has one, never speaks highly of it).

      Neil

  2. Ten months? I think you’re being kind. I suspect that this BLUE cross sale is their last throw of the dice and that they will be the next Comet/Clintons/Jessops, i.e. a retailer that couldn’t keep up with the technological revolution that is changing the way we all shop. What’s so sad is that music and film was the very first area where it became apparent that bricks and mortar stores were going to be a thing of the past (at least for mainstream products) and yet HMV just struggled on with their heads in the sand.

    • We’ll wait and see, Guy. I do hope that HMV doesn’t go under completely, because I love music and film – and the company was so good at squeezing the independents out that they’re the only real option left on the High Street.

      Fundamental change is what’s needed – and not all of it needs to cost a fortune. But they must be brave and rigorous about it…

  3. As someone who has worked for HMV for 16 years, I find your comments about staff deeply offensive. It is regrettable that your personal experience may be as above but to tar all of the staff of HMV as not “real music, film or technology lovers” is completely inaccurate. I assure you I work with a team that are all “real” lovers of the things we sell. We are passionate about the job we do & the customers who shop here. Our shopfloor standards are exceptionally high & you will rarely find things at 2 different prices (occasionally the odd human error slips through). We do not just chuck products on the floor. Ever.
    Everyone two bit retail “expert” seems to have an opinion on the company I have worked for all my adult life but few seem to actually know the ins or outs of our business.
    Who knows what the future holds, I certainly don’t, but if the worst happens I know that it will be devastating for the very many real music & film lovers that work for HMV.
    In the meantime, spare me your sweeping generalisations about the people who work here – no one cares more than they do.

    • Hi Brian

      I apologise if you find my comments offensive – I simply speak as I find after being a customer for many years in Worthing, Chichester and Brighton specifically.

      In a previous blog about HMV, Callum mentioned that he had to sit a music & film exam to work there in his 20s, yet more recent intake haven’t had to do this. And someone else didn’t know who the Beatles were…

      The thing is, most people I speak to who have recently visited an HMV have said exactly the same things as I’ve been saying – so I’m lead to assume that I’m not alone in this.

      Personally, I think that the really passionate people who want to work for HMV because they love music and film are being let down by the brand. I have never seen, for example, any instances of the staff being allowed to do or arrange something to indulge their passion and transmit this passion onto the consumer.
      This small idea would be brilliant for the stores and might give them a chance to be a destination for something other than cheap deals.

      Thanks for contributing, Brian!

      Neil

  4. And don’t expect any real music, film or technology lovers to work there either. In my experience, all you get are sales people who know where the products are, but not WHAT the products are nor why I might wish to purchase them.

    Jeez , who rattled your cage !!!??? , Right so in my shop we’ve got me , 17 yrs experience , been to over 600 gigs around the world , have over 2k cds, vinyl & movies , the manager with over 10yrs experience who can name the band & song from practically any lyric you throw at him , superviser who can not only name any urban lyric you hit him with but then go onto recommend something similar or better , dvd section leader who is a complete movie geek and goes to the cinema twice a week religiously , the games geek who sits up all night playing games & can chat to customers instore forever recommending a game to anyone,….the list is endless…and this is the same vein that runs through every store that Ive worked in the past 17yrs , people who have an opinion & product knowledge and use it , so sorry about you getting the one shop that doesnt have anyone that knows WHAT the products are nor why you would purchase them..

    The blue cross sale is a quick-fix , get as much slow selling or bulk stock sold , to get money in the tills , get bills paid and get fresh stock in , simple as that.

    Everyone knows that HMV cannot continue in the same manner as it is today , too many stores for one , but it rankles when everyone is suddenly a retail expert and knows how to fix HMV , the problems have been there longterm , too many stores and too many execs with their heads in the sand to let it get to this stage , my store was £40k down on the year for December , break that down over 5 weeks and its not that much , had we had the correct stock in place we couldve made the extra few hundred quid per hour needed to be up on the year and hey ho lifes a dream…

    The future looks pretty bleak but who the hell knows whats further down the line , Im sure Universal dont want to pay the reported £150million that they will need to shell out if HMV go into admin ( if reports are true)

    But thanks for the support and the generalisation about staff , thats a bit like me saying that people who set up their own blog sites are 40yr old virgins who still live with their mum

    • Another passionate employee – awesome! If nothing else, I’m pleased that you’re coming out of the woodwork.

      Because HMV SHOULD be about passion – about the love of what’s being sold. As I said to Brian above, my comments are based on personal experience across four different stores over the past few years. They’re not meant to be offensive, I am just saying it as I see it.

      You’re right that the Blue Cross Sale is a quick fix. But that isn’t what the brand needs. From my standpoint, I see no evidence of long term business strategy, goals or bravery.

      I’m not saying that I’m a “retail expert” – I’m a marketing & branding guy looking at the issues from those perspectives. I’m not a sales person either – tried it, didn’t work out.

      Again, as I said to Brian, I think that the people with passion, with knowledge and commitment are being let down by the brand which is failing to put basic measures in place to capitalise on that.

      And yes, I’ve seen the we recommend thing. But in these difficult times, not everyone has a tenner to lash out on an album against someone else’s say so. If the listening posts worked and had access to the inventory, then some more sales might result…

  5. Also……

    Stores have their own sections where they can rack Dvds , cds to recommend to customers with handwritten reasons why you should buy them , its called “We recommend…”

  6. Neil – HMV may exhibit some stunning cock-ups but they’re by no means the only retailer struggling to balance a clicks and mortar model. They’re at the intersection of two incredibly tough categories – music/entertainment and retail – who are evolving at light-speed.

    Streaming services are significantly reducing the need/desire/margin on physical copies – thanks NetFlicks, Hulu, Vuze, iEverything. Retail margins, always wafer-thin, are buttressing up against employee turn-over & training costs, increased rental prices for physical real-estate and a very frugal UK economy.

    A veritable perfect storm I’d say.

    That doesn’t mitigate some of the (abundantly desperate) marketing follies your blog outlines but does give some context. Here in Canada, Sears – once the bastion of smart retailers – has exhibited the same desperate actions. Staggeringly outta touch with the any young consumers, a user-base that is (literally) dying off and a perpetually “On Sale” marketing message.

    Someone at HMV (and Sears) need to give their heads a real shake and make a very very tough decision. What is the business we wanna be in and how can we credibly compete? Anything half-measure – as your examples highlight – is merely re-arranging deck chairs on the Titanic.

    • I hear you there, Hilton!

      Companies need to be agile to take advantage of market trends and changes, and as with so many others, HMV has missed this.

      Smart marketing should be used to get into some of these trends before they become tidal waves and capitalise on changing consumer behaviour.

      Talking clicks and mortar, I’ve always wondered why you can’t pay for and download music in-store from the HMV website onto a mobile device. Could be a different tack to take, albeit with some other implications along the way?

  7. If you were designing a new music retailer business how close would this be to what HMV is like today? … answer: NOTHING LIKE HMV!!! And herein lies the problem. The core issue it isn’t simply struggling with clicks and mortar integration, the problem is more fundamental than that. HMV has wholeheartedly missed fundamental market shifts in retail design, experience shopping, online/offline business models and dynamic pricing – and a last ditch sales promotion will not fix this.

    Some examples of what I personally experience:

    – No or limited ability to actually listen to the music in the shop (unforgivable) – heck I could walk into Apple next door and listen to music on Youtube, but not in a music store!
    – Out of date design – largely unchanged in 20 years (even more)
    – No search functionality – how can I quickly find whether an album is in stock?
    – No download/custom burn functionality in store
    – Poor quality furniture/displays – zero interaction of furniture
    – Broken electronics displays for headphones and speakers … some work, some don’t. No one is ever there to help, offer advice or actually ‘sell’.
    – Zero online/offline integration – heck after 25 years of me spending great amounts of money in there you have NO IDEA who I am. Small retailers that I buy from online nail this with my first purchase from them. Even small new local shops incentivise my business and capture my contact details to send me offers!
    – Generic layouts with no limited input from staff (I agree that the employees could be a huge asset, but this is never going to happen when they are stuck behind tills rather than out there helping customers). This is a very simple change that could be made. I have some great experiences with staff and used to enjoy talking about new releases and limited editions that they had secured from local record reps, but not in recent years. Why does your badge not tell me what you like – or know about? I’d introduce badges so I can find the dance guy, the sci-fi bloke, the rock chick – who can help me???
    – Unpleasant shopping experience. My kids dislike the shop – they find it cramped often noisy and hard to navigate – this says more about the future viability than I could. To them it is simply not relevant. Anything that they want is downloadable from a number of sources (including free listens/views on Youtube) – they can listen to clips, see videos and download to a device of their choice if they want to keep it. In many cases, they don’t – so streaming from Youtube is enough. If they want a video – the default is online, not HMV.

    I am not sure HMV can be saved. That is because the business model that HMV has today is dying. It is arguably dead as no new business could ever get funding for a business that was even close to HMV in concept. If I went to a bank with the HMV business model they would think I was mad. It didn’t have to be this way – HMV could have evolved. It didn’t. HMV could have downsized, reinvented itself and became THE social space on the high street. It didn’t. And on that point … did no one in HMV notice that Starbucks? or Costa or Nero … or any of the successful independent stores?

    The Blue Cross sale has one purpose – increase short term cash flow to pay creditors threatening to cut supply. It isn’t necessarily the wrong thing to do, but it is not a plan that will help it survive. It is likely to simply extend the inevitable, but only by weeks.

    I agree with several comments so far that the timeframe of 10 months looks optimistic. If HMVs Christmas results didn’t make the grade, then it will not be allowed three more quarters to continue – given that Christmas is its busiest period. Early January will see vouchers being redeemed and children’s pennies buying new games for their Xboxes, but this will not continue at this rate until Easter. February and March are going to be a brutal for lots of businesses and I don’t see HMV escaping this.

    The financial structure of HMV (high debt, low margins and falling profits) may mean that the only viable strategy is the one that they have (keep as much cash as you can coming in). I have posted my solution to the problem previously on this site, so go look for this if you want to see my thoughts on the solution, but this may not be feasible anymore.

    Can HMV be saved? The theoretical answer is yes. But the logic that supports that is that until it is formally dead/bankrupt, it is alive and if alive it can be saved. But then until yesterday the same logic applied to Jessops.

    What would I do if this was my problem?

    1) Figure out how long the business can survive. Close at least 50% of the stores to extend this period to buy time to remodel, redesign and relaunch.
    2) Change the exec team and the marketing team and replace with someone who actually cares and understand retail experiences and can see what is possible. Invite design agencies to collaborate on a results reward basis (and pay well).
    3) Rapidly relaunch a smaller number of concept stores to demonstrate viability to investors and customers. Rapidly iterate/improve/innovate by rewarding and empowering local managers – then roll out as quickly as possible.

    Chance of this happening? Pretty much nil judging by what has happened over the last ten years

    Good luck HMV. I wish you well. If anyone has any unused gift cards though, I’d quickly redeem them.

    • Hi Gary

      Thanks so much for contributing. There’s not a lot more that I can add to that – awesome thinking as always!

      The fact that we’ve had a few current employees vigorously defending their stores proves that there is passion in the company still, on the ground floor, in some stores.

      HMV need to understand that passion, distil it and then, somehow, connect it to their customers.

      It’s a challenge I would probably give several digits for…

      Neil

  8. I am reminded of the last five years of Woolworths on the high street. I used to walk in there and see demotivated colleagues, aged and outdated unitary, god awful merchandising, a poor selection of stock, and a general uninspiring environment and dirtiness to the store. I would think to myself, how could anyone in their head office be happy with this? How can they not fix it? How can they not want to fix it today?! These guys are asking to go bust.

    I’ve discovered the answer now with age and experience. Money. Much of the good advice above is known and accepted by many many hmv colleagues in stores and head office. How much can be delivered quickly while paying back £176m of debt is the problem. And it is true that many many good chances have been squandered in the last 10 years. Gary asked why would any bank fund their business model? It’s more a question of how can I get my money back asap, and put a clamp on all spending but the most certain to give a better short term return? Gary’s suggestions are great but they cost money. HMV are between a rock and a hard place. A UK based retailer trying to compete with global super brands like Apple/iTunes who in comparison have near unlimited resources.

    But is this the final chapter? I wouldn’t be so sure. The UK public still buy more CDs and DVDs from hmv than from Amazon (just). Play.com are leaving the market. And the company does have some fantastic colleagues throughout their business, passionate, experienced, and smart. They are fighters. They have fought while practically every other specialist entertainment retailer on the planet has lost that battle in the last 10 years (Virgin, Woolworths, Silverscreen, Our Price, Sam Goody’s, Tower Records, MVC, Fopp, etc.) Are there any dedicated Bricks n Mortar chains left after hmv and Fnac on the planet? Hmv staff should take pride in their resilience. (well, the good staff should!)

    Change is coming, and has to come for hmv. Will it come in time is not known. But to Neil’s original piece, panicking into running ill-thought-out activity like Blue Cross is counter-productive. I was in a store today and didn’t see it driving any more customers in than normal, or any greater amount of goods in people’s baskets. They must understand and embrace their brand at the most senior level, and they must listen to what their customers want.

    • We agree that the staff are a HUGE potential asset. I’d love to see more innovation in how they are utilised in the stores. They are a massive potential differentiator over other sellers. I’d love to see managers given small marketing budgets to innovate and attract customers and freedom to respond to local tastes and events. Neither of these cost a great deal of money. In fact a strategic shift to better engage customers, and be ‘the music and video experts’, could cost very very little. The big strategic mistake HMV is making is going into a low cost price war when it is carrying huge debt – but I assume this is for cashflow reasons so excusable as long as alternatives are being developed. All of the other companies listed tried this approach too. Price reductions reduce margins and sets the expectation with customers of always expecting a big discount. If this can be sustained, then fine – but lets not forget supermarkets sell CDs and DVDs too and they have deep pockets to win price battles. Low cost pricing is ONLY viable as a strategy if your costs are lower then your competitors (not your prices). Whilst HMV clearly negotiates well – I’d expect cost of good to not be significantly different to what Tesco or Amazon pay.

      As for the cost of expenditure on refits and new designs. As it stands HMV is on borrowed time in terms of its concept and viability as a high street store. My argument was reinvent or face irrelevance. Having one or two next generation stores (assuming that they were successful and generated increased profit and customer sat would give investors the confidence to support a longer term strategy of investment and future development.

      As for change coming … I’m still waiting. Most of the changes I listed in the earlier post as missing have been available for many, many years and I’ve yet to see them in any HMV stores. I wish HMV well, but the graveyard of high street names is only going to grow in 2013.

      • It is unfair to compare hmv prices with Tesco and Amazon. Tesco sell entertainment as a loss-leader to get you to buy bread and milk.

        Amazon meanwhile don’t pay any taxes. Perhaps your blogging efforts would be put to better use looking at their business model and what it contributes to the UK economy, rather than complaing about the colours hmv use to promote their offers?

        • Matthew – you are right but they are still competition and cannot be ignored. You may not like the practices of either, but the strategy needs to account for these. Every CD/DVD Tesco/Amazon sells is one that HMV does not. Tesco focuses on the best sellers – but that is where the volume is – which is all Tesco cares about – always 80:20. The tax issue (which I agree is wrong) is irrelevant in terms of survival strategy for HMV. It should lobby about this), but to customers it mostly doesn’t matter. Just for interest (as HMV has a sale on), so I thought I would check 10 random online prices (5 best sellers from 2012 and 5 random albums including Jarre, Michael Jackson, Jack Johnson and a couple of compilations.

          Results: HMV matches 1 album from Amazon on price. 3 are separated by penny (Amazon does the .99 pricing whereas HMV rounds up) … but 4 are more expensive by at least at £2, with the largest differential being £5.01. 2 are priced within £1. On 9/10 HMV is more expensive.

          Total difference: £14.30 – absolutely not scientific, but interesting nonetheless.

          I don’t care about the colours – I care about the strategy. This is the issue for me. HMV has to be a destination store – with tight online/offline integration.

          • You’ve hit the nail on the head there, Gary – “destination store”.

            That’s precisely what HMV need to develop. Alongside a destination website/app too.
            All that we go to the HMV site for is sales. Things to buy. Purchase. Transact.

            Why, oh why, isn’t there some content on there?

            Imagine if the site included a ‘Latest News’ segment on the homepage. Live results from the Golden Globes last night – linked, naturally, to the products on sale.

            Latest news from the film and tech worlds, linked back to the products on sale. Empower the community to learn, to get the cool stuff first.

            Insider tips and information about the latest trends, adding value to the online experience.

            This will cost, yes. But not a huge amount. The online infrastructure is already in place. The marketing people are already in place. The Golden Globes happen already, so it isn’t as though something new is being required.

            I also agree with Martin that there are some massive co-branding possibilities out there, if only they could be looked at both strategically and tactically.

            Silo-ing is something that retail have been really good at in the past – now, with the collapse of the high streets and changes to consumer behaviour, we’re seeing an unparalleled opportunity to create a new model.

            So it will cost money to sort some of this out. But surely it’s better to have a last ditch attempt at redefining the model than it is to slowly implode and fade, eventually, into obscurity?

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  10. I’ll be genuinely, sad if they can’t get it together and make a fist of it. I’ve had good experience with staff over the years, and their frustration has been palpable in recent times

    I’d like to see them see if the hook up with Sevenoaks or Audio T and share some premises (spread the cost) and be able to demonstrate to people just how great this stuff can sound and be seen. Also be a place where the music and film lover can really immerse themselves and give the staff a really opportunity to put across their enthusiasm.

    That’s my rose tinted wish anyway!

    The loss of a bloke escape area when being forced round the shops is an awful thought. Had it at Brent Cross when my Wife dragged me out. Almost had breakdown when I realised the HMV had sadly gone. I couldn’t bring myself to go and mix with the Genie-arses in the Apple store and bar a small section of TV’s in John Lewis I was stuffed

    • Showrooming is simply a sales failure. Forget the online aspect, it is a failure to engage and sell.

      Allow me to explain …

      So the problem is this.

      1) Customers are interested in a product.
      2) They visit a local retailer to see/touch/try on the product
      3) They go home and order this online from another retailer

      And the problem is the online retailer?

      NO, NO, NO.

      The problem is the shop. They had a customer wanting and willing to potentially make a purchase and they let the customer walk out of the store without converting that sale. This is a fail of salesmanship. Price may have been a key determinant in the customer choice, and this needs to be addressed [solution – offer better value, and avoid losing on price], but did the local shop engage the customer? Did they explain the advantages they offer over the online retailer? Did they differentiate themselves and show why they are the best choice to buy from? In almost all cases the answer is no.

      Retail shops need to move from being ‘passive’, whereby a customer walks in looks and around and maybe buys to ‘active’ sellers. This means that shops engage with customers BEFORE, DURING AND AFTER the visit. It is an ongoing engagement.

      – BEFORE by sharing offers, announcements, advice, new stock.
      – DURING by understanding needs and being an A+ service company
      – AFTER by thanking customers, offering come back deals and trying their best to stop the online purchase and convert this to a local one.

      In most cases, none of these stages happen in the shop. But the online retailer does this through targeted advertising and display, through emails, Twitter engagement and dynamic website content management.

      When retailers think active, every customer matters. Every interaction matters. Service IS everything. Price matters, but successful hotels know that only winning on price is a way to lose customers. The solution to showrooming invoves all aspects of retail – price is there, but also is display, service, and most importantly retail experience.

      If you are a retailer – there is one simple way to start understanding this …

      Imagine that 80% of your existing customers are never going to walk in your shop again … ever

      AND

      And of those who do come in 80% will not buy anything.

      What would you do?

      How would you fix these two issues?

      Now do them, because a majority of potential customers are not visiting you and of those that do, most are not spending with you.

      I’m not saying this is easy – but the default outcome – what will happen without change -is business failure. The good news is that many small retailers are reinventing themselves and becoming successful small GLOBAL businesses.

      I can see a book here somewhere …

  11. We’ve all raised “staff passion” as a differentiated aspect of the HMV experience – when delivered, because that passion is certainly not universal across the stores.

    Would the economics allow smaller, more niche, physical offerings? A place dedicated to the experience of music and film? A place that harkens back to the store in the movie “High Fidelity”?

    My worries;

    1) Music and film lovers may browse there but shop elsewhere – “show rooming” is the new threat for retailers facing mobile-empowered consumers
    2) The “experience” of movies and music is both the content and the equipment its played on. HMV isn’t going to replace (or want to compete with) The Sony Store or other higher-end equipment stores
    3) Would any reader of this blog be prepared to pay an incremental 20% on music and film for the opportunity to shop this kinda store?

    HMV appear to have been caught in that unenviable trap. Suck all “costs” out of the system in an attempt to remain price-competitive – store fittings, store design, staff training, staff hiring and incentives, a robust loyalty program based on true customer data. In the end, these denigrate the whole experience…and f**k me but isn’t music and film one of the most experiental categories out there?

    Perhaps there are lessons to be gleaned from the wonderful ZAPPOS experience which, its not surprising, has been acquired by Amazon. Granted Zappos have no physical footprint but their on-line customer service and much-lauded corporate culture suggest there may be something there for HMV to crib from.

    As this collection of armchair retail experts (myself included) suggests, there is a tremendous amount of latent HMV “love” or nostalgia. Many of the folks here are contributing because they’d like to see HMV re-emerge from its current state. That certainly beats consumer apathy doesn’t it?

    • Hey Hilton

      Thanks for bringing up the loyalty scheme! I checked with my other half (who possesses one of the cards) and it’s true – we’ve ‘bought’ DVDs etc using the points. But there are never any emails with exciting news, updates and other reasons to visit store/online. It’s one of the most poorly communicated loyalty schemes I have ever seen….

      To answer your points:

      1) Showrooming. Difficult, yes. But if you can integrate on and offline (for example finding a CD then downloading it to your device while in store), I think that some of this can be ameliorated.
      2) True. Which is why a co-branded retail space could be the way forward. Share footprint costs and really show off the music.
      3) 20%? Hell no. But with co-branded spaces, better on/offline integration, better use of loyalty schemes and various other tweaks, I reckon that figure could be sliced & diced to a much more manageable level.

      The latent love is there, there’s no doubt about that. But whereas Woolworths failed to act on it (leaving the consumer commiserating their implosion), HMV have a last ditch opportunity to recognise it and capitalise on it…

      As I said on Twitter, if any of the HMV team want a meeting, I will make myself available. Let’s talk people. It’ll cost you however much a teaspoon of instant coffee & some hot water sets you back. I don’t even take milk (thus saving more of your overheads)…

  12. I can’t comment on HMV in the UK being from Canada, but I think your points seem salient as ever. The opening reminded me of Simon Sinek’s derision about sales. He described businesses trying to rectify their poor performance with sales to a junkie who must constantly chase his fix. Very apt, I thought. You get the rush of an initial response, but you’re quickly back in the same position and some are then tempted into a disastrous cycle of sales.

    • Hey Fergus

      I think that’s certainly what HMV (and many others) tried to do. And look where it’s got the lot of them…

      We need businesses to transform, not just muddle through…

  13. And the inevitable happens to HMV. Bad news.

    This is particularly bad for the 4000 staff, but also for other high street stores, who are going to find trading increasingly difficult as confidence in the high street business model wanes.

    Some thoughts:

    1) Whilst the ultimate responsibility lies with HMV’s management – and particularly its retail strategists, others including councils and high street property companies play a part too. Councils need to recognise the importance of the high street, to the viability of a whole town or city and stop introducing measures to keep shoppers out (punitive parking management, car unfriendly measures, and carte blanche for mini-supermarkets to kill diversity. Property companies need to better support companies unless they want all their shops to become charity rentals. Retail forums need to represent all retailers – not just those with deep pockets able to participate.

    2) Change or die. This maxim is taught to business studies students, but as they progress to senior roles, they increasingly fear change. HMV ‘was’ THE music shop, full of passionate people who cared about music. Have a look at the comments in this Peston article – http://www.bbc.co.uk/news/business-21023602 Comment after comment stating what everyone knew, but HMV seemed immune to believe. As for the tattoos http://www.guardian.co.uk/business/shortcuts/2012/oct/24/hmv-banning-tattoos-staff-wont-increase-sales – this tells me everything I need to know about HMV and understanding culture. WRONG.

    3) You can argue about online trends, competitors advantages, operating conditions all you want. You can decry Amazon’s tax behaviour, criticise Tesco and it is all a waste of time and energy. Instead of this – recognise reality and FIGHT. Stop moaning – start battling and divert your energies to winning customers, one by one. A previous comment highlighted Zappos – excellent idea. Forget the metrics, forget the statistics. You either provide great service and put the customer first or don’t. Guess which one has the best track record of surviving over the long term.

    So what bright ideas would I propose to reinvigorate HMV, to make it viable?

    Just one … don’t let anyone over 25 be involved in this!!!! Consult, involve, engage young people. Let those under 25 tell you what they want. Understand this and you have a half decent chance of keeping the company alive.

    • Gary

      Great – moving into the wider High Street debate! This is something that I find deeply interesting – and again, a space with so many opportunities IF ONLY those ‘at the top’ will make brave decisions.

      While I agree with your last point, I would urge caution. Isn’t the younger demographic somewhat more afflicted by Shiny Object Syndrome than older people? (At 30, I know I am. The shinier the better…)
      Some stability will be required for future growth – the key, I believe, will be to design and implement a flexible framework that allows on-the-fly improvements to be made within an overall structure.

      Best of both worlds then?

      • Neil – great point about shiny object syndrome!

        My point was that the core concept of HMV was increasingly failing to be relevant to the largest section of music buying market. For ANY high street store (or increasingly any store) to be viable it has to be a destination that attracts the target market to shop there. With HMV this is much wider than the u25 demographic, but designing a future that doesn’t cater to their needs would be highly ill advised. Example … young people increasingly have tattoos. Do they find tattoos offensive? Does it reduce their willingness to shop and spend money there, or does in demonstrate cultural diversity, encourage discussion and engagement in conversation and thereby support the shop – and thereby sales?

        The tattoos decision MAY have been relevant for an over 50s shopper, but was this decision the right one, or misjudged? I do not like Hollister as a store, but I’m not meant to. It is a destination store for my 12 year old daughter not me – she wants to go – I just tag along at a distance and fund the purchases. Would HMV have a future as a series of smaller niche stores, focusing on depth knowledge and being a cool place that over 25s hated? I don’t know – not without the research and data. What I do know is that banality fails every time.

        Your last point about retail agility it spot on. Both at a national, AND local level.

        • This is starting to remind me of a debate Mark Ritson started around the future of M&S (http://www.marketingweek.co.uk/ms-is-right-to-put-over-60s-out-to-grass/3028593.article ).

          The destination store idea is right, totally and utterly.

          The music/film/tech categories are luxury ones for the most part, yet HMV failed to realise that with their increasing commoditisation of the product and lack of empathy for the actual behaviours of the buying public.

          And yes, their tattoo decision was a little odd (apart from in the case of neck/facial tattoos which, even 5 years ago when I was in the u25 demographic, I find repulsive.

          I’m starting to feel that HMV lost their cool-hunter status and relaxed into their category domination – for as short a time as that lasted.

          A return to niche would be wonderful and would let the passion flow unabated. There’s a model here, I wonder if they’ll take it?

  14. @Gary continues to make delightful and savvy contributions to this post. While it might be a simplistic point I’d suggest the issue with the High Street – and HMV as an example – is that they’re all playing to the MIDDLE and that’s always a recipe for disaster.

    Consider this overly simplistic analysis…

    WalMart, CostCo, Tesco, Amazon – and even Starbucks – play the volume, low-cost, value part of the equation. Boutiques differentiate through superior service, exclusivity, niche offerings in their category. People gravitate to scale/value or niche/service based on their particular needs. Online offerings merely accentuate these differences – volume or service.

    By playing to the middle, organizations exhibit inadequate levels on all fronts. Not enough scale/volume/negotiating power to offer the lowest prices, but too large to offer a truly differentiated, highly-personalized service with deeply-trained (read : expensive) assets/employees/locations. Playing to the middle inexorably fails.

    I do find the “death of the High Street” discussion amusing. The stores that have gone to the wall were (broad strokes) caught in the middle. Unwilling to move to the edges preferring to stay in the grey, undifferentiated, compromised middle. With equal culpability, we as consumers took our dollars down the street (or out to the suburbs) to get our low-cost fix. We abandoned the High Street because it couldn’t fulfil our requirements for high-service or low-cost. Again, overly simplistic.

    I’m sure this debate will continue to rage. I’m sure it will continue to weed out those retailers, like HMV, caught in the middle.

    • Love the Grey Middle analogy, Hilton. And, of course, you’re right.

      Operating at the fringes will require a different business model, but one that’s potentially lucrative if done right. However, the fate of the independent record store class here in the UK does raise the odd doubt… But again, we’re back to business modelling…

      You might see your High Street point as overly-simplistic, but it’s spot on. The death of the High Street is not just due to financial incentive, it’s due to the fulfilment of need.
      If humans are truly social animals, then the High Street does not provide fulfilment of this particular need. And thus, everyone suffers – not just the big boys.

      Town Centre Management across the UK has spent years wooing the big names, the big brands, the companies who stock loads of product for loads of people. Which makes every High Street a clone of the next to a significant level.

      We’re living in unprecedented times, where almost everything has to change at once.

      Only the agile will survive.

  15. The problem was that there was no one there to put the brakes on when the race between HMV & Virgin to have the most stores was in full fling , thats where the debt has gathered from , having too many stores in towns that sadly could not support them , meaning that stock wasnt freely available to order at store level due to suppliers wanting paid up front.

    The company was bloated and reached saturation point about 2007 and no-one said enoughs enough this wont last.

    But think on this , HMV had 38% share in entertainment market (from cue entertainment) , 2nd to Amazon , how will record / film companies make up that market share ? Tesco have already said that since there is no margin in entertainment they are cutting back footage , Morrisons & Asda are only stocking chart and budget …so exactly how will say someone like Roadrunner records recoup the loss from losing the thousands upon thousands of CDs that HMV sold from their back cat range ? , or how about Plastichead ? or Proper Distribution ? again HMV stocked thousands of their stock over the course of a year..cant exactly see Asda stocking the new Hatebreed Cd can you ??

    So , given this , how will these companies recoup their losses ??

    • It will be interesting to see what happens. None of the media companies will want to see HMV disappear as this gives Amazon and increased power to demand reduced prices and therefore reduce record company profits. The larger media companies may be willing to extend supplies and amend terms, but this does not change the fact that the core HMV business is not attractive to customers – it is this that needs the change. Unless the HMV store/business model is reimagined/updated, my expectation would be the same happening again in a couple of years.

    • I’m with Gary on this one… The model HAS to change – and I think that there also needs to be a wider appraisal by the labels/distributors on how they get to market as well… yet more shifting sands in an already crazy marketplace.

      You raise some awesome points, SlimJim – let’s see what ideas others have to offer…

  16. A reality check for the High Street:

    1) According to Verdict, the retail research group, the internet will account for about £1 in every £8 spent in the UK this year. (Source:FT). That means 7/8 of spend is NOT spent online (although this varies between goods sold). Given the relatively low cost of setting up an internet shop (many small shops have successful online businesses), there is no excuse. That means you a shop + online business has ALL of the potential market to play for … GLOBALLY. Online businesses have 1/8 of it. If you are not selling, don’t blame the shift to internet.

    2) Retail vacancies are at an all time high (Source: LDC). This excludes charity shops, which are often temporarily disguising available properties. This is bad news for everyone (inc. shoppers, councils, property owners). It does though present an opportunity to negotiate and re-negotiate hard on costs and lease lengths. If the deal is wrong, leave it. If a costs are killing a business – deal with these before it is too late.

    3) This is not going to get any easier. Whether we move into recession (for the 3rd time in recent years) doesn’t significantly matter, because the underlying economic environment is going to stay challenging for a few years yet [this may be the new normal for some time to come]. Businesses need to start by asking themselves one question – and make sure that they have a good answer:

    – Why would prospective customers choose to buy from us?

    You can add another ten or one hundred follow up questions, but this is the starting one. What is your value proposition? Why is it better than your competitors? Who says so? How do you know? How do you measure it?

    HMV is the first, but will not be the last. Act now to make sure it isn’t you next.

    • Wow – 1/8. That’s surprising… Deeply so.
      I assume that this is for transaction value only. Did the report highlight the number of transactions at all?

      This is now moving not only into High Street debates, but into the very nature of business (retail) branding as well…

      With the changing customer patterns and habits, your questions hold relevance for more than just bricks/mortar shops – although these will be the highest profile casualties of failures to address these key points.

      Thanks, Gary! Appreciate it as always!

      • The dominos continue to fall as Blockbuster follow HMV.
        http://www.bbc.co.uk/news/business-21047652

        A much clearer case of online media killing the business than HMV, but a compelling retail destination … no. As the core business is profitable according to BBC News, there is a good chance of saving many stores, but without a viable business model, long term prospects are far from secure.

        Could a checklist be companies at risk be developed?

        Some early thoughts …

        1) Does Amazon sell your product?
        2) Does Tesco sell your product?
        3) Can I buy your product digitally and download it?
        4) Are your monthly physical visitor numbers decreasing?
        5) Is your online business separate to your core business?
        6) Is the purchase functional to fulfil a clear task (as opposed to emotionally driven)?

        If the majority of answers are ‘yes’ then be afraid and start to think hard about how your future.

        Any other ideas?

        • Blockbuster was another inevitability. Large cavernous stores filled with product inventory intended to sell to everyone. Unfortunately, and what NetFlix cottoned on to, the sheer annoyance of schlepping your butt to the store was too high when they were other distribution methods – streaming or ordering/returning physical product by post – was just too high. Especially for the volume viewer of popular or mainstream movies. Use a fancy algorithm (like Amazon Recommendations) and you can punt new titles at viewers based on purchase habits. That’s more valuable than a loyalty program that merely gives you a few points off your next purchase.

          Back to my other post, but Blockbuster got caught in the middle. Their staff were (mostly) shelf-stockers not folks who could genuinely recommend other movies or make decent suggestions (shades of the HMV issue anyone?) which would’ve had VALUE.

          Once the value exchange between consumer & Blockbuster came down to just price & convenience, the switching hurdles were gone. NetFlix offered more of both. Chapter 11 was inevitable.

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