Can HMV survive ‘blood on the tracks’?

‘This is the end, beautiful friend, this is the end, my only friend, the end, of our elaborate plans, of everything that stands, the end.’
Believe everything you read and you might be forgiven for thinking that The Doors’ 12-minute opus released over 45 years ago could easily be a tribute to HMV, as music lovers abandon the high street for the ease of the download market.
But, according to new figures released by Kantar Worldpanel, Amazon – the darling of the online world – has only just toppled HMV as the UK’s number one entertainment retailer in terms of market share.
Amazon took 22.4% of the market for videos, games and music in the 12 weeks ending December 26 2011, while HMV had a 17.5% share.
For the same period in 2010, the two firms were virtually neck and neck, with HMV on 19.6% of the market and Amazon 19.4%, meaning HMV has lost just 2% of its market-share in the past year – not quite Armageddon.
One surprising figure, given the fact that downloads have revolutionised the industry, is that iTunes has only 3% of the market. Retailers Tesco (11.4%), Asda (8.1%), Game (7.7%) and Sainsbury’s (5.2%) have a far greater share.
And the home entertainment sector overall appears to have stemmed its decline, falling by just under 4% year-on-year in December, compared to the 8% drop witnessed in the previous 12 months.
Of course, losses at HMV of £36m last year and the closure of 30 stores in recent months have had the doom-mongers licking their lips. No doubt anyone who received an HMV gift-card for Christmas was banging on the door on Boxing Day just in case the receivers were called in.
Observers claim the company still falls short on a number of areas. Its reluctance to embrace the digital age has been well documented, relying heavily on physical sales and its recent plan to increase the amount of vinyl records in-store. Although this has been answered in part with the November launch of an on-demand video streaming service to complement its digital music store, it still faces stiff competition from established online brands.
The HMV website has also come in for criticism, amid claims it is too clunky and way behind the likes of Amazon. The PureHMV loyalty scheme is another bone of contention. It has no doubt given the company huge insight into customer behaviour, but are the rewards good enough and why do you have to pay to join it? Just a few issues in the in-tray of new head of insight and ecommerce Paul Stevens. He must also build on the successful email and eCRM marketing programme initiated by former head of CRM Matt Button and CreatorMail, which picked up gold at last year’s DMA Awards.
However, it is easy to get carried away with the online world, and forget the fact that Internet sales are still a fraction of those made on the high street – at last count totalling about 10% of total retail expenditure. Retail outlets are here to stay, although obviously the challenges should not be under-estimated. You only have to look at the failure of Our Price, Tower Records and Virgin Megastores (then Zavvi) to see how tough it can be.
The real point is this: can the music and entertainment industry moguls really afford to let HMV go under?

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CRM boss Matt Button exits HMV

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