HMV founded in 1921 has been one of the most recognisable brands on the High Street, with it’s iconic dog and gramophone trademark. It is the last remaining music retailer on the high street, with over 230 stores in the UK and Ireland. As announcements have been made the company is to go into administration, it has been greeted by sadness from customers and the music industry. However it hasn’t surprised many analysts who believe this was inevitable.
The way in which we shop has radically changed over the past ten years, with the internet taking precedence over the high street. Over recent years, HMV has failed to embrace the shift towards online sales and digital downloads, even though HMV was perfectly poised to do so. The power of HMV’s brand, their heritage in music, the fact that people still feel nostalgia for a record store and their unlimited access to content, film and games, meant they were prime candidates for a mass of growth online.
However, the expense of having so many stores and therefore a large rent bill will no doubt have contributed to their decline. With many consumers opting for online convenience, the attraction of trawling high street shops (that won’t guarantee to have your product) has declined. Rather, high street shopping has become a last resort rather than the opposite. In my previous blog – “Can your site handle the busiest shopping day in history?” I mentioned how online sales soared at christmas time with online shopping in December totalling to £5 billion and December 3rd being the busiest web shopping day of all time. Yet HMV kept a 25% sale running for this month in a desperate attempt to attract consumers.
If HMV had adapted its business model to include online 10-15 years ago, they could have built up a stronger brand name and a greater dominance in the online music market. However now if ever you think about buying a niche music product you automatically think – Amazon.
In the digital era 73.4% of music and film is downloaded or bought online, therefore HMV’s business model has became irrelevant and unsustainable – according to Neil Saunders MD and founder of retail research agency Conlumino. He also noted that there is no real future for physical retail in the music sector.
Looking at HMV as a case study, the demise of other major high street stores appears inevitable. Only this week Jessops has gone, as well as Comet at Christmas time. Although the recession can be blamed in part for a decline in sales, high street stores which aren’t embracing online activity aren’t going to last. It seems the only way is online!
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