The Future of HMV


Last week saw an announcement from UK retailer HMV (who sell CD’s, DVD’s, Blu-Ray, Books and other entertainment goodies) that they would be closing 60 stores over the UK. This was amongst profit warnings claiming that sales over christmas were down due to the snow and also competition from online suppliers such as Amazon and iTunes.The Telegraph ran the story which I am quoting from here:

  • Tony Shiret, retail analyst at Credit Suisse, said: “You have got to distinguish between companies who can take this in their stride and those already structurally challenged where it doesn’t take a lot to knock them, especially if they are heavily dependent on Christmas.”
  • It is not the snow that is causing HMV Group to close 60 stores across its HMV and Waterstones chains but heavy competition from online giants such as Amazon and iTunes as well as the supermarkets.

These analysts can talk all they like about competition from Amazon and iTunes however HMV is simply failing as a company, regardless of its market competition. Let me make the case here:Here is a photo of some West Wing DVD’s on sale at HMV. Firstly there is the complete series on DVD for £59 (reduced from £200). Along side this is the 3rd season and the 7th season, both retailing at £60 each.Similarly The Wire DVD collections, firstly the complete series was available for £69 (reduced down from £100) and then season 5 (among others) was available for £53.These werent the only collections with this issue as I saw the same thing with 24, CSI and House and other major US TV shows.Now the final bit of my story is the online story. The West Wing boxset on is £94.99 (and £50 instore) but season 3 and 7 on DVD cost only £9.49 (both are £60 in store). It is fine to compare this with Amazon and you will find the complete series for £40.86 but both season 3 and 7 are identical with HMV at £9.49.To conclude, any store that sells an item at 6 times the cost of it elsewhere (including its very own online store) is pretty likely to struggle and it only has itself to blame, and to allow this farcical pricing policy to be exposed to customers who are becoming more and more price sensitive (with VAT increases) almost drives me to the conclusion that HMV want to get out of the physical retail business entirely.

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January 9, 2011 Business, Games