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Innovative retail is required


As HMV launches a new digital music service to challenge iTunes’ dominance of the market, new research suggest more and more entertainment retailers should see innovation as the key to improving sales.

Entertainment retailers on the high street have seen sales remain steady in the first half of 2010, but by exploring new methods they could ensure they are doing more than just treading water.

Research from the Entertainment Retailers Association (ERA) found sales of music, videos and DVDs “were surprisingly resilient” between January and the end of June, with year-on-year music sales increasing by 1.7 per cent in volume and 0.4 per cent in value.

Innovation was said to be a key driver of these steady - if not rapidly rising - sales, with trading of the new high definition Blu-ray discs 81.3 per cent up on last year and album downloads increasing by 34 per cent.

The area appearing to weigh down the entertainment retail sector is video games. Sales volumes were down by 12.5 per cent and sales values also dropped by more than ten per cent, meaning overall trading for the entertainment market for the first six months was down three per cent year-on-year to £1.886 billion.

Game’s performance of late is proof of the ailing computer game and console market, as it recently announced that total group sales were down by 11.4 per cent in the 19 weeks to June 12th.

Companies in the entertainment sector are not standing still though, and HMV is hoping it can turn round its fortunes with new digital music service,

It is an attempt to take some market share from Apple’s iTunes, which has been a phenomenal global success and saw the number of songs purchased and downloaded from its site pass the ten billion mark in February. HMV’s new portal, which was designed by 7Digital, is part of its target to broaden its brand offering and allows consumers to download music faster and more easily than its current website.

Another reason for the venture is the plummeting CD market, as ERA data indicates that UK CD album sales were down by more than nine per cent year-on-year in the six months to June.

However, HMV may find it is fighting the wrong battle.

Retail Analyst at Ovum, Adrian Drury, questioned whether the decision by the entertainment retailer to develop this area of its digital offering is in line with where the market is actually moving.

“It could be a little late,” he told Retail Gazette. “Streaming on-demand music via the internet with services such as Spotify is the way things are going. It is unlikely HMV’s new venture will revolutionise the download market or take a significant share of iTunes’ audience.”

Although suggesting that the move will be a valuable part of HMV’s corporate learning process alongside its foray into live entertainment, Drury said: “HMV has two choices if it wants to prove successful in the current online music space; either act as an affiliate to a music streaming site like Spotify or build its own on-demand service.”

Other entertainment retailers which may be considering ways of improving trading levels in the year ahead, such as the aforementioned Game which now has a new CEO in Ian Shepherd, should ensure any new avenues they choose to walk down are ones where consumers want to be.

Published on Monday 26 July by Editorial Assistant

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