In July, guest contributor Roger Hyslop commented on the slight improvement of the once dominant retail icon, HMV, since Hilco rescued it from administration. It had almost collapsed twice as it “missed the online boat”, but now had the chance to recover if it acted fast, although Hyslop still doubted HMV’s ability to catch up with the online retail giants who had left them in their wake.
Last month, Richard Maher reported on the continued resurgence of the high street entertainment retailer, as its UK market share increased from 13.6 to 14.7 per cent (down from a record low of 10.7 per cent following administration). In doing so, HMV overtook many of the online competitors who appeared to have “murdered” it previously, sitting in second place only behind giants Amazon.
Now, HMV looks set to regain the top spot, completing a miraculous recovery since Hilco acquired it less than 18 months ago. Like-for-like sales are up 13.8 per cent in the last two months, with a 3 per cent increase in total sales in the year to June, and this strong growth is set to continue.
HMV’s chairman, Paul McGowan, said it was soon to surprass Amazon as the biggest retailer of CDs and DVDs. According to McGowan, the secret has been “re-engaging with music shoppers and getting them back into shops. This is about being an authority in music, not selling music as a commodity”. An example of this new approach has been the increased focus on live performances from artists (including Ed Sheeran), with more than 300 events held in store.
When Hilco bought out HMV in April 2013 it saved 2,500 jobs and 125 high street stores in the process. The secret to HMV’s renewed success has been harnessing its huge brand recognition with an acknowledgement of its failures to keep up with changing developments in the world of retail. Founded in 1921 and a long-time staple on British high streets, HMV continually failed to compete with online retailers such as Amazon and was eventually forced into administration.
In contrast, Amazon continues to record losses as share prices have dropped in response to the retailer’s failure to record consistent profits. The constant reinvestment and long-term focus of chief executive Jeff Bezos has prevented revenues of almost $20 billion being converted into profits, with net losses of $126 million recorded for the second quarter of 2014. Nevertheless, if Amazon fulfills its ambition of becoming the dominant retail giant, HMV could yet again struggle to compete.