When HMV opened its first store on London’s Oxford Street in 1921, it kick-started the company’s journey to selling music and film to the masses and becoming an iconic entertainment brand – both in the UK and abroad.
However, the struggle to stay afloat on the UK’s high street became evident back in January 2013, when a period of decline saw the retailer collapse into administration – placing 4350 employees at risk of redundancy.
The following April, restructuring firm Hilco came to its rescue with a £110 million deal despite HMV having £176 million in debt – including £20 million in tax owed to the HMRC.
Just five years later though, HMV filed for a second administration. When it collapsed again a few days after Christmas 2018, Hilco blamed the “tsunami” of retail competition that HMV faced.
Rick Smith, managing director of insolvency specialist Forbes Burton, said HMV “simply had too many unprofitable stores, not offering anything new and not reacting to the changing retail landscape as quickly as they should have done”.
“There is also the high rents and business rates that are still strangling many businesses on the high street,” he told Retail Gazette.
After it fell into administration, the future of HMV remained uncertain for several weeks as several suitors – including Sports Direct’s billionaire founder Mike Ashley – came forward with rescue bids.
In the end, the winning bidder was Canadian music retailer Sunrise Records and its owner Doug Putman, who acquired HMV for an undisclosed amount in February. While his rescue safeguarded almost 1500 jobs and 100 HMV stores, redundancies from around 20 store closures – including the iconic London flagship on Oxford Street – were pursued.
“Putman certainly knows what has to be done to ensure that his ownership of HMV produces positive results”
Fast forward eight months, and Putman was in the UK to celebrate the opening of HMV’s new The Vault flagship store in Birmingham last week. The news grabbed headlines not just because One Directioner Liam Payne performed on the opening night, but also because The Vault was dubbed the biggest music retail space in Europe combined with Putman’s ambitions to open more new HMV stores on the UK’s high streets.
The news also raises questions around the relevance and credibility of HMV, as well as Putman’s ability to rejuvenate the iconic retailer.
Smith believes Putman “certainly knows what has to be done to ensure that his ownership of HMV produces positive results”.
“The businessman has shown vision in what he wants to achieve and is passionate about the music industry,” he said.
“His ownership is off to a good start by investing in the Birmingham flagship store and he certainly seems to be willing to do what it takes to turn around HMV’s fortunes.
“Time will tell whether his future and the future of the company is successful.”
Retail analyst Graham Soult agreed, adding that retailers that have been rescued in the past were scooped up by “passionate” leaders.
“If you look at some of the success stories of struggling retailers that have come back from the brink, it’s often because you’ve got somebody involved who is really passionate about the product,” Soult told Retail Gazette.
“When James Daunt saved Waterstones, he oozed enthusiasm for books and that has seen Waterstones do a lot better.
“Having somebody in charge of HMV who is actually passionate about the product, rather than someone or some company that is more just about the numbers and spreadsheet, is the way to go with it.
“Of course any business has to make money, but I think if you’re trying to rejuvenate a brand and appeal to people’s emotions and senses, it needs someone who really gets it.”
Undoubtedly, Putman is experienced in the music retail business.
In 2014, he acquired Canadian record store chain Sunrise Records, then in 2017, he acquired HMV’s Canadian business. So it came as no surprise when Putman won the battle against Ashley to scoop up HMV in February this year.
Despite CDs and DVDs being in steady decline since the rise of online retailers and streaming devices such as Spotify and Netflix, Putman appears to be capitalising on in-store customer experience initiatives – and the resurgence of vinyl – in order for HMV to bear fruit.
“Vinyl has already started making a comeback as many people want to reconnect with a more tangible product and vinyl fits the bill,” Smith explained.
“Vinyl has already started making a comeback as many people want to reconnect with a more tangible product and vinyl fits the bill”
“There has always been a strong audiophile group that have bought vinyl and now that is reaching a wider audience.
“Whether this group is large enough to save HMV is another question and only time will tell.”
Meanwhile, Meredith O’Shaughnessy, creative strategist at creative campaign specialists Meredith Collective, argued that HMV “needs to make sure it is offering more than just a space to sell vinyl”.
“HMV needs to think in a broader sense – how it can create a sense of community around music,” she told Retail Gazette.
“HMV’s declining sales weren’t primarily down to an unsought offering of physical music and TV, but its competitive prices also let it down.”
Dr Steve McCabe, associate professor at the Institute for Design and Economic Acceleration of Birmingham City University, argued that HMV was “a victim of the fact that the products it largely sells, can be purchased online for cheaper”.
“As all retailers will attest, selling product from high street stores is expensive in terms of rent, staff, storage of the range of stock and all other ancillary costs,” he explained.
“If HMV is to have any chance of success, it has to be distinctive in a way that online retailers cannot be.”
Indeed, with a footprint of 25,000sq ft, HMV’s new store in Birmingham stocks 100,000 LPs and CDs, 20,000 Blu-ray and over 40,000 DVD titles. It also offers a large performance area at its centre.
Soult said buying, downloading or streaming music online doesn’t offer the same atmosphere that can be created in the physical space – suggesting that HMV’s new store could be an advantage for its business.
Although the singular experiential-focused flagship is unlikely to revive HMV as a business, it could be enough to start a conversation and change consumer perceptions around what can be expected from physical retail.
Today’s climate may not inspire confidence in the future of HMV, but physical music and film offerings can still appeal to the market with the right marketing tactics and ongoing investment from Sunrise Records.
And while vinyls are providing a sense of nostalgia, HMV can capitalise on the new generation’s curiosity by extending its offerings, and turning regular stores into destination stores.
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