Entertainment retail giant HMV may be entering its final days.
The chain, which began as a disc manufacturing business in 1921, has struggled to keep pace with online retailers. It has now entered administration and, although it will continue to trade while a potential buyer is found, as many as 4,350 jobs could be at risk.
HMV is the latest in a string of so-called High Street ‘casualties’, the rate of which has spiked as quarterly rent payments have come due. In just six weeks Comet, Jessops, and HMV have all collapsed, with the potential loss of a total of 12,000 jobs.
The news is the latest in a series of supposed blows for the High Street. But whether you will mourn or applaud the loss of HMV, its failure has lessons for your business.
1. Staying still is not an option
The general consensus is that HMV failed because it could not keep up with the changes wrought by online retail. In fact, the chain took some major steps to combat this threat, including pioneering the discount model that has come to define High Street entertainment retail.
But HMV moved too slowly. It, like much of the music industry, was wedded to its old business model and, through a mixture of cumbersome management structures and the sheer problems of scale, its attempts to head off disaster were far too little too late. Even a giant the size of HMV cannot hold back the tide of changing consumer preference – and it is therefore utterly vital that you develop comprehensive means by which you can listen to your customers and incorporate their wishes into the very heart of your planning.
2. Independents can still be kings
HMV’s demise might seem like a symptom of the general demise of the record industry. Indeed, the loss of such a major outlet will undoubtedly hit distributors and labels. But on the retail side, things may be looking up for independents.
Many independent retailers are struggling to keep up with rising rents and suppressed consumer spending, but others are finding that their independence is in fact working for them. HMV’s travails have found their opposite in the burgeoning success of smaller record shops like London’s Rough Trade – independently owned outlets that have positioned themselves as David competitors to the chain store Goliaths. The success of Rough Trade contains lessons for all small retailers. Read more about making your independence work for you here.
3. Brand equity is important
Finally, it should be noted that HMV is not without assets – and perhaps the most important of these is the brand itself. HMV has built up a serious cachet of goodwill over its long life, as can be demonstrated by the outpouring of ‘HMV memories’ on Twitter today. HMV will likely continue in some guise, simply because the brand is probably too strong to die. With a combination of that brand equity and a forward-thinking management strategy, HMV could have had some years left in it – demonstrating the importance to every business of a properly considered long-term branding strategy.