Thursday, June 28, 2007

HMV in a hole, hires electric rotavator

We've had a lot of email today about the terrible performance of the HMV chain, where a combination of making its record shops like dark, miserable holes of unloved content and buying Ottakars book stores and making them as rubbish as they'd previously made Waterstones has seen their profits, erm, cut in half.

To be fair, the chain managed to grow its sales by 3.8% and still showed a profit of £48.1m (if you don't count "exceptional items"), so it's not quite pulled a Tower yet, but it's been enough for the company to run around squawking. Indeed, FeatherBoa emailed us with what might constitute one of the four horsemen of the retailing apocalypse - Gennaro Castaldo speaking softly on Channel 4 News at lunchtime. No word as to if he'll be on the main C4News tonight, but here's hoping.

There are plans to turn the chain around:

"Our markets are changing profoundly," chief executive Simon Fox said.

"Entertainment is being generated and consumed in entirely different ways putting pressure on traditional retail space and traffic."

He added that efforts were under way to "reduce our dependence" on the sale of physical music such as CDs.

These efforts include selling digital downloads in store and continuing to expand its online business.

As James P responds:
They really want us to close the laptop, drive into town and download our
music in HMV, don't they? The story mentions the supermarkets undercutting HMV on Top 40 albums, and yet HMV still aren't twigging that this is the bit where they say "Ah, but what if you wanted your favourite band's early stuff? Or something by that artist that the band mentioned in an interview, but who doesn't seem to get stocked in Asda?". It's almost as if stocking CDs has become a chore for HMV, and they're using these profit-dips to justify a move from record store to download-outlet. One day, the only CDs we'll be able to buy will be 'Classic Gold' compilations and 'Sad Songs Vol 25'.

But it gets worse. Like many companies struggling to compete in the 21st century, it sees its salvation lying in Web 2.0, reports Paid Content:
”Delivering film, music and games-related content to its online community, our new site will allow users to create home pages, meet like-minded people and access film previews, behind-the-scenes footage and music performances.”

Which is a unique selling point shared only with every other website in the world. There's no suggestion of anything that might be unique to the HMV site which might persuade people to do their social networking there rather than elsewhere; and we suspect that HMV haven't got anything up their sleeves. Sure, they might be able to pull a couple of bands to do exclusive sessions for them alongside a physical in-store, but is that enough to make their site sticky enough to get people to stay and buy stuff?

They are going to off DRM-free downloads for sale - but only the same ones already available for purchase elsewhere, the EMI and some indies which make up the 'enhanced' iTunes offering; they could sell them for less, but don't seem inclined to.

Oh, and if you have tears, prepare to download them from your ducts now. There's this idea, too:
It expects digital music players and digital radios will account for 13 percent of store sales by 2010

The chains which have a tradition of high street sales of tape players and wireless sets, the Currys and Comets, are having trouble making these a significant segment of their business, much less turning a profit on them. Without the room to offer a decent sized range of DAB radios, and the already-announced plans to try and turn the stores into coffee-flogging youth clubs, do they really think they're going to be able to turn more than a pound in every ten they take across the counter from selling hifi equipment?