HMV - Was it inevitable or do you blame the management?

Discussion in 'Growing and Managing a Business' started by MarkTaylor, Jan 16, 2013.

  1. MarkTaylor

    MarkTaylor
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    I have a lot of affection for HMV - a company with a tremendous history, that won the High Street battle (beating the likes of Woolworths, Our Price, Virgin, etc) but still went down the pan.

    I guess they were subject to so many competitive pressures - online retailers, cut price supermarket offerings, digital downloads - that it could be seen as inevitable. However, it could also be argued that it's the directors responsibility to monitor and respond effectively to such trends...

    So, was the demise of HMV the inevitable result of a changing retail landscape or were the directors at fault?

    Interested to know what you think...

    M.
     
    #1 MarkTaylor, Jan 16, 2013
    Last edited: Jan 16, 2013
  2. Fergal

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    I agree with you Mark, in that I would say it was both. The business changes / trends that you mention such as increased online sales, meant that HMV's business model of retailing music, movies and games on the high street was unsustainable. But the directors of the company should have seen that coming and either diversified into another profitable business, or closed the business before it got to this point. Obviously it's easier said than done, but I'm sure they were very well paid for their expertise.

    One group I do feel sorry for is the people who got HMV vouchers for Christmas presents. From what I hear on the news, HMV may not be going to honour these. Plus I feel sorry for the shop staff, losing their jobs, during these difficult times, when it is not easy to find another job.
     
  3. Mark T

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    Was there no contingency planning within the company for this kind of situations? I think every company should have a contingency plan and in my own view - it is not just the directors fault but the whole management's fault by failing to create an contingency plan not only to their productions and services but to their staffs as well.
     
  4. MarkTaylor

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    I've been tracking them since around 2006. I remember texting a colleague saying that I was alarmed to see the share price slip to £1.20... A few years later, it stood at 5p then 3p - imagine buying a house for £120k and then having it valued at £3k! no real difference. Even in 2006, I felt they were being slow to respond to the digital / online (and other) threats and they did try to diversify by buying into Waterstones, but digital books have been around a while so I am not sure what they hoped to achieve with this move. I wrote to the directors with the results of an MBA project recommending they enhance the instore experience, gravitating towards a kind of cafe where you go to buy music. They had some sympathy for this point of view but hinted that their main strategy was low-cost, high street retailer. I think there are some analysts that believe it is a viable model if they reconfigure their retail footprint. I hope this is the case, but it is hard to see high street retailing being anything other than tough...
     
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  5. pete.mcal

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    Some great points being made here. I think that HMV the media retailer had been destined to lose to the changing consumable media retailing landscape for a while. However HMV as a company didn't necessarily need to go bust.

    A lot of people assume they sat back and did nothing. That is not the case. They invested heavily in live music buying MANY live music venues, becoming a ticket vendor, they even opened a cinema in their Wimbeldon branch!

    I think they tried to juggle changing their market/brand whilst keeping their core business too slowly and the carpet was dragged from under their feet. If they have adapted radically it could have failed on the spot, but it's better than a slow painful death. Or is it? :p
     
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  6. Fergal

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    I heard that acquisition discussed on the radio business news. It is very surprising that they made that business move. Book shops were experiencing the same challenges being faced by the music industry and they were losing a huge amount of their sales to Amazon. It is difficult to understand why HMV would have purchased a business experiencing the same threats as themselves.


    The drop in property values as a result of the recession probably hit them hard on those asset values.

    There is a HMV store in my home town and it is sad to see them go. They are actually the last record store in the town, although the major supermarkets sell a small selection of music.
     

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