During the recession, a number of popular high street retailers entered administration and vanished from town centres nationwide. Fortunately, entertainment brand HMV was saved from this fate and has now seen its popularity skyrocket – in fact, it is poised to take over Amazon and reclaim its title as the UK’s number one entertainment retailer.
Less than 18 months ago, turnaround specialist Hilco stepped in to rescue the ailing brand, thereby saving 125 stores and a total of 2,500 jobs. Although financial difficulties were certainly a factor in the chain’s initial administration, Hilco has claimed that the brand had been profitable “since day one” and has therefore seen strong results during the ensuing turnaround period.
HMV chairman and chief executive Paul McGowan is adamant that the brand will continue to set its sights on growth.
He says; “It’s only a matter of time before we overtake Amazon.
“HMV is 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.”
Hilco’s turnaround strategy has largely focused on encouraging consumers to reignite their passion for music in a physical form rather than simply downloading or streaming their favourite tracks online. In order to do this, HMV stores have played host to more than 300 events nationwide, with stars such as Ed Sheeran and Megadeth frontman Dave Mustaine making personal appearances to greet fans.
According to analysts from Kantar Worldpanel, this technique has worked, with the retailer managing to reclaim customers from supermarkets and last month becoming the second most successful firm in the British entertainment retail market. Furthermore, during the past two months, like for like sales have climbed by 13.8 per cent, buoyed by a 21 per cent leap in CD and vinyl sales.
Kantar Worldpanel analyst Fiona Keenan says; “HMV appears to be making a comeback on the high street following a strong performance over the past quarter.
“It has increased its share of the entertainment market from 13.6 per cent to 14.7 per cent – a significant improvement on its record low of 10.7 per cent following its administration last year.”
HMV’s resurgence coincides with a 3 per cent surge in physical music sales in the year to June, indicating that it has indeed played a role in demonstrating the benefits of CDs and vinyl to customers. Yet winning consumers from supermarkets is one thing: locking horns with Amazon is an entirely different prospect, as the e-tailing powerhouse controls a huge market share consisting of literally millions of consumers from across the globe.
As HMV lost a number of stores during the administrative period, it may struggle to compete with the overwhelming market dominance it faces. Yet should HMV succeed, it would represent one of the greatest turnarounds ever seen on the British high street and prove heartening for those struggling to revive town centres nationwide.
