HMV has been a common sight on UK high streets for many years. Established in 1921, it built its reputation on stocking the latest entertainment – from the early days of sheet music, through the ages of gramophone records, to cassettes and videos, CDs and DVDs and then MP3 players.
HMV’s financial woes weren’t borne out of a failure to keep up with the times. In fact, its digital function – though not troubling Amazon – was performing well, making up around 50% of the business and catering for consumers’ desire to download MP3s for use on multiple platforms. Its issue lay in its unwieldy high-street presence of over 200 stores which sold CDs and DVDs at prices which could not compete with online stores like Amazon, and the ‘stack ‘em high, sell ‘em cheap’ business model of supermarkets.
In the modern marketplace where the economy is on a knife-edge, a widespread physical presence with all its overheads can be burdensome. HMV racked up debt of £176.1m and was only ever going to rise. Neil Saunders, Managing Director of Conlumino, the retail consultancy, commented, “By our own figures, we forecast that by the end of 2015 some 90.4 per cent of music and film sales will be online.”
Thankfully for the high street, HMV employees, music and entertainment lovers, the brand strength and underlying business made HMV good enough to save. The interesting part now is going to be the way in which HMV restructures to maintain high street stores whilst competing with online retailers.
Other industries – car sales for one – have demonstrated that physical showrooms or shops don’t need to be stacked with stock in order to create successful business model. Music might not be a high value commodity; in fact it can be considered an impulse buy in many cases. Offering customers the digital experience may nonetheless be the way forwards for the beleaguered bricks-and-mortar store.
Think about this hypothetical scenario: you’re wandering down the high street doing a bit of retail therapy. The last shop you went in had a song you liked playing, so you use an app on your smartphone to find the name and artist for future reference. Popping into a recently re-launched record store, you see a small selection of chart CDs, Bluerays, video games, MP3 players and band merchandise. But unlike the last time you came into the shop, there are touch-screen consoles dotted around the shop floor on which you can browse the entire catalogue of music available.
Flicking through to the song you found earlier, you’re given the option of buying now to download at home later via a simple sign-up and log-in system, or using the store’s wi-fi and your credit card to get it immediately. Downloading the song there and then, you decide that whilst in-store you may as well order a couple of DVDs to be delivered for the weekend and pre-order that album you’ve been waiting for – seamlessly mixing the on- and offline shopping experience.
Even without our illustration, touch screen displays which enable consumers to undertake research and make choices in-store are already a powerful tool being used by some car dealers. They keep a customer on location, adding to the possibility of them transacting there and then, or at least gaining a better understanding of what’s available for future reference.
The experience of shopping in person is still relevant, despite the rise of eCommerce. Adding a digital element to the physical experience, however, is a clever way of appealing to consumer buying behaviour.