It is too easy to say that a lack of a coherent digital is what killed HMV, Comet and Jessops. Too easy, but at least partly true. As this article by Philip Beeching on Guardian.co.uk shows, the senior management at HMV refused to understand the inevitable, even when it was presented to them in 2002. He claims that, at an advertising pitch he made:
The relevant chart went up and I said: “The three greatest threats to HMV are, online retailers, downloadable music and supermarkets discounting loss leader product.”
Suddenly I realised the MD had stopped the meeting and was visibly angry. “I have never heard such rubbish”, he said, “I accept that supermarkets are a thorn in our side but not for the serious music, games or film buyer and as for the other two, I don’t ever see them being a real threat, downloadable music is just a fad and people will always want the atmosphere and experience of a music store rather than online shopping.”
Under Simon Fox, now CEO of Trinity Mirror, HMV had at least tried to address some of these threats: but they had already ceded too much ground to players such as Amazon, iTunes, LoveFilm, and a host of others. One of those others was Play.com. In the same article, Beeching records that:
[I remember] Richard Goulding and Simon Perrée who started the highly successful online games, music and video retailer Play.com in 1998… saying to me: “We were just waiting for HMV to turn their big guns on us but we just kept on going and getting bigger and bigger, and thinking they must be going to get their act together soon and come after us but they never did.”
Of course, Play.com has been effectively closed by the big guns of HMRC, but not until long after the founders had sold the business for £25m to Japanese retailer Rakuten. It’s a salutary lesson; knowing when to get out is at least as important as knowing when to expand.
Steve Hawkes, in the Sun, notes that by 1976 – after 55 years of trading – HMV was the UK’s biggest music retailer with 35 stores. Twenty years later, it had over 300 stores, following a spending spree fuelled by EMI and venture capital partners Advent.
This was at a time when Our Price and Virgin were also competing heavily for High Street space, all buying up independent record stores and creating new ones; stores expanded, their numbers grew, landlords rubbed their palms, and a bubble was created. With such saturation in the High Street, it was a Mexican stand-off: each was trying to outgun the other. Unfortunately for all of them, e-commerce and downloading constituted a complete revolution in trading conditions. HMV’s demise could be the last gasp of a retail sector which will now probably only survive in a much reduced format.
Maybe it will not be too long before HMV be the largest music retailer in the UK – and once again, with 35 stores. Maybe, all along, that was its natural size.