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Summary:

As the market for music on discs shrinks, struggling retailer HMV will try blurring online and in-store to beef up plastic. But is the initiative just designed to defend a fast-diminishing old business?

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HMV will introduce in-store pick-up for online purchases, as it tries to hold on to a plastic music market it forecasts will shrink by a fifth this year.

“The directors expect this trend to continue over the next three years as both physical music sold by internet mail order and digital downloads continue to take market share,” the UK music and entertainment retailer said, as it announced 19.7 percent lower annual sales and a £16.2 million ($25 million) loss on Thursday.

HMV has operated its own HMVDigital download store, powered by 7digital, since it bought half of the retailer and white label provider in 2009. But it has never presented any figures showing any success. 7digital lost HMV £700,000 last year, though is set to hang on to the well-thought-of operator, whose importance to HMV must actually grow as physical diminishes.

The company now plans: “Developing HMV’s online and multichannel offerings, particularly in light of the removal of LVCR (low value consignment relief), which will assist HMV to compete on a level playing field with pure internet competitors, and to offer improved services such as click-and-collect in stores.”

The UK’s LVCR had allowed tax-tree imports of CDs from Channel Islands-registered startups, but was abolished this April.

But both online sales and of and in-store pick-up for music CDs are two variants of an overall market HMV knows is shrinking to vanishing point.

Mostly, HMV wants to continue its recent strategy under which selling entertainment devices like tablets and smartphones – themselves bundled with music – becomes more lucrative than selling music itself.

Music and movie studios rescued the struggling retailer in January when they agreed to take equity in HMV rather than call in its unpaid fees for their disc shipments.

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  1. I think this is a great by HMV. i think we will begin to see more local companies doing this kinds of things in order to compete with online services. Many of these ideas are the core of VRM.
    We have developed blog.kleemi.com as a way for users to broadcast items they want to purchase from local vendors and as a way that vendors can invite users to pick up the items locally.

  2. EU Brainwashing Thursday, August 9, 2012

    The problem is what?
    * People like the immediacy of downloads,
    * Downloads are 24/7,
    * Downloads are direct to your device,
    * Downloads allow spontaneous purchases.
    * Strength of digital searching
    * Limitless catalogue
    * Digital marketing potential.
    * Many folk do not understand exactly how to load files from CD (or the web) onto their devices without just using iTunes and such.

    What is the advantage of a physical CD?
    * Price of downloads is no different – may as well have the physical CD.
    * Pleasure/pride of have physical object
    * CD’s can be re-sold/swaped
    * CD’s can regardless be save as files on a device
    * Artwork and info can be included
    * Purchasing experience can be ‘fun’
    * In store music experts
    * True ‘real world’ social interaction potential
    * CD’s are technically simpler to understand how to use

    So here is my solution for HMV – combine the two experiences. If a client buys on line have the file they purchased, and downloaded, available for them to ‘collect’ from the store, that is: burnt their file to a disc for them while they wait. Don’t send them the disc only allow it to be produced if they go to the store. Get the punter into the shop and they will make further purchases.

    A store burnt disc does not have to be a ‘replication’ of a specific artist’s CD album. It can be assembled from any tracks the purchaser has on their account and selects/requests. The store should have terminals where customers can go and select the tracks from their on-line purchases they want burnt to disc – store staff can help and guide. Artwork and insert info can be selected and printed. Store staff manage the production and assembly process handing a finished product to the customer.

    Make the store a ‘coffee shop’ style multi-media hard/soft digital/physical experience. Let clients go to the store and buy digital products in store if they wish and walk away with the file on a CD and, if they want, loaded onto their portable device (or waiting for them to log-on to their HMV account from home and accept the download purchased in-store).

    * Make a HMV store a ‘digital media resource centre’.
    * Train clients in-store on how to get the best out of their devices and all digital media technologies.
    * Form commercial alliances that will improve the service for the client.
    * Make everything about providing the best service to the client at the best possible price (H Ford style) and success will follow.
    * Make the experience alluring – Go to a (proper) * Apple Store (such as at Milton Keynes – it like visiting another world) to see how 21st century retailing can and should be done!

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