Ignorance Killed HMV and Blockbuster Not The Internet

hmv

So here we are once again in an all too familiar situation, more major retailers calling in the administrators. We’ve already seen Comet and Jessops bite the dust but this week two more retailers HMV and Blockbuster hit the buffers. Now over the last few days I’ve been reading a lot about the downfall of these two chains both from news sources and from social networks like twitter but I really don’t think the downfall is as straightforward as most are putting it. What I think is that the ultimate cause of the demise of HMV and Blockbuster is ignorance in the light of changing market trends and very very poor management. Allow me in this blog post to explain.

Let’s rewind ten years to 2003, HMV was one of the biggest and most respected record stores in the industry along side of course your Virgin Megastores/Zavvi’s and Woolworths’. In 2003 something major happened in the States that changed the record industry forever and that was the release of Apple’s iTunes Store. A year later the same store that allowed users to quickly and easily buy music without ever having to waste time in a record store queue again launched in the UK. Now before you jump the gun no I’m not saying that iTunes has killed HMV, yes digital downloads now make up a large proportion of music sales but what killed HMV wasn’t the digital download, it was in fact the failure to adapt to the changing landscape of the music industry.

We all saw the potential that the online market had, especially over the years when sales of MP3 players went through the roof and more and more mobile devices started to incorporate music players, we all knew how easy the Internet had made it to obtain music and how much cheaper the operating costs of online retail was when compared to the high street, so why on earth didn’t HMV? One thing is for sure, at some point between the original launch of iTunes in the US in 2003 and let’s say 2006 a board meeting took place and someone must have said, ‘Why don’t we look into providing digital downloads’ and for some reason or another they were shot down. I think this was probably the most critical mistake HMV made and the scenes we’re seeing today are a direct result of that decision. HMV did of course eventually try and then fail and then try again in a joint venture with 7Digital to launch a successful download store but this wasn’t until late in decade and in my opinion was too little too late.

Had HMV have reacted earlier when they truly were one of the biggest and most respected record stores in the land then perhaps they’d still have a future, albeit a more streamlined one with a reduced number of stores and lower overheads. They had the ability to be iTunes or to at least be the biggest rival in the UK to the iTunes Store but they missed their opportunity.

HMV did however try to recover by moving in to live music, namely the HMV Hamersmith Apollo, as well as cinemas with a Curizon opening in Wimbledon… Next door to the Odeon and the stocking of technological products such as headphones and tablets but this clearly hasn’t worked for them.

Something else was wrong though and perhaps not all of this was within HMV’s direct control and to realise what it was I had to think back to my last CD purchase which was The XX’s album Coexist. Now I’m a firm believer that CD isn’t dead, when I buy an album I like to have the CD, read through the booklet and have something to cherish, slightly ironic maybe though that I’ll then go home and rip the CD on my MacBook so that I can listen through my iPad or phone, but I’ll leave that one for you to ponder.

Coexist

So picture this, it’s the 5th of September 2012, I’ve been waiting for ages for new material from The XX and I want to go out and buy the album. I’ll take a look online at the prices and as what seems to be the norm these days HMV want a pound or two more than the supermarkets. No big deal though, for the sake of a pound I’d rather just go to wherever is more convenient. Now for me I can either drive to my closest HMV store in Wimbledon which is further away for me and pay an arm and a leg to park and then on top of that pay more for the CD, or drive to Sainsbury’s in Colliers Wood which is closer to me, has free parking and most importantly is cheaper. As you can see from the picture I went to Sainsbury’s.

I think my tale just goes to show the changing shape of the high street and it’s hurting the way businesses trade. Remember the days when you used to only go to the supermarket to buy foodstuffs like milk and horse burgers? Well that’s completely changed as supermarkets expand their offerings into things like clothes, electricals and entertainment often at very competitive prices due to their buying power. The other thing is that the high street is starting to become a more and more dire place to spend an afternoon. We’re seeing boarded up shops, high parking charges and angry pedestrians, most of which can be avoided by shopping in supermarkets or online.

Which leads me nicely on to Blockbuster. If we once again rewind 10 years Blockbuster had the biggest database of DVD and video subscribers. Then came the Internet from two angles. Lovefilm was pure genius. DVD rental managed online and mailed to you in a couple of working days. No stores, no late fees, minimal running costs, brilliant. The second was Netflix, we’ve over the last few years seen internet speeds increase and video codecs become more and more efficient with the advent of H264 and soon H265. Netflix took advantage of this brilliantly by offering unlimited movie and television show streaming for the very affordable price of £5.99 a month. Meanwhile Blockbuster sat pretty.

Blockbuster logo

As I said Blockbuster had the UK’s biggest database of subscribers and had they have made the jump to proper online streaming and worked on implementing a better postal service earlier we’d perhaps not be seeing them in the situation they’re in right now. They had the opportunity to become the biggest name in the online space, but they sat pretty and they missed it and now they’ve driven themselves into insignificance and they’re paying the price.

Am I going to miss Blockbuster? Probably not considering Netflix provide me with all of he motion picture content I need right now, if I wanted more I’d add a Lovefilm subscription to my monthly expenditure. Am I going to miss HMV? Well considering my last purchase from them was on Boxing Day 2011 and was a pair of Urbanears headphones and not a CD I probably won’t be missing them either. I’d much rather buy my singles from iTunes or Google Play and my albums from supermarkets where prices are often slightly cheaper. I guess the only bit of nostalgia I have for HMV is for their Oxford Street store where I’ve seen a number of acts perform live and sign merchandise.

My condolences are of course with those on the shop floors and in support roles at HMV and Blockbuster who have their jobs at risk but for those at the top managing each Titanic I have no sympathy, you did this and you are to blame for what’s happening today. Yes business is struggling on the High Street but both retailers had the opportunity to save themselves and failed to take it.

One final note to end on and a bit of consumer advice, I know a lot of you will have friends and family members who put hours of thought into buying you a HMV Gift Card. HMV have of course stopped accepting them rendering them near enough useless like for example this HMV branded ice scraper on eBay. What you can do however if the card was bought using a credit or debit card you can call your card issuer for a chargeback as you haven’t received your goods or if the card was bought from certain retailers you can take it back to them to have it exchanged for the store’s own gift card, more about that here.

If you don’t fall into either category don’t worry just yet. The same thing happened with Comet’s vouchers who were also administered by Deloitte who then changed their tune and allowed customers to use their cards.

As always I’d love to hear what you think about this all, do you agree with my comments or do you think they’re ridiculous? Most importantly though where do you think Moss and Roy will be stealing Grand Designs DVD’s from now when they bunk off work now that HMV are set to disappear? You can let me know in the comments section below.

Richard.

UPDATE: After assessing HMV’s financial situation Deloitte have announced that HMV will be honouring gift cards from Tuesday 22nd January onwards.

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Richard Lartey Written by: