The music retailer is on course to overtake Amazon as the UK’s biggest music and DVD retailer, just 18-months since its collapse. What’s behind the comeback?
It’s one of the biggest musical comebacks of all time and no I’m not talking about Kate Bush. High-street music retailer HMV says it is close to wresting the title of UK’s biggest music and DVD retailer back from Amazon as Britons rediscover the charm of actually going into a shop and buying a CD or a record.
Regaining its high-street crown would be a remarkable achievement for HMV, which went bust just 18 months ago, felled by the toxic combination of declining physical music sales, expensive shop rents and huge debts.
The stricken business was rescued by the little-known turnaround firm Hilco, which has also been involved with Habitat and Clinton Cards in the past. Its chairman Paul McGowan says the commonly held view that digital (music) was killing the physical “was never true”. “Only 30% [of music buyers] switched to digital – 70% of the market is still physical.” It’s only a “matter of time”, he adds, before HMV reclaims the top spot from Amazon, which banks 20% of UK music and DVD sales versus HMV’s 19%. Sales at HMV stores have increased nearly 14% in the past two months, including a 21% increase in sales of CDs and vinyl records.
Key to HMV’s resurgence has been an increase in live performances, with more than 300 acts ranging from Ed Sheeran to Megadeth pitching up in stores to plug their latest releases. The retailer says an expanding roster of live acts is a win-win, as Sheeranators, for example, are able to get up close and personal, while at the same time the mini gigs pull in extra punters and sales. They are also good news for record labels too, says HMV, with live performances able to make the difference between a No 5 album and a No 1.
With annual sales of close to £500m, HMV is half the size it used to be, with just 125 stores in the UK. Hilco closed loss-making stores and stopped selling iPads and tablets, instead returning to HMV’s traditional stomping ground of band merchandise such as T-shirts. It is now back on the expansion trail with new stores planned in the UK and Ireland, where the chain was initially shut down completely.
Hilco’s bid to return HMV to its glory days saw the retailer reopen at 363 Oxford Street, the London location of its first store, complete with retro neon “His Master’s Voice” sign last year. In 1921, music fans made do with the composer Sir Edward Elgar but this time round it was Sir Paul McCartney signing autographs. “All we are doing is making sure that when you come to our stores you enjoy the experience,” continues McGowan. “This is about being an authority in music, not selling music as a commodity.”