Blame the internet!

We’re not even 3 weeks into 2013 and we’ve already seen Jessops go bust and HMV fall into administration. And that’s on top of Comet collapsing in the run up to Christmas, and other high street brands such as Zavvi and Woolworths fall by the wayside since 2008.

What caused these businesses to fail? Isn’t it obvious?

Clearly it’s all the internet’s fault!

Or at least that’s what the music industry would like you to think. There’s an editorial piece on the NME website that blames Amazon for the downfall of HMV. Really? Really really?  The downfall of HMV, and in fact Zavvi,EMI and the music industry as a whole is not down to the rise of the internet behemoth Amazon. Nor is it the fault of Apple and iTunes. No, the blame lies squarely at their own door. They became too big, too bloated and so stuck in their ways that they were not flexible or adaptable to change.

Who remembers the 90’s? Do you remember what music used to cost? As a quick refresher, a CD single used to cost £3.99. A standard CD release would cost between £11.99 and £15.99! Seriously! When was the last time you paid more than £10 for a non special edition version of an album? Yes, these were the glory days for the music industry. More and more people had disposable income and record sales boomed… with record profits. And obviously the artists profited spectacularly through this period. Erm… well some did. So, who made the money? The record labels and the stores of course. And they were all powerful!

So what did they do? Absolutely nothing. By the late 90’s the internet was on the rise and flexible online retailers with less overheads, such as Play and Amazon were starting to emerge. Rather than embrace and invest in digital channels and platforms, they just stuck their head in the sand and dismissed online retailers as a dot.com fad that would eventually burst. When HMV entered the online retail space they were so far behind, with an inconsistent pricing model, and, wait for this, postage charges, they were never going to catch up.

And then they slit their own throats. Look at all those nostalgic photos of HMV doing the rounds? People browsing record stores? People listening to music at listening stations? People at instore performances and signing sessions? Clearly there is an experiential element to visiting a record store. Consumers are happy to buy music in a shop like Rough Trade, not because it’s more expensive than the internet, but because it’s such a great experience to shop in Rough Trade. So, what did HMV do? They hauled out those  A-Z CD racks, moved them upstairs or to the back of the shop, put discounts and promotions at the front of the shop and filled the free space with DVD’s, t-shirts, electronic goods and games… and effectively killing the record store experience that consumers craved. And not only had the killed the experience, they had replaced the experience with products that were also dying out thanks to online channels.

I read the other day that the founders of Play were terrified of the day that HMV turned its guns on them. But the day never came. Play went from strength to strength and just days before HMV fell into administration, Play announced that they were winding down their entertainment retail offering, not because they are in trouble, but because the business is changing and Play is moving into  delivering product to its customers via digital channels.

I feel incredibly sorry for the staff at HMV, and also for those who have vouchers that cannot be exchanged, but let’s face it, HMV has had this coming for a long time. If your business does not adapt to the market and the needs and requirements of your customers, your business is doomed to fail. It’s no coincidence that traditional high street retailers such as Dixons Group and Argos had a good 2012, considering the way that they were able to blend an online offering into their offline brand. The Argos click and collect model where you can pay and reserve purchases online would have been perfect for HMV. I remember browsing the HMV website about 10 years ago, looking to buy  Kill Bill vol 1. It was advertised on a special offer of £10.99. Wow! I thought. I’ll just pop along to HMV and pick it up tonight. Only to discover that it was £4 more instore. Did I buy it? No, of course I didn’t. In fact, I went home and bought it on Play.com…

 

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4 responses to “Blame the internet!

  1. Couldn’t agree more with this post. Further I’d say that the over saturation of the same stores across the country has meant UK shoppers are bored of going to the high street.

    There is no USP in hardly any of the town centres in the UK. Rough Trade is great because it is unique. HMV is the same no matter what city you go to. In fact Oxford Street had two on the same street.

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