HMV’s recent demise was hardly a surprise. The writing has been on the wall for so long that it’s been painted over and graffitied many times since.
If we rewind ten years to 2003, the conversation around retail was focused on the importance of the web, and although not all major retailers had made the move to reinvent their web presence, it was on the agenda.
In many cases this move took some time to happen and latecomers lost market share and revenue opportunities… but those up against the online leaders such as Amazon (launched 1995) and Play.com (launched 1998) lost much more. They eventually lost a business.
According to the FT and research company Verdict, HMV’s share of the combined music and video market, defined as physical and downloaded products bought on and offline, was 22.2% in 2012.
HMV’s market share and its sales peaked in 2009 following the closure of Woolworths in 2008. Its market share remained steady for the following few years, despite falling sales, as other competitors such as Zavvi fell by the wayside.
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Administration may not have happened quickly, but the trajectory was clear. The evolution necessary to avoid this path was plain, but the action was slow. We are now seeing the end result of this cycle.
There are many other issues to consider in the case of HMV, such as the constantly moving music/media sales industry. This has perhaps led the way in retail digital sales since Napster came on the scene, and the ongoing row about tax loopholes that Amazon and Play.com took advantage of for many years.
However, the wider issue is not just focused on HMV alone. Hindsight is a wonderful thing, but as ever there are lessons to be learnt and the evolution is continuing.
Retailers that have survived the first digital coming, now need to be aware that the need for change isn’t over, and the pace and variety of changes linked to digital are only building.
Today a flexible, engaging and easy to use sales-driven website and wider community is a must for retailers. But the evolution has gone beyond separating online and offline customers.
Modern customers do not just live in online or offline worlds, they cross the divide everyday and most importantly, they expect to remain connected and enjoy the benefits of an online experience while in-store.
This has seen a focus on setting up accessible Wi-Fi networks in-store over the last few years, and those that are late to this evolution will quickly be left behind.
The UK population loves to be connected. According to Ofcom’s International Communications Market Report, consumers in the UK spend the most online, an average of £1,083 a year, compared with Australia which spends the second highest at £842.
16% of all web traffic in the UK is from mobile devices, which is more than any other European country. This means that all in-store shoppers need to access the web is a stable connection, and retailers are catching on to offer free access and provide shoppers with useful content, offers and reasons to engage to reward them for shopping in-store.
The line between online and offline is continuing to blur, and the next set of administrations from major retailers may well be those that still live in a separated offline and online world.
Retail customers expect to be connected at all times, and to compete High Street retailers need to enable them, otherwise they, like many before them, will also lose their business.