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Retail

HMV to close 60 stores as UK sales fall 13%

Wed 05 Jan 2011 8:00am GMT / 3:00am EST / 12:00am PST
BusinessRetail

UPDATE: Poor Christmas and slow entertainment sales during year hit High Street retailer

Entertainment retailer HMV is to close 60 stores in the UK following a poor Christmas period that saw sales drop 13 per cent.

Sales of entertainment goods have been weak in the financial year to date, said HMV, which also blamed poor weather conditions over the holiday period. For the five weeks to January 1, like-for-like sales were down 12.9 per cent on last year, and down 13.3 per cent for the 10 weeks to January 1.

"Whilst HMV has had a challenging year to date, it remains a profitable and cash-generative business and a powerful entertainment brand," said CEO Simon Fox.

"The pace of change in the markets in which we operate underlines the urgency with which we must continue to transform this business."

HMV added that it expects to miss profit targets for the full year of between 46-60 million.

In December last year the retailer said that the games sector in particular had underperformed during 2010.

Data from UKIE and Chart-Track released yesterday highlighted that the market for boxed videogame product has fallen by almost 30 per cent in the past two years.

Christmas sales from High Street rival GAME are due to be announced next week.

UPDATE: HMV has issued a statement to GamesIndustry.biz stating that the planned closures are not a sign that the company intends to pull out of the entertainment business.

"We are actually talking about a relatively small number of stores across HMV and Waterstone's chains - less than 10 per cent of our combined estates, which are likely to be located primarily in large-city conurbations and may be in close proximity to each other - thus resulting in a degree of duplication in relation to local demand," said a representative.

"The vast majority of HMV stores around the country will not be affected, and we will look to ensure that the specialist offer and service that we make available to our customers in these locations is maintained."

"Likewise, we will look to redeploy any affected staff where we possibly can. This move in no way signals any intention to pull out of entertainment retail, which remains at the heart of our offer, and is ultimately aimed at safeguarding our core business as we continue our transformation into a broad-based entertainment brand that now also encompasses live music venues and festivals."

23 Comments

I bought Toy Story 3 from HMV this Christmas. I think that was the only thing I bought from there all year, actually. Games from Amazon, occasionally Game or Steam for PC, never buy movies anymore, tending to rent them on iTunes.

Yep, I can't see much use for HMV other than to browse!

Posted:3 years ago

#1

Adam Campbell
Studying Games Technology

101 0 0.0
God, that's a bit drastic. Though they probably have an insane number of shops.

Posted:3 years ago

#2

Nick McCrea
Gentleman

177 217 1.2
It's tough to think of a more challenging set of products to sell in the digital age as a brick-and-mortar retailer - games, DVDs, music, and books (via Waterstones). Just a few years ago HMV were convinced that games were their ticket out of the doldrums, guess that's not working out particularly well.

Posted:3 years ago

#3

James Prendergast
Research Chemist

730 411 0.6
I was working at HMV during the Christmas period of 2009 and they did quite a brisk pace of business on their video games and consoles. The main problem was (from my perspective) that their games were not priced competitively, even with the likes of GAME on the same street. Comparing that with how they discount their DVDs and CDs or match prices with other retailers shows that there might be a disparity in how the upper-"part" of the company view the different forms of entertainment. Stock was also usually pretty low too.

However, their hardware bundles were pretty good value - though, as above, stock was usually an issue and they were sold out within a week of getting in (or promoting) a good bundle.

Posted:3 years ago

#4

Kingman Cheng
Illustrator and Animator

943 157 0.2
I don't remember the last time I bought from HMV....

Posted:3 years ago

#5

Matthew Hill
Head of Recruitment

75 26 0.3
Firstly this is sad but not surprising news. Best of luck to those affected by this news.

Some good observations above, In my view Simon Fox (HMV CEO) has actually done a pretty decent job but it appears the pace of market change is making things incredibly tough.

Online - HMV missed a real opportunity to establish itself as a leading online retail destination 5-10 years ago. This predates Simon Fox and frankly is unforgivable.

Store Count - I have 3 huge HMV branches within 5 minutes walk of my office. In addition there are another 4 branches in Glasgow plus two HMV owned Fopp stores. Surely some scope for trimming which arguably could have happened sooner.

Digital Distribution - has slashed sales across ALL HMV's core categories (DVD, Games, Film, Books). This will only continue. Again HMV missed a major opportunity to establish itself as a leading online destination for entertainment.

The tragedy is HMV have an excellent brand - the steps they should have taken to protect and grow their business should have been taken a long, long time ago. While these may not have saved high street jobs it would ensure HMV was in a much stronger position.

Posted:3 years ago

#6
Sad news. I have actually been using HMV a lot recently. They have been offering me great value for trade-ins and have always had ample amounts of stock.

Maybe HMV need to redefine what makes them unique. Music stores have been dying for years, maybe it's time for HMV to change focus.

Hopefully this does not signal the end of HMV, it's as much of an institution in the UK as Our Price was.

Posted:3 years ago

#7

Paul Smith
Dev

189 148 0.8
Maybe if they didn't take Woolworth's approach with pricing I would shop there more often.

Edited 1 times. Last edit by Paul Smith on 5th January 2011 1:53pm

Posted:3 years ago

#8
Best of luck to those affected by this news. I can't see it getting any better. Hope I'm wrong!

Posted:3 years ago

#9

Ben Hewett
Studying MA Philosophy

40 1 0.0
Sadly I don't see things improving. The fundamental problem for retailers like HMV and Waterstones is to work out an effective way to match the pricing of the online stores, such as Amazon, especially in a tough economic climate. The most pressing issue seems to be regarding the integration of the online and high street arms of each store; these need to be effectively integrated, rather than operated as separate entities. If they could find a way to coherently combine these two entities on the high street then they'd be more handily placed to compete with Amazon. Whether such integration is possible, is another story.

Posted:3 years ago

#10

Nick Gunn
3D Artist

12 0 0.0
All the HMV's I've been in have always had a poor selection of games. They seem to be pushing DVD sales, which I thought they were doing decent at, but I'm sure that can't save them alone.

Posted:3 years ago

#11
Added a further statement from HMV.

Posted:3 years ago

#12

Daniel Parker
Senior Engineer

5 0 0.0
I have still not received all the Christmas presents I ordered from amazon in November. HMV saved my christmas, and they will be my first port of call this year.

Posted:3 years ago

#13
I think HMV can tighten its belt with having less small branches in london alone. The larger waterstone stores are great places to hang out and enjoy good regular sales.

Posted:3 years ago

#14
Sad news. I love bricks and mortar retail. I LOVE to walk into a shop, buy a physical copy of a game, go to the pub and read the manual, go home, install and play. I hate digital distribution (and even more, I hate buying a box to find that all it contains is the steam installer, grr!). I'm willing to pay a premium over the digital price to actually have the game in my hands (and on my hard drive) right now.

I've noticed that HMV is often cheaper than GAME for some titles, but their game sections are so badly organized and buying from them isn't a pleasurable experience because they spend so long trying to push their stupid reward card programme. It's no wonder that people less attached to the idea of owning a boxed game don't shop there any more - it feels like assault and interrogation trying to buy from them.

I wonder if people would return to the high street if shops would stop pouncing on customers the second they walked through the door?

Posted:3 years ago

#15

Steven Pick
Lead Graphic Designer

70 14 0.2
Is this the same HMV which charge 16 for certain CDs?

Posted:3 years ago

#16

Matthew Harrington
Programmer/ game designer

12 0 0.0
well it's to be expected when you charge more than everyone else

Posted:3 years ago

#17
bad sales or bad sales proposition?

Posted:3 years ago

#18

Haven Tso
Web-based Game Reviewer

255 8 0.0
I haven't seen a HMV store in Sydney for quite a while but I go to the Hong Kong stores a lot when I was there. The good thing with HMV is usually they house hard to find CDs and DVDs. Not all of them are priced competitively but when you want to find something particular, they usually have it. As for games, their collection is not comprehensive enough and are usually pricier. But that's my experience only. It could be different in UK.

I do think there is a space for HMV in the market, just need to be a bit more creative in marketing I suppose?

Posted:3 years ago

#19

Miguel Melo
Software Engineer

65 0 0.0
I was in the UK for the 1st time in 10 years this Summer and really enjoyed calling on HMV Oxford street again: very good selection and acceptable pricing (I'm sure that store caries a premium on certain items). I ended up coming out the door with 5 or 6 seasons of assorted Britcom on DVD.

I think HMV should do well to look at expanding abroad as a form of improving revenue. In Portugal, where I live, FNAC essentially have the market to themselves which is making for extremely poor value for customers (all new CD's seem to launch at around the 17-19 euros mark and they tend to pretty much stay there).

I believe someone the size of HMV would do really well with a select number of stores in, for example, major Portuguese cities as competition here isn't as fierce as the UK. Furthermore, most Portuguese people are not in the habit of purchasing online so good shops are always filled with punters.

Look at IKEA - they opened their 1st store here some 5 years ago and ended up making in their 1st year the forecast they had for the first five...

Edited 1 times. Last edit by Miguel Melo on 6th January 2011 9:13am

Posted:3 years ago

#20

Kevin Clark-Patterson
Lecturer in Games Development

291 23 0.1
Pricing is definitely an issues, while it may be cheaper to buy online, HMV often suffers by comparison to Game and Game Station on like for like titles. Plus with the genius decision to put all things gaming in the back far corner of the store doesnt exactly make them easily accessible!

Posted:3 years ago

#21

Paul Smith
Dev

189 148 0.8
"Daniel Parker - I have still not received all the Christmas presents I ordered from amazon in November. HMV saved my christmas, and they will be my first port of call this year."

Thats the royal snails fault not amazons

Posted:3 years ago

#22

J. Goldmaker
Community Management

26 0 0.0
In Canada there is a tax on blank CD's that goes to Canadian artists.

Posted:3 years ago

#23

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