HMV: Where It All Went Wrong

His Masters Voice

By Alex Scott

So this is how it ends, not with a bang but a spectacular death rattle. Hundreds of businesses have been on the wrong side of a balance sheet in the past five years, but none have affected the public conscious quite like HMV – over a month has passed since the company succumbed to administration, yet its fate continues to be discussed unabated. Even the most hardened cynic would be hard-pressed to ignore the scope of the chain’s demise; the last of a dying breed, the final curtain for HMV would send shockwaves through the high street, and have such an irrevocable effect on the music industry that the face of consumer spending would be forever changed.

It’s easy to point the finger of blame at the company itself. Having operated on such an archaic business model for the past twenty years, it refused whole-heartedly to fully commit to an online service; a move which gave rivals Play.com and Amazon the opportunity to gain commanding positions in the internet marketplace and reap the rewards. It was a refusal marked by arrogance, those in HMV’s head office were all too wilful in ignoring the impact of the internet – perhaps taking the manifesto of Big Black a little too seriously – and it has cost them dearly; while HMV festers in administration, Amazon expects revenue of $61.09 billion for 2012 alone. The disappearance of Zavvi in 2008, by then HMV’s only competitor in high street music sales, should have acted as a stark warning but instead bred nothing but complacency. Omens were in the air and clouds on the horizon, but still nothing about HMV’s practices changed as they continued to charge on, blind to any threat.

That isn’t to say that all of HMV’s moves in the past ten years have been without merit. The choice to branch out into the live music market, with investments in venues including the Hammersmith Apollo, was perhaps the most forward-thinking decision taken by the company in recent memory. It was, of course, completely undone when HMV sold off the live venues last year in the vain effort to keep its high street stores afloat: a move so illogical it begs belief. Why the company willingly chose to sell off such a profitable investment to save a failing one is anybody’s guess, and one that the freshly-redundant head office employees will no doubt mull over for some time. The decision to also purchase the Waterstone’s brand, expanding their reach into the literary market, was a brave one but ultimately short-sighted – in 2013, the hardback novel has the same life-expectancy as the CD.

HMV’s predicament today could very well be a result of this ‘fingers in many pies’ approach to business, an approach that was maybe made with the best of intentions but ultimately highlights the sheer arrogance and complacency of those in higher management. Perhaps they felt untouchable, perhaps not. Regardless of motive they chose to play away when tensions at home were at boiling point, amounting to a total betrayal of their ever-loyal and loving spouse: the staff.

For two stints totalling around 16 months I was lucky enough to work in HMV, both in the stockroom and front-of-house, and it was hands down the best job I’ve ever had. When I was first hired in 2008 at the age of 17, it was difficult not to be forever in awe – to be surrounded by music and be paid for the privilege was, and still is, a teenage boy’s wet dream. But it was the staff that made the experience so thoroughly enjoyable, boasting such infectious passion and knowledge it was impossible to not be swept up in their enthusiasm. They were consistently hardworking, friendly and eager to help the customer, and while those in head office chose to squander opportunities to secure the store’s future in favour of frivolous investments, the sales assistants and managers were tireless in their dedication to the brand. They were its lifeblood, intensely loyal and imbued with a sense of pride – they cared what happened to the company. They should have had the CEO’s wage and he should have had theirs.

It was shortly after I started that Zavvi entered into administration. While at the time I paid the event little heed other than to feel guilty about my download habits and be glad it wasn’t my job, upon reflection it was my first experience of questionable direction within HMV. Very quickly and quietly, as Zavvi disappeared from the high street, HMV phased out its student discount scheme without explanation. This, understandably, upset a lot of customers and led to some awkward questions that could only be answered with a stock ‘I don’t know, I just do what I’m told’ response. But we all knew why. Even though we were never explicitly told, the reason behind the move was clear – Zavvi had offered student discount too. Without a competitor on the high street, it’s almost as if HMV felt no need to compete. They didn’t reassess, they didn’t think about learning from Zavvi’s mistakes while maintaining their business and continuing to offer the best service to the customer. They didn’t do anything. They just sat back and let their complacency grow, expecting an influx of customers that never (really) came.

A lot of those upset customers left empty handed, and when I look back on that it can’t be seen as anything other than a total fucking disaster.  If there was one consumer group HMV could not afford to alienate, it was students. Students, with their limited disposable income yet insatiable desire for music and film, have other ways of obtaining entertainment. Taking away their discount served to do nothing but force students into the open arms of Amazon and Play.com, and some stopped paying for media all together. HMV was not only acting as a disservice to itself, but perhaps the entire entertainment industry – after all, 16-21 is a pretty key demographic.  It’s little wonder why the music labels and studios are all collectively shitting their pants.

Oh the labels. A lot has been said about various media group’s involvements with HMV, how Sony, Universal and Warner and the rest have banded together in effort to save the company. There’s talk of in-store performances from acts as big as Elton John, in order to bring more people through the doors. The word ‘survival’ has been thrown around quite a bit, not just in reference to HMV but the major music labels too – the labels need HMV to survive to secure their own futures. But it’s the labels that facilitated this musical-Wall Street Crash; they stuck their knives in deep and continually twisted the blades. Holding the company to ransom with a pricing strategy that benefited no-one but themselves, they bled HMV dry. That’s perhaps one of the biggest tragedies of the whole ordeal – HMV was doomed from the start. It’s why it’s frankly enraging to hear people rejoicing over the demise of the chain, some citing it as a ‘consumer victory’ over HMV’s price-gouging tactics: what they don’t understand is that these tactics weren’t HMV’s at all. The prices charged by suppliers, which in turn were outlined by the record labels and the film studios, were for the most part so completely outrageous HMV had no choice but sell the products at that price. If any profit was made for HMV, it was at maximum 10-15%, and this was rare – often, as was the case with chart CDs, DVDs and games, no profit was made at all. Even when deals with the suppliers were reworked in 2011 to support the ailing company, the labels didn’t step up their game too and reduce their prices (seriously, £17 for ‘Lust for Life’?). They simply continued to fuck HMV. It’s surprising that the administrators weren’t called in sooner; no business can survive on such minimal revenue.

I left my job at HMV in late 2009, and after completing my studies returned briefly in 2012 as a Christmas temp. The difference between the company then and the one I had left 3 years ago was astounding. Gone was the emphasis on CDs and DVDs, replaced with an infatuation for technology, t-shirts and gimmicks – the experience was so alien I was thankful to be in the stockroom most of the time. While CDs and DVDs still had their place on the shelves, the emphasis on four or five big chart acts over everything else pigeonholed the company to a very select market. Obviously this had always been a factor in HMV’s business plan from the off, but never to this degree – it was depressing to think that HMV had to rely almost solely on these artists to stay afloat. The only thing that had stayed constant were the staff, who as ever soldiered on despite enduring a horrible change in uniform and every attempt to stifle any individuality. By this point it was no secret that the company was in serious trouble, but what people don’t seem to grasp is how poorly informed the staff really were. We were told nothing. In late November, when rumblings were first made in the press, head office sent round memos instructing stores to continue to sell gift cards – despite what was being written in the papers, they assured us that the company ‘wasn’t going anywhere’. Around the same time, deliveries became unpredictable and seemingly random; some chart releases were never re-stocked. Head office continued to reassure us that the company was safe for the time being, but it seemed like nothing but a falsehood. Regardless though, no-one expected anything to happen until the end of the tax year at the very least. It was a clusterfuck of misinformation and empty promises, and two weeks after the other Christmas temps and I were let go the company announced it was entering administration.

I caught up briefly with HMV Brighton manager Ryan Grimond to find out what happened in the days leading up to the announcement.

“I learnt it that night, from various colleagues calling me saying ‘look at the news’…I knew things weren’t great for a while so it wasn’t a surprise”

“[However] the staff have been brilliant – positive, uplifting, getting on with it, doing what we say [and] working together as a team. They’ve been absolutely outstanding.”

While HMV announces another 37 store closures this week, bringing the current total to 103, Ryan is confident that HMV Brighton can continue on.

“[The] Brighton store has always been a very successful store – it’s very buzzing, it’s got a good vibe to it. It’s one of the busiest stores in the centre.”

“Customers have been positive, business has been positive…it’s just been good and it’s mainly because of the staff and the way they’re talking to customers, keeping customer service as good as they can. For the most part [the customers] have been understanding. You get the odd one but that’s the same with every business.”

“I believe there’s room for HMV on the high street…I think it’s a fantastic business and there’s still a massive demand for the physical product.”

At this point in proceedings it is difficult to predict what might happen to ailing chain – with most of head office being made redundant after mass firings and Hilco owning all of its debt, HMV could go anywhere. The only certainty at this point is that if HMV were to disappear entirely, this could very well be the end of conventional music sales as we know it: without it, the only place in town left to buy entertainment would be supermarkets, and their range will never be as vast or eclectic.

The death of HMV could have vast ramifications for entertainment industry, as fans shift the purchasing to solely digital products. If there’s no place to purchase on the high street, some may stop buying music all together. The fact that HMV is in this position is both heartbreaking and a cautionary tale – this could well be the end of the analogue age.

Stray Observations

  • In case you’re interested, the Big Black manifesto can be found in the liner notes of their excellent record ‘Songs About Fucking’, and reads “The future belongs to analog loyalists: fuck digital.”
  • How it took someone in the company THIS long to come up with the idea of big name acts performing in-store is baffling – On the subject of stupid decisions, mysteriously the student gift cards had stopped coming in around mid-November 2008, around 3 months before we were told the scheme was to be stopped, and about a month before Zavvi folded. Did head office know something we didn’t?
  • I don’t know why Trevor Moore saw it fit to introduce the company wide policy of ‘no tattoos, no piercing, no “outrageous” (whatever that means) hair’. A big reason why people shop in HMV is because of the staff – making them bland and faceless is not a way of solving the problem of falling sales
  • It makes me sad that HMV bet its survival mainly on selling records from One Direction, Emelie Sande, Adele and Rihanna
  • If HMV does go, I am very excited to see how the labels deal with the loss – the sales model for music could be something truly amazing. Or it could be terrible. It’s finally come to the point where labels must adapt or die, and that makes it an exciting time to be a music fan

What I’ve said during this article is taken from a mixture of personal experience, hearsay around stores, opinion and a little bit of conjecture. Sorry if I missed anything out or got anything wrong, this is how I saw it at the time and how I see it now.

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