HMV – A casualty of the digital age?

Like many of my contemporaries, I’ve spent many happy hours browsing round HMV and leafing through CDs and DVDs and checking out new releases so I was saddened to hear that they’d called the administrators in this week.  However, it seems we only have ourselves to blame, as although many of us may browse in-store, more and more of us then go online and download or order a cheaper copy and as HMV has been lacking a coherent digital strategy we use a competitor more often than not.

Our Ipsos MediaCT Tech Tracker suggests that I am not the only one who uses digital more and more.  We have been tracking the rise of digital for the last couple of years and in November 2012 28% of us claimed to have bought a physical CD and 26% had downloaded some digital music in the past year. Digital sales have been slowly rising over the past few years, while buying hardcopies has seen a similar slow decline. The same seem to be true for movie consumption. 30% of people might have said that they have bought a DVD in June 2012 but this is still 15% less than it was January 2010. So what happened?

Not only is the internet now nearly a universal commodity (nearly nine in ten of us can now access the internet) but the rise of Smartphones has made downloading music and films something that can be done from anywhere, not just available in store or at home using your PC. We have become increasingly used to being able to download audio or video content without having to enter a store and often also without having to wait for something to arrive via post. With the arrival of 4G last year downloading music or films has become even faster for some smartphone owners. Unsurprisingly our Tech Tracker found that  listening to music and watching movies are the two activities that owners said they would engage in more with 4G.  And with huge back catalogues, we don’t have the problem of our album choice being out of stock and having to be ordered!

Additionally there is also the price aspect. In a time of recession where we are all bargain hunters, the internet offers a nearly inexhaustible choice of retailers. More often than not buying a DVD or CD online or as a digital copy is cheaper than going into a store to do the same. This even goes for the websites of actual retailers like HMV.

So in the end HMV’s troubles might be a direct effect of the rise of digital and the freedom it brings the consumers but that does not make it any less of a shame. What remains to be seen is where the future for the music retail industry lies.  Although it’s not necessarily over for HMV yet, many commentators are talking about an evolution, which may offer a much needed boost for independent record shops who will become the grazing ground for those of us that enjoy a browse around the record shop.  I hope this is the case as I for one would miss it if I could only buy my films and music online or at my local supermarket.

You can find the latest Tech Tracker report here.

Written by Gavin Sugden, Research Director, Sarah Gale, Senior Research Director and Ronja Damian, Marketing Assistant at Ipsos MediaCT. Follow Ipsos MediaCT on Twitter @IpsosMediaCT.

  • Neil Hopkins

    It’s less a casualty of the digital age than one of poor management both of the brand and of the retail environment.

    HMV were left behind and ignored many opportunities for growth. They ignored some of the basic tenets of modern online experiences (content provision, not just hawking product) and they failed to capitalise on the enthusiasm and knowledge of the staff they had.

    They had opportunities for digital integration which they ignored, hoping that ever deeper discounting would lure customers back to the soul-less retail environment.

    It’s been a long time coming, but no one is really that surprised. HMV have provided an exceptionally expensive brand management lesson to the rest of the retail sphere…

  • Samson61

    So your insight shows that more people are buying online and its usually cheaper?
    Groundbreaking info guys!

  • Ruth O

    Amazon thrive on selling hard copies. The problem is, they can undercut HMV’s prices due to their lack of tax expenses. Although HMV certainly didn’t embrace and adapt to digital quick enough, that is not entirely to blame.

  • Vanessa H Y Chan

    Erm I thought the whole point of companies is to serve consumers demands in line with their lifestyles. Since when do consumers need to cater their behaviour to companies? The thinking on this is completely flawed.

  • Aaron

    I am sure I am not the only person who has pitched ideas to HMV over the years about how to embrace digital and modernise. As a company they had terminal myopia and this is the real reason why they have gone to the wall. The internet and web isn’t new, and some of us were talking about this happening over fifteen years ago. HMV could and should have been a major force in online entertainment retail. Amazon’s dominance didn’t happen by accident, it’s entry into the UK market was met by white flags and complete capitulation by HMV, no doubt hoping that this internet thing would all just go away after a few years and everyone could get back to normal. Similarly iTunes, and finally super markets dealt other killing blows that it was seemingly oblivious to. it is a sad loss and I spent my formative years going across the road between HMV and the local independent record shop, but this nostalgia shouldn’t get in the way of the fact that HMV were the architects of their own demise which saw their business strategy for online offer much too little, much too late. My thoughts go out to the staff of those stores, who were always so helpful and enthusiastic about their products which they knew inside and out.

  • Mahesh

    I think you highlight some great points. In the end of the day HMV did not adapt to the change in consumer habits. They also could not compete with the cheaper online alternatives.

    A great point you mention is the impact of smart devices. Phones, tables and tvs have all contributed to the downfall of HMV and Blockbusters. I recently wrote a couple of blog posts which looked at the demise of both companies.

    I think HMV have a chance of being bought but I think this will be the end for Blockbusters in the UK.

  • Leegazza

    Check out this hmv tribute, not sure if I wanted to laugh or cry!!!

  • Den Lee

    HMV have always been perceived as more expensive than their competitors for decades and have survived them all by delivering (perceived) value through quality of customer service, experience and product range which has historically been key to their brand. In more recent years, they’ve either failed completely or have failed to improve on some of these areas which in turn has eroded its consumer relevance over time.

    My personal experience of the stores has seen many cases of the good, the bad and the ugly which, I feel, would be inappropriate to mention right now but it is in my overall opinion that the upper levels of HMV’s management have failed, for many years, to identify and address many problems, issues and concerns to fully properly support operations on the ground level.

    Although physical digital media sales is declining, it still accounts for ~75% of sales so there’s still opportunities for HMV to exploit should they survive, but the business would probably need re-engineering aplenty to synergise (probably not a word, but you get the gist) it’s key assets, with massive efforts in branding to revive consumer confidence.

    Not going to go into online activities as that’s been done to death almost everywhere, but hmvdigital? Jeeeeez!

    Wishing HMV and especially it’s staff the VERY, VERY best as I can still see plenty of legs in Nipper (suits permitting).