HMV: Revival of the top dog

HMV, established in 1921, has long been the leading UK high street retailer in the music and video market. The company, with the slogan “top dog for music”, had an edge over other entertainment retailers with exciting in-store events, huge back-catalogs, and backing from the music and film industry. However, following a period of revenue decline and profit losses, the company found itself on the brink of collapse, officially going into administration in January 2013. In April 2013, Hilco UK announced that it had acquired HMV and subsequently embarked on a strategy to turn the company around. This case study looks at HMV in the early days, analyzes the problems that led to its near collapse, and examines how the business has been revived following the Hilco purchase.

Scope

Looks at the rise of HMV and the reasons for its subsequent decline into administration.

Examines the market conditions that impacted the company.

Looks at the acquisition of HMV following administration.

Examines the new methods employed by HMV to turn the company around.

Reasons to buy

Why did HMV fall into difficulty?

What factors led to administration?

What new strategies have been employed?

How successful has HMV been in staging a turnaround?

Companies mentioned

None

Table of Contents

Overview

Catalyst

Summary

From ”˜Top Dog’ to Administration

HMV expanded to UK stores with a growing turnover

Difficulties in led to a year transformation plan

HMV switched focus to video games for temporary relief

HMV thrived in late s due to price cuts and ecommerce push

Falling sales and mounting debt prevented recovery

Changing Market Conditions Spelled Disaster For HMV

HMV did not react quickly enough to the rise of digital media

HMV's slow digital adoption sealed its fate

Increased price competition impacted HMV

Showrooming accelerated HMV's decline

Mass merchandisers also caused HMV problems

Hilco pulled HMV out of administration and back into profit

HMV has gone back to its roots

Hilco focuses HMV on in-store offering and core products in bid for profitability

HMV reconnected with suppliers following administration

Vinyl revival boosting high street footfall

Early indications are positive for the company

Conclusions

HMV is back in the game but must remain relevant

Sources

Further Reading

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Disclaimer

List of Tables

None

List of Figures

Figure 1: Number of HMV stores in operation in the UK 2001-2010

Figure 2: HMV Group Turnover 1999-2006 ($m)

Figure 3: HMV Group Turnover 2006-2012 ($m)

Figure 4: Number of HMV stores in operation in the UK 2007-2012

Figure 5: UK Music & Video Market 2008-2012 ($m)

Figure 6: UK Music Streaming Market 2008-2012 ($m)

Figure 7: Digital Media and Physical Media Share of UK Music & Video Market in 2009 and 2012 (%)

Figure 8: UK Online Retail Market Value 2008-2012 ($m)

Figure 9: Market Share of UK Music & Video Market Q4 2010 and Q4 2011 (%)

Figure 10: HMV Flagship Store in its Original Location, Oxford Street, London

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