How Long Left For HMV?

HMV announced figures today that in the 5 weeks leading up to Christmas in 2011, sales were down 8.2% in comparison to the same 5 weeks in the year before.

You know things are bad when the company itself is saying that it may not be around in the coming few months! However according to reports, the suppliers to the high street chain are still backing the company, which is probably the most important string to the HMV bow right now. If they lose the support of their suppliers however, they might as well shut up shop now.

The big question here is what has caused HMV to be hit so hard? It lost out mainly due to being on the back foot when it came to the digital music revolution. iTunes from Apple really hit the company, as well as others, very hard indeed. In fact iTunes sales account for over £2billion per year in online music sales in the UK. Other companies like Amazon have adapted a little bit better. They've created their own music download section, though it's nowhere near as advanced as iTunes, at least they're making an effort. HMV on the other hand have been very slow off the mark. They have tried to update their online music operations. Their site looks well laid out, better than the Amazon download site. They have a list of 8 million songs to choose from, and the prices are very similar to iTunes. But because they were so many years behind Apple, most people's default choice of online music store is now iTunes. They won't be able to catch up.

Speaking from a personal point of view, their prices in-store are far too expensive. Why would I pay £15 for an album when I could pay half that online? Spending another £7/£8 just to own the case isn't enough justification. 

HMV have spent a little bit of money trying to update their stores. The thing is, I never found their stores dowdy or offensive in the first place. I always found it a nice environment to be in. So money wasted there if you ask me.

They've also made their way into technology. They sell things such as iPods, iPads, speakers and other musical hardware. The problem here again is price. Online these items are cheaper. And if someone is going to buy something like an iPad, or speakers, they're more likely to go to those suppliers direct and pay a cheaper price.

I think the overall problem here is that HMV have an old business model that has just been caught out by the advances in internet shopping habits and the recession. I can see the chain going into administration sooner rather than later. Hopefully it will find a buyer. I've always been a fan of HMV. In fact I have a points card with them, which I probably need to spend before they go! Someone, possibly one of the guys from Dragons Den, needs to take over the store and inject some new passion and ideas. Maybe reduce the high-street presence, as there probably isn't a future with that, and focus more on creating a bigger and better online business.

The employ thousands of people in hundreds of stores. It will be a sad day if they were to go from our high streets altogether.

You Can Be Too Bullish

Social media sights and blogs are full of companies stating how well they seem to be doing. It's been like this all the way through the recession years. Now some of these bits of information are probably going to be true, despite no-one being brave enough yet to post any figures to back up what they're saying. I also fear that the mass majority of reports on how well many are doing are pumped up to save face, to prevent any bad information getting out into the public domain. The problem is, if your company goes bust after you've said how well business is, you're going to have some serious egg on your face.

One perfect example of this is Lakeside Glass who went bust a couple of months ago. They had a member of staff on the now defunct Glasstalk forum website who constantly talked up how well business was. How they were taking on massive contracts and oodles of new customers on a regular basis. In just a couple of years this company is now bust. All this over-positive, sickeningly bullish bullshit talking now looks even more stupid than it did when the company was trading.

Reporting on positive news is all well and good. But there is a fine line between truth and wildly overstating the actual state of affairs. From what I've learned observing these statements from people and companies is that it's better to provide some sorts of numerical proof to back up what you're saying. People using social media are becoming ever more skeptical about information they see, so proof is becoming ever more necessary. Also, it's also pretty easy to spot the bullshit from what's genuine.

You've probably all noticed how little I talk about facts and figures from the company I work for. That's for two reasons. Firstly, we're not a limited company so we have no need to publish any figures what so ever - hence utter privacy - so I don't see the need to talk about it online, no matter how positive or negative things are. Secondly, the minute I talk about how 'well things are right now', I open myself up to scrutiny of what I'm saying.

So, in the future, if you're going to talk about how well business is, make sure it can be proved correct. Don't leave yourself open to ridicule if things go bottoms up!

P.S. the industry has shrunk from £5.4billion to £3.7billion in the last few years. If all the statements online about how well companies seem to be doing were true, our industry wouldn't be in recession and it wouldn't have lost £1.7billion in value!