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.
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?
The rapid growth of DVD sales in the UK in the early 2000s helped to propel the growth of HMV, with the retail chain accounting for around 30% of the UK DVD market by the end of 2003. During the same year, the company was the market leader in music sales, accounting for over 25% of the UK market. HMV’s market share of both music and video continued to increase in 2004. However, for the first time in the autumn of 2005 these trends reached a plateau, with HMV losing market share in the UK to supermarkets and internet retailers.
Amid declining sales and mounting debt, HMV struggled to recover and officially went into administration in January 2013. The advent of digital technologies, increased price competition from mass merchandisers, and weakened supplier links coupled with a failure to react quickly and sufficiently enough, spelled disaster for the company.
On 5th April 2013 Hilco UK announced that it had acquired HMV, saving 141 HMV stores and taking the company out of administration. The company has gone on to stage a comeback, with profits reaching almost GBP17m ($26m) just 11 months after it was on the edge of collapse. The company’s strategy has involved effectively going back to its roots, with a renewed focus on in-store events, rebuilding links with the music industry, and increasing footfall in its stores to drive sales.
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