The official line is that bad weather has affected expected seasonal profits. To shut 60 stores based on one Christmas sounds extreme, and the problems HMv are facing go far deeper than this. The first major knock to the high street seller was the boom in internet shopping, and as this continues to increase, HMV’s customer base subsequently dwindles. There are more and more online retailers of DVD’s and Blu-Ray, and they are continually finding ways to undercut each other to try to win the lion’s share of the online customer base. This means a physical stockist like HMV can’t possible hope to compete on pricing, meaning more and more shoppers are being drawn away. this has been accelerated by the global financial meltdown, as more and more people seek ways to shave down their spending. HMV themselves are guilty of this, with their online pricing far cheaper than their high street stores. Their own online shopping service is helping to hammer the nails into their coffin.
The credit crunch has also seen people taking stock of how much money they spend on entertainment. It is hard for the average family to justify paying full price for a film on DVD or Blu-Ray when they are also spending £50 a month for the full Sky package, which includes literally hundreds of movies a month. Less and less people are happy to pay a premium to see movies earlier, and will now wait to see them on TV. Rental is also becoming more popular. For the cost of a new release Blu-Ray, you can pay for a months subscription on Lovefilm, with unlimited rentals and 3 discs at a time. The committed Lovefilm subscriber can get through 25 films a month in this way, not counting the movies they can watch for free through online streaming. Most films are available for rental at the same time as they can be bought in shops, and whilst you may have to wait a while before a specific disc on your queue becomes available to you, it is a far cheaper option.
There is also, of course, the usual pirating problem. With faster broadband speeds and better technology now available, illegal online streaming has become a very attractive proposition to many. They feel that if they can watch the latest movies online for free, there is no reason to pay a fair price to procure them from a shop. Legal streaming is also on the rise, with the success of rental through i-Tunes encouraging more companies to enter the market.
HMV are also being hurt by the might of the supermarket, and this is an element that is maybe being underestimated. Big chains like Tescos and Sainsbury have a history of putting other shops out of business. Their ability to buy in bulk and mass produce on a global scale began by putting local butchers and bakers out of business. as they have diversified, they have rivalled fashion retailers by stocking low cost clothing that is still in many cases attractive and stylish. With the whole family’s consumer needs being met by one big store, there is far less need to shop in the high street. Supermarkets now sell the latest DVD’s and CD’s at competitive prices, and also stock older movies and music in discount aisles. There are not many hassled parents that will make a special trip to HMV, or any other retailer, when they can pick up the latest films when they are doing their weekly grocery shopping. The big supermarkets are the last ‘must visit’ shops in existence, and all other sellers are feeling the pinch.
There are bargains to be had at HMV. whilst new releases are as expensive as you can find them, the ascent of Blu-Ray means they are selling many of their DVD films cheaply, with a movie as recent as Public Enemies available for as little as £3. These sales will not make them a profit however, and whilst it is nice to be able to drop into a physical store to pick up a particular film as and when you want it, the increasing variety of choice is beginning to render even this convenience obsolete. HMV are closing branches, they are not currently going out of business. It is, however, only a matter of time as far as i can tell. With HMV gone, and the promise of more new films available to stream on the same day as they are released in theatres, movie watching looks to be becoming very much a solo endeavor. Without visits to the cinema, and shopping trips to the high street, we look to be coming that bit closer to confined living. This is frightening, but if things continue as they are, it is also inevitable. Long live HMV, for as long as possible. It’ll be sad to see it go.
Bazmann – You can follow me on Twitter at www.twitter.com/baz_mann