How sad it is to see a great iconic consumer brand fail. HMV became a giant in the world of retail music and video and at its peak was valued at roughly £1b. In the eighties the company expanded around the world in the USA, Canada, Japan, Germany and France. The company was so profitable in that era that the UK Government set up a Select Committee to investigate its CD profits, and the then CEO, Brian McLaughlin was vigorously questioned. The advent of DVDs and computer games bolstered its commanding position. Record labels, desperate for their products to be sold by the company, would pay for the advertising message that HMV was carrying their products. 38% of CDs sold in the High Street was through HMV. Then in Jan 2013 the company went into administration. 4,000 jobs were at risk across 250 retail branches in the UK. Where did it all go wrong ? Did the demise originate at a 2002 board meeting where marketing specialist Philip Beeching was asked to pitch to the board. He explained, “The three biggest threats to HMV are online retailers, downloadable music, and supermarkets discounting loss leader product.” His warnings were ignored. Perhaps a SWOT analysis of HMV at the time would have concluded: Strengths: Scale, Brand, Heritage, Market Position, Relationships with Music and Film Providers Weaknesses: Few
Opportunities: To develop a world beating online presence
Threats: Everyone else who was exploiting newer online technologies As we all know, HMV did not take up the online opportunity, and the potential threat posed by others executing an online strategy became a crippling reality. It’s easy for those of us who have been loyal HMV customers to criticise. However, this desperately sad collapse serves to remind us of the importance of having a business strategy that can evolve and develop as the environment around it changes. HMV failed to adapt quickly enough to today’s business model where more than 70% of music and video is bought online. The question for all businesses is, are you doing sufficient environmental scanning, and adapting your strategies accordingly, either to respond to, or to create new ways of working.