HMV evolves to tackle competition
LONDON (Reuters) - British music and books retailer HMV Group Plc (HMV.L) is evolving fast to deal with the shift of recorded music sales to online channels and the encroachment of the supermarkets, its chief executive said.
"We have a very realistic assessment of what's going on in our product markets and we're planning on that basis," Simon Fox told the Reuters Global Retail Summit on Wednesday.
"We're certainly not saying 'the CD is going to bounce back,'" he said.
Fox said HMV's challenge was to ensure it evolved its in-store and online mix faster than the changes in product demand.
"We've got a good understanding of all our markets, we're very close to all our suppliers, the labels, the studios, the games companies. We've just got to keep evolving and moving fast," he said.
The CEO, who is two years into a three-year turnaround plan, has introduced a raft of new initiatives to reposition the 88-year-old HMV brand away from its traditional music base into a broad entertainment retailer.
The group, which runs music, DVD and video games shops under its own name as well as Waterstone's bookstores, is entering the live music market through a joint venture with Mama Group Plc (MAMG.L), trialling digital cinemas in partnership with Curzon, and selling mobile phones and services through a concession deal with France Telecom's (FTE.PA) Orange.
It has purchased pay-to-play gaming company Gamerbase and launched ticketing business hmv tickets.
HMV has also revamped its stores to a "next generation" format, launched new products, ranging from MP3 players to T-shirts, introduced loyalty cards, belatedly invested in an online offer, focused on improving in-store service and targeted 40 million pounds ($65.56 million) of cost savings.
"I think we've done an awful lot in two-and-a-half years and I'm convinced we'll do a lot in the next two-and-a-half years. Yes, there'll be other things for sure," said Fox.
Amid the downturn in consumer spending, HMV's rivals Woolworths and Zavvi failed to cope, with both groups entering administration late last year.
Fox swiftly snapped-up 27 former Zavvi stores and is now targeting the market share previously held by Woolworths.
"We're focusing on the ex-Woolworths customer which may not have been a traditional HMV customer, particularly around family DVDs and events where Woolworths were very strong, so we've upweighted Easter, Mothers, Fathers and Valentines Day," he said.
Shares in HMV, which have lost 9 percent of their value over the last year, closed on Wednesday down 2 pence at 122.75 pence, valuing the business at 518 million pounds.
($1=.6101 Pound)
(Reporting by James Davey; Editing by Rupert Winchester and Jon Loades-Carter)
