Should SMEs Be Worried About the Demise of HMV?
The news this weekend has been filled with stories about the demise of HMV. That’s not to say that the store, founded in 1921, will totally disappear, but it has been placed in receivership and there will probably be some fallout.
Firstly, there are more than 200 stores and over 4,500 staff whose jobs are at risk. Comet closed its doors for the last time in December 2012, leaving behind 236 empty stores and making some 7,000 workers redundant. Photographic retailer Jessops also shut all of its 187 shops, with a loss of 1,370 jobs within the last week.
And this is only a selection of the big high street retailers who have “gone under” within the last month. In the previous year we’ve also seen Clinton Cards go into administration along with the computer games retailer Game and purveyor of shell suits JJB Sports. Before that we lost Woolworths in 2009.
David vs. Goliath?
So, in a matter of years, we’ve seen small independent retailers struggle, often saying they can’t compete with the big retailers who get a better economy of scale, and yet here we are seeing the big guys tumble.
Maybe it’s not just a question of big vs. small, maybe this is the “high street” having a major shakeup. I remember the rumours, back before the dot com crash, that the high street was dead and that the online businesses were the ones that would take over. It could be that it’s taken 15 years not the 5 that were originally anticipated, so my MD says.
There’s certainly a spot of sadness in the demise of historical names – HMV, formerly His Masters Voice, and sporting a dog listening to a gramophone, has been a British institution for 92 years. The Comet brand dates back to 1933 and “Woolies” operated in the UK for 100 years before it closed its doors.
Online Killed the High Street Star
But aside from the nostalgia, what was it that brought down the “Top Dog for Music”?
In 2002 Philip Beeching, a former HMV marketer, said that the music company faced three major threats from 1. online retailers, 2. music downloads and 3. supermarkets. Alan Giles, the MD of HMV from 1999-2006, dismissed these threats as “rubbish” and pushed on with his own direction for the business. HMV was floated on the London Stock Exchange that same year but within just a few years they were in trouble, HMV’s online offerings were just not up to the job and probably came a little bit too late.
Our Price, Virgin Megastores and Zavvi are all no more and HMV could follow suit. Amazon and Play.com are still alive and well, although with both businesses trading in the UK but having their HQs based in Luxembourg and Jersey respectively, there are certain advantages that they have over mainland operations.
It seems like the axe Philip Beeching saw falling made the fatal wound a long time ago and HMV and their ilk have simply been in overextended death throes.
So, Should SMEs be Worried About the Demise of HMV?
If I were running an independent high street store I would be taking a lot of time to reflect on the current landscape – Shops, large and small, are failing, so no business is immune. The question really has to be what are you doing that makes you stand out, what is it that will make you money, what is it that will do you business when others are not? Who is succeeding in this tough retail environment and who can the small businesses learn from?
An online offering to supplement tradition footfall is probably highly desirable. Secondly, that online store needs to be promoted heavily – “Build and they will come” has never worked and so keeping up with the times will need to be complemented by some serious efforts to stay alive and well. (See more on the subject in Chris Barling’s excellent business advice article Selling Successfully Online)
Whilst there are threats there are certainly opportunities to be had and any small business should assess its weaknesses and strengths, fixing the former and playing to the latter (See SWOT Analysis for more information) and if Emma Jones is right, 2013 could well be the year of the pop-up shop.
Sitting back and taking stock of the landscape is better than continually flying by the seat of your pants, so SMEs need to fill in the gaps in the market if they are to survive the next round of beatings the high street is going to get.
By is4profit editor Paul Mackenzie Ross