Are the curtains closing on HMV?

By Alexandra Coles

The closure of HMV was one in a string of high profile street chains who were victims of the recession. The fact that this beloved music chain has been taken into the grasp of administrators demonstrates the changing consumer behaviour and the direct effect this will have on the high street.

HMV, along with Jessops and Blockbusters who have also fallen into administration this month, are all specialist businesses with very specific target markets. However, the birth of the internet developed new ways for consumers to access their products, and with the rise of internet streaming and instant downloads the old business models no longer apply. The closure of Blockbusters, by comparison, has been expected for some years with the rise of products, such as Lovefilm, providing easy streaming of rented movies and the growing sale of DVDs by large supermarket chains eating away at its specific consumer base.

It has been suggested that if HMV had taken the move to increase its internet download capabilities ten years ago it would have been in a position now which would rival the internet chain Amazon. This vision could still be a possibility, as many buyers have approached the administrators, Deloitte, expressing an interest in buying parts of the music chain. Even the music industry itself has increased the deadlines by which HMV must pay for their stock in an attempt to help salvage the failing company.

HMV not only face the economic results of a static business model, they are also facing a deluge of comments about their brand itself. The announcement that they were not initially going to honour the thousands of gift cards that many received as Christmas presents forced the administrators to have to release another announcement saying that such cards would be honoured. The precarious position the brand image is placed in means that every positive image of the brand must be saved.

Furthermore, this determination to save HMV highlights a wider issue on how the economy as a whole is trying to claw its way out of recession. It has been suggested by some commentators that trying to prop up failing companies such as HMV has resulted in exacerbating the effects of the recession. Even though it is good for employees that their workplace stays open, the continuing presence of businesses which, in any other environment may have been left to die, makes it even more impossible for new business to grow into the stagnating market.

There is not one definite way to bring the economy out of recession as has been made clear by the numerous debates on the subject. However, it is clear that businesses have to be constantly adapting to an ever changing market. Whether HMV, or parts of it, are able to be salvaged remains to be seen, but it certainly is a wakeup call for those businesses who haven’t adapted to the changing consumer market.