Will HMV survive despite the weather conditions?

Current Situation

Go back a week HMV Group – owners of Waterstones and HMV shares dropped by 17%. Sales have been declining for years and for some reason I am not surprised, it was pretty evitable. The barrier of entry based on Porter’s Five forces is very low, anyone can buy a box of CDs and sell it, it is even easier for a major supermarket to buy a crate of CDs and sell them at a competitive price compared to HMV. Yes, they should have saw it coming when Tesco and Co. decided on their mission of world dominance which included expanding into every market possible including entertainment products.

Taking a Nap during the Online shopping phenomenon?

So where were HMV and Waterstones when Amazon and Play.com were shipping out first and second-hand books on the internet cutting out the middle man retailer? A wise man, Keith Bowman, equity analyst at Hargreaves Lansdown, said HMV was "paying the price for failing to embrace the internet much sooner". Damn right, they must have thought they were out scott-free when Zavvi went down but it just meant they were next, hopefully this won’t be Woolworths all over again.

Last Hope

With supermarkets and online retailers breathing down HMV Group’s necks what is the plan? Let’s be fair, the supermarkets are not a real threat except for best-sellers where competitive pricing is a match-winner as their product range is too limited. It just leaves the online retailers where I feel the battle on that front is already lost unless they somehow pull a differentiation strategy out their backsides and re-position themselves thoroughly back into the market.

But all is not lost. The acquisition of MAMA Group has opened a new door into the fast-growing live music market, already six of the high profiled music festivals this year were owned by HMV so that’s a good start. The retail store market is still there for the taking even though the weather conditions are having an impact. With effective marketing you may not be able to lure shoppers out of their desktop chairs but you can make an active shopper passing-by come take a peak. This may involve taking a leaf of out Zara’s geographical marketing strategy book which is just being at the right place at the right time and a lot of sales promotion. Customer loyalty is another major factor concerning the retail stores which can be received through improved customer service and effective direct marketing. HMVdigital is necessary but will probably still drown under iTunes dominance though if Waterstones can headstart the e-book uprise then maybe this organisation won’t get hit by Marketing Myopia again.