HMV is Bankrupt – What Happened?
Recently, HMV has gone into administration. As many of you may know this is one of the most famous shop in the music industry and not many of us want to see it go.
This isn’t the first time that the company have gone into debt. In early 2011, the company was facing similar threats but it managed to pull through on its own, however this year the debt from the company has gone up too high and they need someone else to give the company a helping hand.
Their business strategy as many of you may know is outdated from the 1990’s. Many of their products are overpriced and expensive compared to the online alternatives such as iTunes & Google Play. Nowa-days it is much much cheaper to buy an album from amazon than from HMV. The reason is convenience. People cannot be bothered to leave their homes, and amazon saves them from doing that by delivering the music to their door. HMV does have an online store, but it’s not as well advertised as it could have been. However, the price is still a huge player. Compared to other sites such as Amazon, HMV is still more expensive.
The website is currently unavailable as the company has since gone into administration. This is losing the company business that they desperately need if they want to keep going, however they have no stock so they cannot sell prodcuts if they don’t have them.
The company is also suffering a large amount of competition from online sellers such as iTunes, Amazon & Play. This is quoted from their website.
HMV’s main retailing competitors entertainment are supermarkets, Amazon, Play.com and other generalist and mass merchant retailers. The largest single competitor in live entertainment is the combination of Live Nation and Ticketmaster.
This shows that the company realized the threat of online music and how it was killing their business; however they did nothing to act. As I have stated previously, they have had the same plan for the past 20 odd years. They haven’t kept up with the times and they have fallen one of many to the recession. Their prices were too high for many budget tight families after the recession which is another reason why they have fallen under.
They were relying on the older generation to keep them going as many of the younger generation are more accustomed to using computers to store all of their music to sync it to phones and fewer young people want the physical CD anymore. I personally am I fan of the physical CD, but one of the reasons people have gone off the idea is that HMV’s prices are rather expensive. Even the sale prices over Christmas were rather high.
The whole gift card problem at the moment is that as soon as the company goes into administration, it simply does not have the financial support for Gift cards. HMV have made their £10, £20 etc and do not need you taking their stock as well. This does help with getting the company back off of its feet which has been a struggle for many companies, but HMV has a bright future.
Its already gone! Someone saw the business opportunity out of 50 other people. Namely Hilco. Hilco owns HMV Canada and they wanted a piece of the action over here in Europe. What I am hoping is that they will hopefully clear the company’s debts, and update their business model that is in dire need of a re-think. Just over 4,000 jobs are at stake so let’s hope that Hilco can pull the company through!
I am currently hoping the Hilco will save the company and lower the prices, I love having the physical CD, and I hope that there is a great brand that I can trust on the high street. Thanks for reading.