HMV tries to turn Fopp into a hit

Fopp, the bankrupt independent music chain, is being resurrected after HMV Group bought the brand, six of its most profitable stores and the website for an undisclosed sum last week.

Fopp went into administration in July after its purchase of 67 Music Zone shops stretched the company to breaking point, resulting in the closure of all 81 stores and the loss of 700 jobs.

HMV says it will run Fopp as a standalone business, retaining its own identity after “recognising Fopp’s quirkiness has an appeal for certain people”.

Born from a Glasgow market stall, Fopp was perceived to have an “indie vibe” and built a reputation for offering an alternative range of music, DVDs and books at low prices. It traditionally avoided selling products such as computer games, leaving that to the likes of HMV with its broader, more mainstream offer.

Graham Hales, executive director of branding specialist Interbrand, thinks Fopp has an earthy, authentic, genuine reputation and will appeal to a different audience than HMV.

Its new parent company stresses that Fopp will not be HMV by another name. Back-end functions will merge but the customer experience will not change, according to an HMV spokesman, who adds that Fopp’s “value retailer” reputation has little meaning at a time when chart pricing is so competitive.

The spokesman says that the company sees potential for the brand online – a notion popular with analysts. Fopp has historically steered clear of advertising, preferring to use word of mouth, and HMV says it has no immediate plans to change that. The six stores in Glasgow, Edinburgh, London, Manchester, Nottingham and Cambridge could soon be joined by a second store in Glasgow, and while HMV admits it is not sure how far to develop the brand, experts predict any expansion plans are likely to be limited.

Dominant retailer
Mike Godliman, director at Pragma Consulting, believes HMV’s latest purchase is good news for both companies: “What it has done is buy a brand that appeals to customers not normally interested in HMV. If they want to be a dominant retailer, Fopp is a good acquisition because it caters for a sector not catered for at the moment.” 

But he admits that the brand has only limited appeal. He adds: “In major cities there’s a place for Fopp but not much more then that. Online, however, there’s a place for a music specialist.” 

Not everyone believes HMV’s purchase of Fopp was a sensible move. Jose Marco-Tobares, retail analyst at Numis Securities, says the investment bank has been negative about HMV since 2005, fearing the growth of online downloads, online privacy, DVD downloads and video-on-demand will continue to hit its bottom line.

“I’m not sure why they acquired Fopp,” he says. “If they wanted to move into a more quirky offering they have plenty of space [in stores] to do that.” 

Strategic move
High street music retailers are increasingly facing tough times with the explosion in online downloads and increased competition from the supermarkets hitting profits hard. HMV must find a way to unlock the “potential” of the Fopp brand to prove that the purchase is a smart strategic move at a time when many believe it should be concentrating on getting its own house in order.

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