The reality was HMV – much like the now deceased Comet – had struggled to compete as consumers flocked to more digital-savvy brands such as Amazon.
“The press loved it as it was an easy headline; beleaguered retailer goes into administration,” says HMV’s head of marketing Patrizia Leighton in a rare interview, four years on from the business being saved by Hilco in a £50m deal. “But the headlines are not always where it’s at. Even now they say physical media is dead, but it actually isn’t dying!”
An audience for physical media
That isn’t to say physical sales are doing well, however. Last year, total UK sales of DVDs and Blu-ray discs – two of HMV’s core ranges – fell 17% to £894m as total revenues from digital video, which includes services such as iTunes and Netflix, surged 23% to £1.3bn overtaking more traditional formats for the first time. Physical sales of CDs, meanwhile, fell by 13%, a steep decline after a 3.7% fall in 2015, according to the Entertainment Retailers Association.
Yet these numbers don’t tell the full story, according to Leighton.
She hits back: “There is still an audience out there for physical media, irrespective of what the media believes. Young people like to own a physical product as it makes them feel closer to the artist and have something tangible to hold in their hand. We are seeing a trend [towards this way of thinking], particularly among young women.”
Last November, HMV overtook Amazon to become the UK’s largest music retailer. It attracted 41,000 new customers over the 12 weeks to 25 September 2016 and grew its share of the physical entertainment market by 3.1%. And while HMV’s sales and profits both fell in 2016, Leighton says it has regained “some momentum” and is now a “completely different business, which is sticking to the things it is good at.”
Her confidence has been boosted in part by the hipster-led revival of vinyl, something HMV has wisely aligned itself to. Last year, for example, it launched a student-focused cinema campaign reaffirming its support for the format and Leighton says HMV is “working tirelessly” with the record industry to ensure major releases are being printed in big enough volume to satisfy demand.
“We are selling thousands and thousands of turntables every week so that tells me those consumers will now need a place to buy their vinyl too. We want to bring in a new audience and show them HMV can be the home [for vinyl].”
HMV has also been boosted by its ecommerce operation. Its online business relaunched in June 2015 via its digital agency Ridgeway; prior to that the website was forced to shut off purchases and serve only as an editorial hub for news around the music industry. Leighton says the revamped website is a success because it has allowed HMV to broaden its product range, move into click-and-collect and ensure its 121 store estate isn’t “strained by stocking too many categories”.
Between 24 October 2016 and 28 February 2017, she says the number of transactions on HMV.com increased by 67% as overall revenues rose 76%. Basket size was also up by 69%. New online features, such as an intelligent search tool, also track the browsing history of HMV members in order to give members “sophisticated and tailored” music and film recommendations.
The fact the website now balances editorial articles and ecommerce is a plus, according to Leighton. “The majority of our competitors aren’t necessarily in both the retail space and the content space. That gives us an advantage.”
Rebuilding the brand
But what about the brand? After all, by Leighton’s own admission she now has to “make do with less” due to HMV’s owner Hilco cutting everything from store numbers to its marketing budget. Despite the latter drastically falling from the days when HMV was regularly advertised on British television, its brand awareness score holds up surprisingly well.
According to YouGov BrandIndex, HMV’s brand awareness rose 1.6 points over the last year, placing it 15th on a list of the UK’s 45 biggest high street retailers. Yet with consumer perceptions around HMV’s buzz and quality both remaining flat, according to the Index, Leighton concedes the brand now has to now make its money stretch a lot further.
“It is very important to ensure every single pound you spend on advertising gets a return. I need to sweat that spend as hard as possible and convert to a purchase or get somebody into a store,” she says.
So long as people want to buy physical media then HMV will be on the high street.
Patrizia Leighton, HMV
She believes HMV’s store estate replicating the feel of independent record shops will ultimately help this mission: “One of our big focuses is on giving each store a local feel. Each store is filled with staff recommendations and we try to host compelling events and work with social media influencers to create word-of-mouth buzz.
“Yes, streaming [on Spotify] is now big but we see people are using the digital space to inform their decisions or get inspired to then go into a store to ask our staff what they’d recommend. Streaming isn’t a replacement [for physical media], it is just another part of [the buying journey].”
HMV also has history on its side. HMV can communicate a heritage that stretches back to its beginnings in 1921. “It is great to have that history and yes we have a lot of consumers who are passionate about the brand, but your existence isn’t justified just from being there before.”
Surely this history means the brand is now more relevant to older consumers? “There is a question mark there,” Leighton honestly answers. “We certainly don’t have the level of ad spend we had pre-administration so in terms of the visibility of the brand you need to make sure you’re targeting that message really carefully at the right moments to the right people. But we are successfully bringing in a younger audience in a very calm, targeted way on vinyl and through partnerships such as collaborating with Warner Bros on Suicide Squad product exclusives.”
Faith in the future
That DC Comic partnership might have had something to do with Leighton’s previous stint at Warner Bros, where she was senior customer marketing manager from October 2007 to October 2013, and handled blockbuster campaigns for films such as Harry Potter and the Deathly Hallows. Reflecting on her time at the Hollywood studio, she says marketers can learn more from rebuilding a brand than being in a situation where ad spend is endless.
“It is great to experience both sides. Retail marketing is for me one of the best foundations you can get for understanding marketing in general as you’re extremely close to the customer,” she explains. “Retail isn’t for the faint-hearted as it’s so competitive but it’s also very rewarding as you constantly have to innovate.”
While catching Leighton during a reflective moment, I ask her what went wrong at HMV leading up to its administration back in 2013. Although this happened before her time at the business, she believes HMV was guilty of being ahead of its time, pointing to its previous sponsorship of music venues.
“You don’t have to look far now to see the iTunes festival or Spotify sponsoring events. It wasn’t that it was a flawed model [at HMV] but we were probably just a little ahead of our time and suffered [as a result].”
It wasn’t that HMV had a flawed model before… it was just a little ahead of its time.
As I share my own experience of paying for my first ever single at HMV – for the record, it was a cassette of Clint Eastwood by Gorillaz – I ask Leighton whether HMV has the potential to mean the same to future generations. With streaming only getting bigger through the likes of Spotify and Netflix, can HMV really survive for another five or 10 years?
“So long as people want physical media, we will be on the high street,” she answers. “The music industry has recovered really well over the last five years and it’s a solid foundation to build upon. But the one challenge is convincing the music industry, which has moved away from physical media, that things such as the vinyl boom aren’t just a flash in the pan.”
The media, according to Leighton, also has a big role to play. “I just think we have a very nasty habit in this country of latching onto negative news until people lose so much confidence they don’t even know what to do with it anymore. I hope entertainment will distract consumers [from Brexit] and HMV can provide the escapism. At the end of the day, we have weathered the storm and will continue to do so.”
And even if there are more storms on the horizon, you sense Leighton’s determination will help HMV to silence its critics for a while longer.
Retail and Ecommerce is one of the categories at this year’s Marketing Week Masters of Marketing awards, taking place on 3 October. Entries are now open. To find out more visit www.festivalofmarketing.com/awards