Many commentators and analysts have already called time on high street music and video retailers, sounding the huge and swift emergence of digital file formats and internet distribution as the death knell. For some, HMV has become something of a bellwether for the fortunes of the whole sector. With a long history of innovation in the music retail market, HMV has developed from its original Oxford Street store, which opened in 1921, to become a leading music retailer with 250 stores in the UK and a further 129 outlets internationally.
But the last few years have been a turbulent period. According to market research company Mintel, high street sales of pre-recorded music have fallen by 14 per cent between 2002 and 2007. Similarly, Verdict Research says that last year the market shrank for the third consecutive year, dropping by 2.9 per cent to £4 billion. At the same time, downloads are rocketing. Verdict predicts that they will reach £600 million in value by 2012, accounting for 13.5 per cent of the total music and video market in the UK.
It has taken time for traditional retailers to realise what is happening and to develop a response to it, but HMV is now at the front line of those changes thanks to a substantial investment in brand strategy and design. Under chief executive Simon Fox’s strategic plan for the group, this design investment forms a key part of plans to ‘revitalise’ its stores business, chiefly by embracing the consumer shift to digital products and online social networking.
Over the past couple of years the company has worked with branding and design specialists venturethree to define what HMV should represent as a brand, and to determine what changes were needed to ensure the company stays relevant to today’s consumer. In developing HMV’s strategy, one of the key aspects identified by venturethree was that the company should align itself more closely with people’s emotional relationship with music, films and games.
This eventually led to the succinct strapline ‘Get Closer’, inspired by HMV’s new mission that ‘no one gets you closer to the music, films and games you love’. This idea has since led to the launch of a ‘social discovery website, getcloser.com, and which, crucially, has also informed the store design developed by retail specialists Dalziel & Pow.
‘A huge amount of what we’re doing now has come out of working with designers,’ explains Gennaro Castaldo, head of press and public relations for HMV UK and Ireland. ‘Once we understood that we needed to get closer to our customers by using the emotional dimension of the albums, films and games we were selling, we were then in a better position to invest in a brand campaign. As a result of this, our stores are effectively becoming a physical manifestation of that same basic idea.’
A ‘whistles and bells’ trial store opened in Dudley in September 2007 under the Dalziel & Pow blueprint and sales jumped by 25 per cent compared with an equivalent period pre-redesign. According to Castaldo, the Dudley store necessarily represented a major investment, so the company refined the format with a few minor changes to materials, unitary and fittings in order to bring down the cost without affecting the impact of the overall design scheme.
Technology plays a substantial part in the next-gen stores, with social hubs connecting customers to the internet via Apple iMacs and digital kiosks enabling customers to purchase MP3 format songs that are DRM-free as well as download video and games clips for free. The overarching idea is that physical and digital products come together in one retail environment for the first time that is much a social space as it is a shop.
Thanks to the strong performance at Dudley, HMV decided to roll out key elements of the new design across its existing estate, as well as a number of new stores, such as in the Liverpool One and Westfield London shopping centres. Having launched in October 2008, Westfield is one of the first ever retail outlets to offer direct in-store mp3 music purchases – reinforcing HMV’s specialist credentials.
This investment came at a time when other high street music and video retailers were finding the market tough. Virgin had pulled out of its Megastore business (now called Zavvi, after the acquisition by Zavvi Entertainment Group) and Music Zone and Fopp had both called in the administrators.
‘It’s a sophisticated multi-channel offer where the design shifts the stores from a functional retail offer to become more of a social space,’ says Castaldo. ‘We’ve had to adapt and change to what customers want, and working with design groups venturethree and Dalziel & Pow has helped to give us a brand and store identity which reflects those changes in the market.’
