'It's a huge part of the industry': Kim Bayley on why the biz needs HMV

'It's a huge part of the industry': Kim Bayley on why the biz needs HMV

While the music industry is celebrating continued growth with new figures from the BPI and ERA, the potential loss of HMV is a dark cloud looming over the start of 2019.

Kim Bayley, CEO of the Entertainment Retailers Association, was on media duty over the festive period to provide a voice for the industry when the news broke. Here, she offers her analysis and outlook for the last music chain and physical entertainment...

HMV’s been in much better shape over the last few years. What went wrong this Christmas? 

“I don’t think anything specific went wrong at HMV that wasn’t going wrong everywhere. It was just a really difficult Christmas trading period – sales in that week prior to Christmas were 30% down across the board in both video and music. That’s not really what anyone was expecting. If you looked at the trend up until the last few weeks of the year, you would have expected a much better Christmas than we had. I think it’s high street malaise and tough Christmas trading, I don’t think there was anything HMV could have done about that.”

Why did the release schedule not deliver for retailers?

“While there was some optimism about the release schedule, it wasn’t full of the big releases necessarily that we’ve had in recent years. When you look at the top sellers, you’ve got soundtracks and Now That’s What I Call Music albums, but you’ve not got premier artists necessarily selling huge volumes through Christmas.”

The administrator at KPMG mentioned the decline in DVD sales, was music as badly hit? 

“They both suffered massively in that run-up to Christmas. There was relatively little difference in terms of the performance of the two products in the week before Christmas.”

While there was some optimism about the release schedule, it wasn’t full of the big releases that we’ve had in recent years

Kim Bayley

What’s been the wider industry reaction since the announcement?

“I would hope that suppliers are looking at what they can do to at least get them through the next few weeks, and hopefully take it from there and find a buyer or maybe run the business on a slightly different scale. HMV have a lot of stock on consignment, so there are no doubt conversations going on about how to deal with that.”

What’s the outlook for HMV?

“I think it’s too early to tell at the moment. We’re only five days from the announcement and whether there’s a buyer out there remains to be seen. We also need to see how trading goes over the next few days. We’d like to hope that there is a buyer out there or the business can be run in a different way. But I think it really is too early to say at the moment.” 

HMV is still a market leader in terms of physical sales... 

“It’s a huge part of the industry. If you think that physical entertainment across music, video and games is £1.8 billion a year, and certainly for music and video they are a significant proportion of those physical sales, between a quarter and a third of the market. That’s quite substantial, it isn’t something that would immediately get picked up by anyone else were [HMV] not to be there.”

So would those sales be lost to the market if HMV disappeared? 

“I think you would definitely lose some of it. We know from history when other retailers have closed down, generally about half of the sales vanish completely. One might say we’re in a slightly different place now but there are certainly a lot of buyers out there, particularly of catalogue-based DVD and music, who won’t have anywhere to buy that other than to go to Amazon, and not everyone wants to go to Amazon. So [the market] will definitely lose some of those sales if a solution is not found.” 

The indies seem happy to co-exist with HMV…

“Absolutely, if you talk to a lot of indies they see HMV as complementary and not a competitor necessarily. A lot of indies are very specialised in vinyl now, whereas HMV skews more towards CD. So they are not really in competition in many way. Yes, if you’re right next door to an HMV you might be in competition, but generally they help each other.”

To read Music Week’s physical retail feature subscribers can click here.

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