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Diversification to continue at HMV: Bring on the catwalk

By | Published on Monday 29 March 2010

HMV last week confirmed that its recent diversification strategy will continue in the coming years, as the one time record seller repositions itself as an all-round entertainment brand.

Following its recent acquisition of live music and talent management group MAMA, HMV CEO Simon Fox confirmed on Friday that live entertainment was now a key strand of the company’s operations, with ambitious targets to boost ticket sales across MAMA’s venues and festivals, and to further expand HMV Live’s venue portfolio.

The HMV high street stores will also further diversify, with fashion and technology both priorities. With an increasing number of artists dabbling in fashion lines in recent years, HMV intends to expand the clothing departments in its stores beyond the usual band t-shirts and into other music-influenced fashion products. On the technology side, it’s hoped the retailer can boost its reputation as a seller of digital media devices and even other computer kit, in particular laptops.

On the net, Fox said he hoped to use HMV’s 50% stake in 7Digital to tap into the former independent download store’s knowledge and expertise, so to improve HMV’s own online operations, in particular music downloads and eBooks.

And talking of books, a diversification plan is also in place for HMV’s other major retail enterprise, Waterstones, which has been struggling more than the main HMV chain of late. Waterstones has a new MD in place, Dominic Myers, formerly of Blackwells, and he plans to expand the sale of book-based technologies, so e-readers and stationery products, through the Waterstones chain.

He also plans to give more control to the book parts of his stores to local managers, rather than enforcing nationally-orchestrated campaigns that invariably meant all Waterstones shops had to put tedious celebrity books in prime locations near the door. While such books will be best sellers in some Waterstones stores, of course, Byers said that the nationwide approach often didn’t work.

Giving examples, he explained how the Ant & Dec book had dominated at the firm’s Hampstead branch, whose clientele probably aren’t really looking for the ramblings of telly hosts past their prime (the Hampstead branch sold four copies of the book); and even better, the chain’s Glasgow store had been forced to give front-of-store racking to a book about the England football team. Byers hopes some local input on such things will help differentiate Waterstones from book-selling supermarkets.

Concluding his grand plan for the HMV Group on Friday, Fox told reporters: “Having rebuilt profitability over the last three years, we have a clear strategy to continue the transformation of the group and to ensure it has a vibrant and sustainable future, even though the markets in which we operate continue to change. We will continue to evolve HMV as a brand able to offer our customers a wide range of entertainment products and related experiences to be enjoyed at home, live and on the move. We have moved from being a one-dimensional retailer selling entertainment products to a broadly-based entertainment brand”.

As previously reported, despite all this diversification, and the general good fortune it has delivered HMV in the last eighteen months, until recently the City still seemed to think of the company as primarily a traditional entertainment retailer, resulting in a relatively low share price. However, Friday’s strategy statement has possibly helped turn things round a little in that domain, with the HMV share price shooting up more than 10% to 87p after Fox’s presentation.

As also previously reported, CMU publisher Chris Cooke will be talking to Fox about his diversification policy and what the future holds for HMV at this year’s Great Escape, on 13 May in Brighton.