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The Great Escape: HMV chief on diversification, iTunes and extending his brand

By | Published on Thursday 13 May 2010

And we’re off. The Great Escape 2010 has begun, and the first CMU-hosted event of the convention saw CMU Publisher Chris Cooke chatting to Simon Fox who, as the boss man at HMV, is now not only in charge of the high street’s only surviving music retail chain, but also oversees the mega MAMA Group empire, which includes The Great Escape itself.

“I definitely saw the opportunities that were there, given the history of the brand”, Fox said, discussing his appointment in 2006 as CEO of what was then a struggling retail company. Though he admitted that the opportunities he initially grasped involved reinventing his company’s high street operations, rather than the subsequent diversification out of retail.

“My initial business plan focused much more on the stores, and making those better. While we no longer think of music in terms of plastic boxes at HMV, our initial strategy was focused on selling physical products in our shops. But I think that was the right thing to do. We needed to strengthen our offer and brand on the high street, to increase our profits, and boost shareholder confidence, before pursuing more ambitious plans”.

Those more recent “ambitious plans” have seen HMV expand its digital operations by taking a stake in 7Digital, move into film screenings through a partnership with Curzon, and enter the live market by partnering with and then acquiring MAMA.

“I think we were very clear where our expertise lay”, Simon admitted, when asked why his diversification strategy centred on partnership and acquisition rather than launching brand new digital or live ventures. “HMV had tried to launch itself in the download space, without success. When you have companies like 7Digital doing all the interesting stuff they are already doing, it makes sense to work with them rather than to try and go it alone”.

Of course, while a 50% stake in 7Digital, and the relaunch of the now 7Digital-powered service, sees Fox’s company step up its game in the digital music domain, that is still a market dominated by one big competitor, Apple.

“Apple, with the iPod and iTunes, they have a great service. It wouldn’t be wise to take them head on”, he admits. “But there are lots of other ways we can engage with consumers through digital, and 7Digital are active in many of these areas. There’s no point trying to punch iTunes, but I do believe we can compete by providing new and innovative services, and that’s where 7Digital lead”.

The diversification continues, with fashion departments due to open in HMV stores this year, the first one in Leeds tomorrow.

“HMV is an entertainment brand first and foremost”, Fox observes, “games, films and especially music. That will always be at the heart of what we do. Our job is to provide entertainment products and services to consumers in the way they want – on the high street, via the net or mobile, and in the live domain. In terms of growing out of music, film and games;  well, fashion is a logical step, music and fashion go hand in hand. But our fashion ranges will be strongly linked to music, and entertainment will always be key”.