What strategy should HMV employ next?

The most recent financial reports on HMV are pretty grim.  As The Guardian reports, its like-for-like sales in the music stores fell 13% in the last five weeks of the year and snow explains only a few percentage points of the decline. The problem is basic: HMV has too many shops and too many fierce online competitors.

The chief executive is taking action. The group, which also own Waterstone’s, will close 60 out of 600 shops in the UK. The management of decline is one of the hardest tricks to pull off in retailing, but not everybody ends up like Woolworths. There are examples of success, like WH Smith.

The situation is not yet dire - HMV still makes profits (maybe £46m this year), generates cash, does not have a heavy debt burden and has flexibility in its leases. All the same, it’s an interesting challenge to look at what’s going wrong and what might be done about it.

This BBC video clip sets the scene and should get you thinking.  What might be some of the ways forwards?

A very helpful BBC article is full of tips and suggestions, by taking an international perspective.  It looks at similar firms in France, Germany and the US.  The overall picture that emerges is pretty bleak, to be fair.  Firms like HMV seem to have found some sort of niche in Europe, but have almost entirely died out in America. 

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