Amazon step aside: HMV poised to become UK's biggest entertainment retailer

Is HMV back on track 18 months after being on the brink of collapse?

by Elizabeth Anderson
Last Updated: 10 Oct 2014

After years of struggling against the likes of online retailers and supermarkets, HMV chairman Paul McGowan has said it is ‘only a matter of time’ before the music chain becomes the UK’s biggest entertainment retailer, overtaking internet giant Amazon.

Given that the statement comes just 18 months after the chain went into administration, putting more than 400 shops and 2,500 jobs at risk in the process, it would be a remarkable turnaround if accurate.

The brand was saved by turnaround firm Hilco in January 2013, which has spent the last year trying to entice customers back into the remaining 125 stores.     

Paul McGowan, Hilco’s chief executive and HMV’s chairman, told the Mail that customers are flocking back to the stores after a renewed interest in buying CDs and vinyl.

HMV said same-store sales rose 13.8% in the past two months, including a 21% increase in sales of CDs and vinyl records and a 6% rise in sales of DVDs.  Live in-store performances from bands including JLS and Ed Sheeran have also helped to get customers through the door.

The growth means HMV is closing in on Amazon, which controls about 20% of the market across music and DVDs. HMV estimates it is now only 1% behind Amazon and gaining fast.

And it comes after figures published last month by Kantar Worldpanel showed that HMV has reclaimed second place in the British entertainment retail market, after winning back customers from supermarkets.

‘It’s only a matter of time before we overtake Amazon,’ McGowan told the paper. ‘HMV is re-engaging with music shoppers and getting them back into shops. This is about being an authority in music, not selling music as a commodity.’

He added that the chain been profitable ‘since day one’ of Hilco’s takeover after it shed loss-making stores and stopped selling goods online, including tablets and headphones. Previously the chain had suffered from the high street ‘showrooming effect’, where consumers go to a shop to check out the product they are interested in, and then head home to find a cheaper deal from an online supplier that does not have the same overheads as its high street counterpart.

Top 9 UK entertainment retailers

Market share in 12 weeks to 07/07/2013

Market share in 12 weeks to 06/07/2014

Change 

Amazon

18.8%

21.8%

3%

HMV

15.1%

14.7%

-0.4%

Tesco

16.4%

14.6%

-1.8%

Asda

12.8%

12.3%

-0.5%

Sainsbury's

8.8%

8.0%

-0.8%

Game Group

6.0%

7.1%

1.1%

Morrisons

4.1%

3.4%

-0.7%

Argos

1.8%

2.6%

0.8%

Play

3.0%

2.2%

-0.8%

Other

13.2%

13.3%

0.1%

Source: Kantar Worldpanel

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