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Can HMV stop Amazon?

The long resurrection of the high street retailer continues as it snatches CD and DVD market share from Amazon, but ultimately the trend only goes one way.

by Adam Gale
Last Updated: 06 Jan 2016

The British high street has been ‘dying’ for decades now, yet a quick glance at our city centres shows they haven’t become boarded-up, dystopian ghost towns. Those retailers that survived the onslaught of Amazon and the other online stores did so of course by adapting. Argos ditched heavy catalogues for sleek tablets, while HMV’s new management said a firm goodbye to its long rows of £19.99 CDs (those were the good old days).

Data from market researchers Kantar Worldpanel seemed to vindicate that approach today. In the physical entertainment sector (music, game and films in DVD or CD form), the high street lifted its share of sales to 68.4% for the 12 weeks to 27 September, from 64.6% the year before.

HMV led the charge, raising its share from 12.3% to 13.6%, followed by Game (10.6% up from 9.5%) and Argos (4.2% up from 3.2%). Sainsbury’s and Morrisons grew their share slightly, but Tesco and ASDA’s woes continued, with the supermarkets losing 0.3 and 2 percentage points respectively.

Amazon, while still clearly the market leader, lost ground correspondingly, with its share falling from 21.6% to 20.4%. Is this the turning point in the war between the high street and the web then, and the beginning of the end for online retail? In a word, no.

For a start, the shift away from online is likely to be reversed over the next couple of months, as Black Friday/Cyber Monday hysteria sweeps the nation again. More importantly though, the reason the high street stores are gaining ground is likely to be because Amazon knows the market is shrinking.

Physical music sales, for instance, fell 4% as customers continue to shift to streaming and online downloads. Amazon would far prefer people buy their music from its streaming service (the originally named) Amazon Music rather than having to ship a CD to them.

This isn’t to say physical entertainment is going to go away or that Amazon doesn't want every sale it can get – the convenience and gift markets means there’s still a place for it. But Amazon won’t be too worried by the recent high street resurgence, not least because physical sales are so small now anyway. It's still much cheaper to buy films and music in digital form and that won't change - the high street megastores with their vast arrays of CDs and DVDs remain firmly dead and buried.

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