Conditions are famously tough. UK CD sales dropped by 10% in the first half of 2007, while there was a 50% increase in digital single purchases. Against this backdrop Virgin was forced to close several of its stores, while Fopp’s failure meant the collapse of 81 branches, and 700 job losses; HMV, meanwhile, saw its profits drop by more than half last year. The company has experienced a similar situation in books. Sales at its Ottakar’s and Waterstones chains have suffered at the hands of the supermarkets, which are able to sell the new Harry Potter novel, for example, for half the price.
So what is HMV doing to keep afloat? The sale of 62 Japanese stores will enable it to focus on its key markets, and the Fopp deal will bring a popular, if cult, brand under its wing. But as it only plans to operate six regional Fopp stores (saving a mere 70 jobs), it hardly seems enough to stem the tide. HMV’s other main tactic, of diversifying its own offering to include accessories like mp3 players and digital radio sets, seems slightly desperate as well. Perhaps it won’t be long before the dog starts listening to His Master's Voice on an iPod, too.