HMV in Fopp deal

It's enough to make Nipper, HMV's gramophone-obsessed terrier, emit a bark of relief. Not only is vinyl undergoing a welcome renaissance, but the troubled high-street giant has offloaded its Japanese stores and snapped up the remnants of Fopp, the budget music, DVD and book chain that went into administration at the start of July.

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Last Updated: 06 Nov 2012
Seven-inch single sales may be breaking records, but HMV will probably still have one eye on the salutary lessons of the cassette and 8-track. Both achieved great popularity in their heyday, only to be rendered completely obsolete by newer formats. Just as the cassette was sent to the great bargain bin in the sky by the rise of the CD, so HMV has been brought close to the brink by the relatively new challenge of supermarkets, online shopping and digital music.

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. 

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