With the demise late last year of high-street rivals Woolworths and Zavvi, HMV is acting quickly to ensure that it does not share a similar fate.
A spokesman for HMV says it was crucial for the retailer to diversify. 'Consumers are now accessing music and entertainment content in many different ways and across numerous new platforms, taking in everything from the live experience to digital technology. Physical albums are still an important part of this landscape, and shouldn't be written off, as many fans still love to own and collect, but the market has been showing gradual decline, and we have clearly had to respond to this trend and reflect it in our own changing offer,' he adds.
In January HMV expanded into live music via an £18m agreement with the UK's second-biggest live music venue operator, the MAMA Group. HMV now owns 11 of the UK's best-known venues, including G-A-Y, Heaven, Jazz Cafe and the 5100 capacity Hammersmith Apollo, which has been renamed the HMV Apollo.
HMV stores sell tickets as well as gig-related merchandise such as T-shirts. 'There are huge potential synergies - on the most basic level, the two brands can mutually promote each other,' says the HMV spokesman. '[Our] stores can actively promote the HMV co-owned Mean Fiddler Group venues where these are nearby, while the venues can return the compliment, and highlight HMV offers.'
HMV also has the potential to enhance its DVD sales with its move in April in to cinema. The in-store cinema concept at its Wimbledon store has been created in partnership with Curzon Artificial Eye (CAE), operator of the Curzon Cinema chain. 'If the hmvcurzon Wimbledon trial is the success we all hope and believe it will be, then the plan is to roll it out to other appropriate locations where we have the space and feel there is viable demand,' says the HMV spokesman.
In May, the retailer also launched a loyalty scheme, called purehmv. The rewards-based scheme allows customers to build up points and then trade them in for things such as gig tickets, subscriptions or even exclusive items such as a signed Metallica guitar. The HMV spokesman says that the purpose of the scheme is to develop a precise understanding of its consumers. 'In understanding them better we can develop a more informed, one-to-one relationship, which, in turn will hopefully encourage increase traffic and spend across all the products and services that we sell,' he says.
In the digital arena, Patrick Clifton, a director at digital agency Darling Social Services, believes that HMV has had to play catch-up in the market. 'It was so far behind online retailers such as Play.com and Amazon that it had to set up a warehouse in Guernsey to exploit VAT regulations so that it could compete on price.'
Simon Fox, who was appointed chief executive of HMV in 2006, has been credited with the retailer's turnaround. Sales and profits were up 4.4% and 6.4% respectively in the year to April.
Some argue these results should have been better. 'They look impressive, but if you consider what the market looked like in November with Zavvi and Woolworths making up about 20% of the market, if you knock that out then they aren't so impressive,' says Clifton. 'I think, long-term, the City isn't really convinced.'
The Group is currently in its final year of a three year transformation plan. Clifton explains that it is an ongoing battle for HMV to prove itself to the City. ‘The work they are doing is intelligent, but they always have to prove longevity to the City, which is difficult. The three year plan is an example of this and how they have to try and keep them happy,' he says.