Wednesday, 30 January 2013

The Demise of HMV: Part 3 - Lack of Clarity of Vision

When the very first HMV opened in 1921 its vision was about one thing: gramophones.

But the entertainment industry changed and with it the vision of the brand expanded and evolved. But unfortunately somewhere along the line the vision of what the company was about either got lost, or it grew so flabby it could no longer keep up with the pace of change. And so gramophones became records, became records and tapes, which became records, tapes and video cassettes, which turned into records, CDs, tapes and videos and which continued to add things all falling under the banner of entertainment. Records were phased out but DVDs, Blurays, computer games, t-shirts, books, mugs all got added. And the chain started acquiring bookshops adding Waterstone's to Dillon's and later bringing in Ottaker's too.

So to return to the question, what exactly was the vision of HMV? Did they express it any more precisely than to be the leading retailer of entertainment products?

Such a broad range of stock doubtless worked well at the big stores, but at the smaller stores it was fatal. The stores stayed the same size, but whereas originally they had housed two or three types of product, they ended up selling many more. Stores went from being half full of CDs to having to squeeze out the CDs to accommodate the DVDs, games, books and mugs which meant that those that went in to buy a CD had a much smaller choice. Fine if they were desperate for anything. Or if they wanted to support the high street despite having no real interest in the product, but long term the cloudiness of HMV's vision meant that they were compromising on their service. No longer able to offer a significant chunk of the spectrum at the very moment the spectrum was broadening rapidly.

Looking back the decision to takeover Waterstone's and then Ottaker's looks particularly foolish. I'm not sure how they acquired Dillon's in the first place, but it was clear by the time that HMV took over Waterstone's in 1998 that book shops were going to be in as much, if not more, trouble than music stores in the long run. Amazon were up and running and the memory required to transfer the text of a book was always going to be less than that required for a CD.

But it was always the decision to reduce the amount of space dedicated to music, particularly for games, that I think was the most costly. They never really went for it - games were always at the back of the store, and the variety of formats and consoles and the speed of change meant it was a bad area to get into. Ever bought a computer game from a supermarket?

The lesson is to keep your vision lean and focused. Diversity is not necessarily a bad thing. The main supermarkets have diversified more and more without hitting the buffers. But HMV's vision didn't account for critical factors, such as store size and ultimately what it thought it stood for differed from what its customers thought it stood for.

Wednesday, 23 January 2013

The Demise of HMV: Part 2 - Being Indistinct

We used to have a Virgin in town. Then Virgin became Zavvi, Zavvi went bust and shortly afterwards became an HMV. But nothing changed. Apart from a change in branding and colours the set up was exactly the same. 'Sale' items close to the door, a not particularly easy to navigate layout. It was probably the same racks and tills as the Virgin ones all those months before.

This fact highlights two big problems with HMV's strategy. Firstly, they failed to remember that Zavvi went bust. Why do everything the same as a company selling the same stuff as you that has just failed? Perhaps the people at the to assumed Zavvi's customer's would come over to them, and in small town's like mine they probably did to a certain extent. But no-one seems to have questioned why Zavvi went bust (aside from blaming the internet).

More importantly it highlights HMV's failure to be distinct. What did they stand for. Some of those questions I want to look at in the area of their vision, but even when compared to companies that shared their vision (such as Virgin/Zavvi) how was HMV any different. Occasionally it got box set deals that no-one else did, but otherwise there was no craft, innovation or identity to their sales. They weren't cheap enough to beat Amazon and iTunes. They lacked the love of their product like the record shops they had ousted.

This really left them only three markets - technophobes, those buying £3 DVDs who couldn't be bothered to see if Amazon did it 50p cheaper, and people buying presents at the last minute. Those are three fairly small markets, and shrinking ones at that.

Or look at it another way. Back in the days when a decent town centre might have an HMV, a Zavvi and an MVC/Andy's records, what proportion of customers cared which they were in? Once the Internet could do snigger selection quicker then without being in any way distinct, HMV were done for.

Thursday, 17 January 2013

The Demise of HMV:Part 1 - Failing to keep their customers hearts

(This is part of a series of posts looking at where things went wrong for HMV. To read the rest of the posts in this series click here.)
I've heard many people talk about their love for HMV over the last few days and about happy memories of visiting the store.

The problem is that they were all in the distant past.

 I've had people talk about getting expert advice from staff, or discovering something new, or even just the sensation of flicking through the vinyl (which really dates things!). For me I remember the experience of the big HMV in Leeds opening and the excitement of all that lay inside. But no-one has talked about any such recent experience.

Somewhere along the line HMV stopped delighting its customers. Some of those delighters became obsolete or got abandoned as not producing a significant return on investment, but without them there was little to give the brand loyalty - to make people love HMV. They just became a retailer selling things which might be more convenient to pick up in town whilst you were there, than somewhere you went to town for. And as getting to town got less convenient, and you could order something cheaper and have it drop through your door without having to leave your seat then HMV got left behind.

I have a few ideas on what HMV could have done to maintain some of this "Experience" and I'll outline them in future posts, but for now the main lesson is this - if you want to do your business away from the internet, you've either got to generate ownership for the customer - to help them feel like they have invested something in your company - or you have to be the cheapest. Sadly by the time they died out HMV were neither.

Tuesday, 15 January 2013

The Demise of HMV

One of Britain's largest high street retailers HMV has at last called in the administrators which is being seen as significant not just because of the 4500 staff who will probably lose their jobs, but also as a key marker in the demise of the high street.
Having seen this moment on the cards for some time now I'd like to look at some of the areas where HMV failed, and I'm going to take a post on each of the following points:
  1. Failure to keep their customers hearts
  2. Being indistinct
  3. Lack of clarity of vision
  4. Lack of innovation
  5. Failure to take advantage of new technology
  6. Failure to develop their online business
  7. Not facing up to the changing nature of music distribution
  8. Not exploiting their key commercial advantage.
I may add others if they occur to me as I go on.

This list does not, of course, cover all the reasons behind HMV's demise - the challenge from the likes of Amazon, CDWow and the supermarkets was substantial - but it looks at the areas where a bit more creativity and strategy might have made a difference.

Monday, 14 January 2013

Countering the Euro-sceptics

Euro-scepticism is on the rise in the UK, and primarily it's because those against the current set-up are winning the arguments hands down. By instinct I'm pro-Europe, but at the moment on the fence, because whilst, time and again, I've heard the reasons to leave the EU, those in favour of it seem to have no coherent strategy for getting their point across.

UKIP's current success is of course down to more factors than just their Euro-scepticism - and the increased Euro-scepticism is due to many factors other than UKIP - nevertheless they have been a significant catalyst in this change in perception.

Why? Well firstly they are passionate. Not just in the way everyone says they are these days ("passionate about insurance"), but genuinely. On the day of the 2010 election UKIP leader Nigel Farage was involved in a crash whilst flying in a plane towing a UKIP banner. At the time I remember joking that he would do anything to grab column inches. Time after time he appears on "Have I Got News For You" knowing he is going to be torn apart and just smiles through it. Time after time on "Question Time" he links the social and political problems of the day back to our membership of the EU. Say what you want about his party being "closet racists" (Cameron) or NIMBYs (various), but you cannot argue that Farage passionately wants the UK out of the EU.

Let me put it another way. Have Clegg, Cameron and Milliband shown anything like the passion that Farage has about, well, anything? The only person I can think of who is passionate about Europe is comedian Eddie Izzard.

The second reason that UKIP is gaining traction is that they have their communication strategy sewn up whereas the pro-Europeans just have a few disparate threads.

Listen to anyone from UKIP for long enough and they will tell you a story of how the EU is wasting our money. They will give you the figures about what the EU costs us. They will express those figures in terms people understand and care about, such as how many hospitals could be built for one year's EU membership.

In contrast, all the pro-Europeans do is talk disconnectedly about how it will cost British business, or how the business community is behind it. These are poor, incoherent, arguments. The evidence of how it will cost us, and what it will costs us has not been communicated with anything like the clarity of the cost of being part of the EU has. Will leaving the EU really mean no-one wants to buy our aeroplanes (Farage's crop-dusters aside)?

Furthermore, wealthy, business leaders are hardly flavour of the month. And dragging out old-timers like Ken Clarke and Peter Mandelson just reinforces the impression that this isn't really an issue that the major parties care about.

So having been pro-Europe for most of my life, I'm now on the fence. I don't want to be. I'm trying to pay attention, but until the pro-European lobby get their act together (and if they really have all that British business behind them, they really should have the money to) then the argument is going to continue being lost.

Wednesday, 9 January 2013

You Don't Need a New Diet you Need an Effective Strategy

In years gone past, people prepared for Christmas by eating more plainly during advent. These days things have switched around and the month of self-denial is the month after Christmas as people try to shed their Christmas weight.

There's an abundance of diet plans these days. Many are indistinguishable from one another; others provide the opposite advice. But here's the thing: what most people need isn't the best available diet, because most of us that weigh more than we'd like know that we either need to eat less, or eat better things.

No, what most people need is the right strategy, and by that I mean the one that works best for them. For some it is the January/pre-holiday "fast". Getting rid of the excess after Christmas or before the beach. For others it's the crash diet. Statistically it's likely it will all go back on again, but it brings a measure of balance and at least stops things getting worse.The key is knowing what will work for you.

For me I can remember the moment I realised what needed to happen if I was going to lose weight, and 500+ days later I'm about 50lbs lighter. My solution may well not work for you - your strategy might be something else - but rather than write my "one weird tip" in an advert and make you pay for it, you can have it for free. Here it is in its most economical form.

Record your weight every morning with digital scales.

"Record" because your memory fades and you'll lose the firm knowledge of where you started. Sometimes it's even hard to remember yesterday's. Plus if you do it on a spreadsheet and you're a stats geek like me you can make pretty pictures. "Morning" because that's when your weight is most consistent (and lowest). "Every morning" because my (and I assume your) weight fluctuates far more widely than I (you probably) imagined. People often say they have lost or put on a pound since last week, but that's largely meaningless - it's less than the weight of a pint of water and might simply reflect what happened that day. And this is why I stress "digital scales". Analogue scales are just too inaccurate relative to the actual rate at which weight loss is occurring. There's minimal encouragement/chastisement to be had.

Recording it every day means that not only do you have an accurate picture of what is happening as well as maximising your motivation, it also means you learn about how your body changes with weight. I've discovered I put on weight very easily, but losing it takes a while. Unless that is after I've eaten a big meal (or five) when the weight drops fairly quickly, not because I'm getting less fat, but just because that extra tonnage is taking a while to pass all the way through.

But as I keep saying that strategy won't work for everyone. Other people do far better with a strategy such as WeightWatchers, which might be because of the simplicity of the points system, or be because of the group support aspect. For others it's more trips to the gym.

So if you want to lose weight this January think about your strategy, What will work for you? And if you've no obvious ones coming through try recording your weight every morning on digital scales.

Sunday, 6 January 2013

Customer Retention or Customer Return?

A couple of weeks ago I finally switched gas providers and I've been dreading that call.

I know friends who have used the customer services exit call to secure a better, deal, but I just tend to feel under pressure to cave and having no intention of doing so, it's a tense, combative experience which tends to reinforce the less-than-positive view that drive me to switch in the first place.

Yesterday the call came.

I sighed, braced myself for yet another conversation dominated by short, terse, "no"s and waited for battle to commence, but it never came. Instead I got a polite, and business-like confirmation that this was indeed something I had initiated, and a thank you.

And now I'm even wondering if switching was the right call...

I don't know if this is something driven by legal changes or by a strategic rethink, but if it's the latter I can see its potential. I wonder what proportion of customers are persuaded to stick by those calls. And how long it is on average before they try to switch again, and how much extra it costs the company to give them those sweeteners. Will leaving the ex-customer not feeling battle weary (and perhaps slightly guilty) mean that if and when they get disillusionned with their new company they'll return because they at least had "good customer service"?

Thursday, 3 January 2013

Water, Water Everywhere

Last year was one of the wettest years in the UK ever. That's pretty good news at the start of a century when high quality water is going to become one of the most sought after commodities in the world.

So what do we do with it?

We pour it down the drain.

Literally.

Perhaps it's just me, but I don't need drinking quality water to wash in, or to water my garden with, or to use to flush my loo. And yet we all still do. And then our water companies tell us there's a water shortage.

Changing this system is not going to be quick or easy. But in the long term I strongly suspect we can't afford not to. Give us a second, lower-quality grade of water, pipe into our homes and in the long term as consumers we'll save money, and as citizens we'll be far better placed in the global economy.

Because some day one of the countries who don't find planning BBQs quite so precarious is going to do it first.

Tuesday, 1 January 2013

New Year, New Plans

I dreamt of starting this blog for a long time, and then a new job happened and time disappeared and the need wasn't so great. But quitting wasn't so strategic, so one of my New Year's resolutions is this - to this blog rolling again. Apologies if you wondered what happened, but things are going to start to pick up again.
Matt