decision by HMV’s administrators Deloitte to honour gift vouchers and to pay proceeds raised for charity singles is a piece of luck for those caught out by the music chain’s crisis. While at first sight this is less heartwarming for the chain’s other creditors, it may in fact be slightly upbeat news for them as well.
As administrator, Deloitte must act in all creditors’ interests in its attempts to keep the business a going concern. The vouchers move is therefore a bright sign, for two reasons. Firstly, as Deloitte acknowledged yesterday, the ability to honour vouchers depends on the circumstances of the case. Having reviewed HMV’s financial position, Deloitte evidently believes things are not bad enough to justify failing to honour these vouchers. Second, such a PR-friendly move suggests a strong commitment to keeping some of the chain’s stores afloat – the only circumstance in which consumer goodwill is vital to retain.
But why has the picture suddenly brightened for HMV? Partly because a frontrunner has emerged, apparently willing to take on the struggling entertainment distributor: Hilco, which owns HMV Canada and is a specialist in restructuring troubled firms. Hilco took on HMV’s Canadian brand in similar circumstances and it now boasts a re-energised business as the last nationwide bricks and mortar specialist retailer in CDs and DVDs north of the 49th parallel.
However, no matter who takes the reins in the UK, HMV’s stores have little chance without a business model that makes sense again. That either means adapting to new, digitally-focused consumer demand – for which it is already rather too late – or persuading content firms, also fighting a fierce rearguard campaign to protect their pre-digital margins, to back HMV as their last UK high street champion.
So it comes as no surprise to hear the rumours that Sony, Universal and Warner are lining up to offer HMV special credit arrangements and cheaper wholesale prices on their recordings. As I wrote before Christmas, Trevor Moore had already signalled the firm’s intention to come cap in hand to suppliers in the new year. Recent events have only heightened the move’s urgency. The start of 2012 saw the giant content firms ride to HMV’s rescue. It seems they are on their way again. It is hardly a long term strategy though, so spend those vouchers soon.
LEADING THROUGH THE DARK
From a chain fighting to keep back the future to one embracing its possibilities. Tesco is opening another so-called “dark store”, the fifth of its warehouses designed to serve online shoppers, after a Christmas in which online food sales grew 18 per cent. On launch, the retailer conjured up images of its staff rolling trolleys up and down secret aisles on our behalf. However, this month it announced three dark stores will use automation to support the humans picking and packing, which sounds more reassuringly futuristic. Tesco has its problems, but with dark stores and its investment in Click and Collect, at least it’s looking for the answer in innovation, not nostalgia.