RESEARCH PROPOSAL

Research proposal

Research proposal

RESEARCH TITLE

“Is it worth being on the high street? - An analysis of HMV's retail store performance”

INTRODUCTION AND MARKET OVERVIEW

HMV was founded in 1921, with its first store opening at Oxford Street. HMV Group was formed in March 1998 with the acquisition of UK's leading bookstore; Waterstone's. Both of HMV Group's brands have been very successful. HMV Group now operates 379 HMV stores and 313 Waterstone's stores worldwide, out of which 250 HMV stores are in the UK and Ireland. (HMV Group) (1)

Tough competition from supermarkets and online retailers made HMV Group to rethink their strategy and the Group decided to take a bold step forward and started a three year business transformation plan for the HMV retail outlets in 2007. (BBC News) (2) At current, the trend in the UK market is changing. HMV's core target age group consists of consumers who are under 25 and this is causing a huge problem with physical sales of CDs. As their target age group is 'tech-savvy' and they prefer to download their preferred tunes rather than going into the stores and buying the physical product. This in turn has affected the sales growth and profitability has also slowed sharply.

HMV's slow growth is only helped by the tremendous rise in video games. Game sales have increased by a whopping 42%. (BBC News) (3) It now accounts for 21% of HMV's total UK & Ireland sales, up from 14% last year. (Daily Examiner) (4) The gaming market is expected to be worth 4.6 billion pounds compared to a 4.5 billion pound music and video market. That means that the gaming market has increased by 113% over the last five years compared to tiny 0.8% for music and video. (Times) (5)

The market is moving away from music and according to news article, playing games is becoming Britain's favorite past time rather than listening to music or watching DVDs. There are fewer people going to buy CDs from the retail stores as they are enjoying browsing the purchasing the CD or MP3 file from online retailers. You would think that file-sharing or legal downloads would be the main problem, but that is not the case. According to Verdict Research, less the two thirds of CDs and DVDs are now sold in stores rather than online. (BBC News) (6)

HMV has changed 6 of their stores to the new retail store format for a trial period and if successful, HMV plans to transform all of their stores over time. The new stores have internet service kiosks, where consumers can scan a CD/DVD or listen to a sample of the track before purchasing it. HMV is also planning on rolling out a new loyalty card scheme and a digital jukebox service through their website. HMV are also launching a second hand games offering by the end of the year. (Telegraph) (7)

The online store of HMV is going to start offering a jukebox service which will allow consumers to stream and download ...