HMV Feeling the Pinch…Again

Following a big dip in group profits HMV has continued its cost rationalization process by selling off its Japanese business, enabling:

…the Group to focus on the markets where it has market-leading positions.

The problem for HMV, and most high street music retailers, is that they are feeling the pinch of (among numerous other larger factors) online physical and digital retailers, yet they are unable to respond effectively. Though it riles the retailers that a consumer electronic manufacturer is busy stealing their customer base there is unwillingness to really take the plunge and heavily integrate their digital offerings into the shop floor. This is largely because the core retail divisions are unwilling to risk further cannibalization of the core business by a low margin digital business that skews towards singles rather than albums. But unless they take a brave plunge and roll out aggressive integration the high street retailers will remain hamstrung when trying to compete against Apple et al and may fail to lay the crucial foundations for tomorrow’s music retail business.