Consumer spending across the UK-based HMV Group increased 3.1 per cent to over £2bn ($3bn) during the financial year ending 24 April 2010. Total profits also grew by 17.7 per cent to £74.2m ($112m), although like-for-like spending was down 2.4 per cent. Meanwhile, HMV has adopted a new strategy, effective March 2010, which builds on a plan first developed in 2007 to broaden the HMV entertainment brand. It is aiming to develop the product mix in its specialist retail stores, further expand its live music venue and ticketing business following the final acquisition of Mama Group in January 2010, increase its presence in digital via a joint venture with digital company 7digital and improve the performance of UK book retailer Waterstones, which it acquired in 1998.
The decline of just 2.4 per cent in like-for-like consumer spending at HMV contrasts with the steeper 9.9 per cent decrease in UK spending on retail video product-the main driver of sales at HMV's retail stores. This suggests that HMV has picked up business from generalist Woolworths and entertainment specialist Zavvi, following their respective closures. Some consumers buying from Woolworths and Zavvi outlets are likely to have switched, if HMV had a store nearby, although mass merchants and online retailers will also have benefited from the closures.
HMV is now the only bricks-and-mortar chain representing the UK's once-strong specialist audio-visual retail sector. Instead the market is now dominated by supermarkets. This change may be increasingly felt as the industry attempts to launch what is effectively another new video format-3D Blu-ray Disc (BD). Whilst specialist retailers are usually open to providing shelf space for new formats, many mass merchants tend to focus on value video product, often heavily discounted to increase footfall in stores. There are concerns that UK mass merchants may opt not to stock 3D BD until the technology is more mainstream, particularly if the US studios decide to release a separate 3D SKU (stock keeping unit) alongside the standard 2D BD version, rather than opting for a single-SKU solution.
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