New Music Store Model in London

photo: Oxford Street, London.

HMV Group, with 250 stores, is Britain's top music and film retailer. It opened its first UK store in London in 1921. HMV stands for "His Master's Voice" - a reference to the company's logo - a 19th century painting by Francis Barraud, of a dog listening to a wind up gramophone.

With music making up only 30% of sales, DVD's 46%, and technology 21%, HMV has embarked on several new business ventures.

* HMV has partnered with the movie theater chain Curzon Artificial Eye. They are testing a 200-seat movie theater, branded "HMV Curzon", above a HMV London store. It should open this fall. The theater will be on the second level of the building, and patrons will enter the theater by walking through the HMV store on the ground level. Once in the theater, patrons will be treated to a cafe, bar, and luxury seats. There will be a merchandise area inside of the theater, as well. The theater will open at 9am, and will also show films for local schools, as well as parents with young kids.

"Millions of film fans visit HMV's High Street stores each year, making them an ideal destination for this new type of cinema experience," said Simon Fox, HMV Group CEO. "This partnership demonstrates our commitment to getting our customers even closer to the film and entertainment content they love."

"This is part of a wider strategy to reinforce the brand as an entertainment specialist," said Malcolm Pinkerton, a senior analyst at Verdict Research. "Their core market is moving online, and this is part of a long-term move away from the store as a place to buy music. At the same time, by getting people onto the premises to watch films, they will hope that they can attract customers to the stores."

Mr. Pinkerton doesn't expect the movie theaters to be a big revenue earner for HMV, but UK movie theater audiences were up 2.5% last year, the strongest year since 2004.

"HMV is the ideal partner to trial this totally new concept in cinema," said Philip Knatchbull, CEO of Curzon Artificial Eye. "HMV Curzon will expand the cinema experience beyond just film programming by interacting and reacting to our customers' interests and desires and providing them with a wide range of film and entertainment in an intimate and high-quality environment."

* In 2005, HMV purchased Waterstones, a book retailer, so the company now owns all 692 of the Waterstones stores - in 7 countries including Canada, Germany, Hong Kong, and Singapore. If the cinema venture mentioned above is successful, then HMV will consider opening cinemas above the Waterstones stores.

* In early 2009 HMV formed a joint venture with live music venue owner Mama Group. As a result, the Hammersmith Apollo is know the HMV Hammersmith Apollo.

* HMV also recently entered into a partnership with France Telecom's Orange, and as a result is now selling the company's cell phone products in the HMV stores.

HMV posted a pretax loss of $40.7 million in the six months ended Oct. 25, 2008. "We still have much to do," Mr. Fox said, "but I remain confident that the group's transformation plan remains on track to increase efficiency, revitalize our core business and establish new channels to market."

Source: HMV to Put Cinemas Above Music Stores in U.K., Advertising Age, by Emma Hall on 05.12.09 @ 06:19 PM.