What HMV needs to do next

HMV, the embattled last bastion of high street music retail, has caught on to the desperate need for an ecommerce overhaul. But it will have a tough job making an impact, because that horse bolted long ago.

HMV now has a new head of insight and ecommerce, Paul Stevens, reporting to ecommerce and marketing director Mark Hodgkinson. Both are former Asda marketers, both with relevant online pedigree from Asda.com. That shared experience ought to help them construct a coherent strategy to push HMV’s online offering into the 21st century, but it all comes very late. The retailer was sitting out the fight during the ructions that pulled apart the music industry in the past 10 years and took the business online.

If they are to have a hope of reviving HMV’s main business selling music and films, Hodgkinson and Stevens need to drag its website up by the bootstraps and make it competitive with Amazon and Apple’s iTunes. It is doubtful whether the new ecommerce team will have the freedom to go as far as necessary, but here is what they need to do.

1. Make everyone a loyalty member

The first thing Hodgkinson and Stevens should do is take down the barriers between consumers and HMV’s loyalty scheme, purehmv.

Go to its website, and you will be told there are just three “simple steps” to becoming a member. They include paying £3, then obtaining a plastic loyalty card either in store or via post, which takes between one and three weeks. Then you have to set up an online account and register the card with it.

A £3 charge might work if you want to create a premium service, but HMV needs to make its scheme mainstream so it can collect data on consumer preferences and market to them accordingly, as Amazon does. Membership should be free and available automatically with any online purchase. And customers should not have to wait for the card to come if they want to start earning points over the internet.

2. Bundle physical with digital

Many people still value physical media formats, but the main mode of consumption is increasingly digital files. So if someone buys an album or a film, they should get both.

This is going to be the hardest hurdle to overcome as it requires convincing the suppliers that the product they are selling is the content, not the distribution method. It will increase the cost per sale, but it will also be a unique selling point where it has a head start on Apple.

3. Simplify the website

The current website design gives a clue to how HMV thinks. Products are categorised by format (DVD, film-on-demand, music, downloads) rather than by the type of content. Consumers don’t think like this.

HMV needs to stop deluding itself by foregrounding physical discs as its most important product. This depends greatly on achieving step 2.

But music industry executives admit the labels have a keen interest in preserving their physical revenues from high street sales. So whether HMV has the political will to make these changes remains to be seen, especially now that big record companies and film studios have a direct investment in the chain.

The fact that HMV has put a ‘for sale’ sign over its live music division - the profitable bit and the bit with the brightest future - does not bode well at all.