HMV’s announcement last month that it is closing 60 stores is a sensible response to the company’s problems.
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Retailers are too reluctant to bite the bullet and close stores when the going gets tough, but in HMV’s current predicament, brave measures are needed.
But a morning spent in Birmingham brought home to me just how much duplication there is in the company’s portfolio. I passed two Waterstones’ stores and three HMVs all within spitting distance of each other. In New Street there are two branches of Waterstones at either end just yards apart, one on a wonderful old Midland Bank building, the other in a horrible 60s block.
Obviously there are complexities when it comes to getting out of leases, and any store closure is a shame for the staff involved. But from a pure business point of view, if there was to be only one really good HMV and one really good Waterstones in the centre of Birmingham, are many shoppers going to take their business elsewhere? It’s not as though there are many other options for book, music or DVD shoppers in the city centre.
It’s not just Birmingham. HMV Group has ended up acquiring more stores than it needed in many towns and cities around the country, largely as a result of the failure of its rivals. That was the right strategy at the time but now the focus needs to be on efficiency, and having fewer better stores in the best locations.