Was HMV the first victim of showrooming?

Showrooming, the practice of using a shop to browse and research, but buying from a cheaper online store later, has been a hot topic in the retail sector recently.

Our own research, conducted just before Christmas, showed for the first time the true cost of Showrooming in the UK.

With one in five shoppers saying it was something they had done, and nearly half of those ending up buying elsewhere, nearly 10% of sales are walking out of the door as a direct result of showrooming activities. So it is no surprise that those retailers who seem least well equipped to deal with that loss are finding it hard to stay in business.

And HMV looks like a prime example. Almost their entire product line is easily found at lower prices on Amazon and other online retailers, and reliable and often free next day postal delivery, there are no compelling reasons to pay more just to own it today. HMV became a great place to while away half an hour looking for inspiration, but not a place to pay over the odds for a purchase.

But not only did HMV fail to read early enough the changing habits of shoppers for CDs, DVDs and games, they also failed to put in place an adequate online offering of their own. By failing to invest in ecommerce, you could say HMV lost their customer twice. Once when that customer decided they would switch their purchase behaviour from High Street to online, and again when that customer made a decision on which online retailer to buy from.

So could they have done anything differently? I would argue yes. HMV had an inherent advantage over other retailers, in their links with the music industry and distributors. They could have built a unique online experience, offering a level of rich and exclusive content for music fans, which would have been unmatched by rivals. They could have been an early player in the download space, another behaviour change that they failed to read and react to.

HMV’s problem, like Comet and Jessops before them, and like Blockbuster and I am sure others to come (Game anyone?) is that they failed to understand and respond to changes in consumer shopping behaviour. The lesson for all retailers is that only by investing in gaining a deep and insightful understanding of the shopping behaviours and preferences of your customers, can you design shopping experiences that keep them in your store, physically or virtually.

Image via HMV media centre
 

Further reading:

• Blog: The true impact of showrooming
• Mobile infographic: Brands risk losing customers as result of poor mobile engagement

21/01/13 Lucas said:

Totally agree with this... HMV shamefully missed the opportunity to leverage their physical presence. A key problem was they never got the digital piece right, which is the first step toward effectively managing the showrooming phenomenon (rather than being a victim to shifting consumer behaviours).

21/01/13 Philip Morton said:

It's always going to be difficult when the majority of the products you sell can be bought more conveniently and more cheaply elsewhere. 'Showrooming' only adds to the problem.

21/01/13 Richard Veryard said:

What use is a showroom full of sealed boxes? (In the old days, record shops would let you listen to stuff before you bought.) Nowadays the internet is a far better place to browse music and film.

21/01/13 Tim Caynes said:

Having spent a previous lifetime in record shops, it was the intangible excitement of new releases, the flipping piles of vinyl, and the interaction with sometimes knowledgable staff and customers that made the physical store a lifestyle choice, as much as a purchasing engine. But that was when the only place to buy music was on the high street. HMV appears to be the latest and possibly last of a line of music retailers that, as others have said, haven't adapted and reacted to the opportunity of digital sales as well as they probably should. HMV digital was always a woeful experience, and if it's the experience, as much as the price, that effects your buying decision and loyalty, then it's no wonder that HMV slowly lost it's relevance. I don't believe showrooming really plays a significant part in HMV's slow decline. Consumers of popular music had turned their back on the high street a long time ago.

21/01/13 Mike Davison said:

There have been quite a few interesting articles discussing the reasons doing the rounds, mainly revolving around: • That the ‘core customer base’ – those who used to spend their youth in record shops and would seek out ‘real’ music – were alienated by the vast array of games and digital devices the store was now trying to sell relatively unsuccessfully. • To make room for all this, the vast record libraries moved to centralised locations and/or on-line ordering only (the irony), meaning what music the stores did sell was the same top 20 albums you can find in the supermarkets – complete loss of any competitive advantage. • Modern day HMV staff seem to be more likely to have retail experience at Burtons or Next than any real knowledge or love of music, removing any benefit from going to a store vs purchasing on-line. …so although showrooming must have played a part, where purchases may be expensive enough to warrant it there were many strategic problems that were bigger?

21/01/13 Emma Fludgate said:

If they had made the stores a more customer friendly place they would have attracted more custom. For instance a day in the week where local bands could perform, therefore bringing in music fans. Pods where customers can plug their own music devices in to listen to music that is in the store and instantly download for a fraction of the cost. Make the stores in to a leisure facility. Games stations where customers can test the product. All these things would have brought in the youth of today wich is currently where the money seems to be. They could therefore have used the 'showroom' to their advantage.

21/01/13 Ronan Fitzsimons said:

I’m of the opinion it wasn’t showrooming that contributed to HMV’s failing. There are better forums and online business models (freemium) for researching/getting inspiration. I do agree there is still a market for selling CDs and DVDs. HMV targeted a market that still buy CDs and DVDs. But that same market that Tesco and Amazon target is diminishing day by day as they brave the “new” world of smarthpones, tablets ,downloads, online streaming etc. It was HMV’s decision to take a short-term, short-sighted strategy has proven detrimental to HMV’s empire. They should have seen this coming when Napster came into town back in the later nineties. They had nearly a decade to get it right yet they missed the boat to take advantage online. I don’t really buy the argument for the lost opportunity to create a HMV experience store full of couches, TV’s, listening pods/booths etc. The type of product they sell doesn’t lend itself to requiring a person to experience/sample/discover in-store. It was disintermediation and short-sightedness that killed them off. RIP HMV.

21/01/13 Neil Pawley said:

Comet is the best exemplar of a company coming undone through ‘Show rooming’. I think the HMV point is a valid one but it also actually highlights another fascinating aspect of what has been going on for a long time. In the past music and movie purchases were as much about the tactile ownership of the disc as about the enjoyment of the music. Reading the sleeve notes and uncovering the lyrics through to gaining enjoyment from a shelf full of product was important for many. This really is no longer the case. Ownership equals clutter. I don’t want cases and discs all over the place. I threw all my CD/DVD boxes away years ago. Now it’s purely about the content. I don’t want to buy my music by the album (3 songs I like and 8 songs that I will never listen to) any more than I want to buy a case of the same wine. I don’t want filler tracks, I want variety. Commoditising the song is what killed HMV My suggestion would be that HMV failed as they didn’t understand this fundamental change in consumer

21/01/13 Matt Radbourne said:

In addition to price and convenience, I'm sure guilt also dissuades some people from shopping in-store: The salience of paying for content in iTunes, for example, is a lot less than handing over your cash or credit card at the counter in HMV.

21/01/13 Rob Gillham said:

This reminds me of Dixons infamous ads encouraging showrooming behaviour in their 2009 campaign: http://www.campaignlive.co.uk/news/939667/ Interesting to note after a couple of hard years BOTH John Lewis and Dixons’ profits are up in recent times, despite having very different brands and online strategies. This suggests that there’s more than one way in which traditional retail businesses can prosper online, but engagement with the medium early enough is probably key. It’s been harder for Amazon et al to make inroads into the consumer electronics market, for obvious reasons to do with people wanting to try out the merchandise, not feeling expert enough to make decisons unaided etc. So I suspect there’s been a stay of execution for Retailers in this area, perhaps buying them time to get their houses in order. The music industry lest we forget, spent a decade trying to turn back the clock and eradicate anything that looked like music downloading online, attempting to criminalise any of their own customers who might have the odd dodgy mp3 on their hard drive (and for those of us old enough to remember, ‘home taping is killing live music’?). In the meantime, a second generation of legal download offerings such as iTunes walked into an empty marketplace and set up shop. This refusal to accept progress and trying to turn back the clock would be funny if it wasn’t responsible for putting quite a lot of people out of work. Personally, I think failure has been hardwired into the DNA of the music retail industry for several decades.

22/01/13 Kate said:

Great read Peter – “showrooming” is a very apt phrase for one of the biggest challenges facing almost all High Street retailers. You ask the question “…could they have done anything differently?” and although the answer is invariably going to be yes, I think it’s important to draw the distinction between two diverging groups of brands here. There are those brands (like HMV and Blockbuster) that quite frankly lost this battle many years ago by refusing to acknowledge the need for radical change in a digital world, let alone innovate in it. Then there’s High Street brands that have started to adapt to changing consumer behaviors and made inroads into the online realm, yet are still facing the showrooming challenge. Whilst the first group are destined to be “what went wrong” case studies in business textbooks, the second group – the ones that have been investing in adapting and evolving – do now have a big opportunity for combat showrooming; offering and promoting in-store services that simply cannot be bought or sold online… Consumers still want to shop, and it is well acknowledged it is easier for retailers to sell, upsell and build lasting loyalty with consumers who are in-store rather than online. So despite the continued gloom, there is now a significant opportunity for the retailers that have invested in, and fought-hard for an online presence to now encourage their online community to head back in store. We’re at the beginning of an era of “online-to-offline” strategies in retail; using online assets to drive in-store footfall. By offering and promoting new added-value in-store services that cannot be delivered online, and by using online to promote and drive uptake of existing in-store services, brands can improve the in-store customer experience and generate increased sales. If brands fail to adapt and start using their online assets in a more strategic way – and quickly – they seriously risk losing out to those that do.

29/01/13 Rick said:

I don't believe HMV closed as a result of showrooming. DVDs books and CD's are the perfect product to sell online as they do not need to be 'handled' by the customer, for the customer to understand whether they want them or not, unlike clothes, shoes etc. HMV would have folded anyway due to a number of factors. Not being able to undercut competitors, (possibly because they paid tax) and not having a viable on-line presence.