The researcher states that HMV Group Plc (HMV) was one amongst the world’s leading retailers of music, DVD/ video, pc games and books within the United Kingdom, North American country and Asia. A rise in the range of online purchase of CDs and DVDs, an increase in digital downloads associated stiffer competition from general supermarkets had an adverse impact on HMV’s revenue in 2005. Changes in musical tastes conjointly affected HMV’s sales adversely. HMV has to enhance its profit by initiating contemporary worth cuts and increasing its online product offerings. HMV is fraught from three sides. On one flank, there are competitive street retailers with similar business models. On the opposite flank, grocery chains, which are progressively entering into the HMV’s recreation product territory? Additionally, arising quickly from behind, are pure-play online retailers. Online pure-play retailers above all create an excellent threat, as they will operate at a value advantage ensuing from associate degree absence of physical stores and lowest staffing needs. Within the past decade, as online penetration has inflated and shopper familiarity withonline searching has expanded, pure-play online retailers like Play.com have emerged as important rivals to venerable chains of HMV. The diversion product mix furnished by HMV (CDs, DVDs, video games) is especially suited to on-line merchandising. Merchandise square measure extremely standardized and commoditized (a videodisk is a videodisk, in spite of the channel it is purchased from), simply transferable through the post, and promoted heavily by the show business (meaning customers can ‘pull’ merchandise through distribution channels).
A Strategic Challenge HMV Faces