His master’s vision

Games accounted for a large slice of the PowerPoint pie at HMV’s annual presentation to suppliers and partners last week.

Held at the recently re-branded HMV Forum in Kentish Town, the event saw the entertainment retailer in good health and a confident mood as it discussed the ways in which it has capitalised on the disappearance of Woolworths and Zavvi, and how it is looking to build the size and profile of its game offering in-store and online, grabbing itself a larger market share in the process.

ON  THE  UP
Group CEO Simon Fox confirmed that for the year ending April 25th, like-for- like sales in the UK and Ireland were up 1.9 per cent and total sales were up 6.3 per cent. But he also gave an indication of the rate of acceleration within those figures with the news that for the last 16 weeks of the period, like-for-like sales were up 4.3 per cent and total sales up 11.7 per cent.

A not-so-stellar performance by HMV’s international division (consisting of outlets in Canada, Singapore and Hong Kong) allied with ongoing struggles at Waterstones, however, means the group is pretty flat in like-for- like terms, up just 2.4 per cent in overall sales – a blip that will push total revenues to the threshold of 2 billion.

A full set of FY09 figures are due on June 30th, and profits are expected to come in at the high end of analysts’ forecasts, possibly as high as 62m.

One more bullish financial note was struck with Fox telling the audience that HMV’s share price had outperformed any other in the FTSE 250 by over 60 per cent in the last year. He added that the company’s balance sheet showed very little debt (less than 10m), that it was capitalised at around 200m and that, unlike elsewhere, credit insurance is not an issue for HMV.

GAME  PLAN
When talked turned specifically to games, it was, according to HMV’s own in-house lexicon, as an ‘Ambition’ category, as opposed to the ‘Core’ sectors of movies and music. Not quite at the very top table, then, but, on the upside, room and plans for growth.

It stressed its strength in the ‘entertainment’ sector of gaming, highlighting particular success with Wii Fit and Guitar Hero, a product on which it claims a 25 per cent share of all sales.

Casual gaming also got a specific mention, with a promise that it will gain a higher profile at front of store, more press ads and an emphasis on the value message. Again, the targeting of former Woolworths customers was cited as a factor, although obviously all the major supermarkets have the same demographic well and truly in their crosshairs.

HMV is also looking to be a bigger player in the pre-order market, with plans to increase the profile of big titles in the weeks leading up to release. To the assembled audience of publishers and manufacturers, it said it wanted to work closely with them in this area, and on providing exclusives and added value for customers.

CUSTOMER LOYALTY

There was also talk, albeit unqualified, of HMV looking to have an increased commitment to PC gaming.

Online, HMV.com is now attracting one million uniques per week and online sales are up 20 per cent year on year. The site is being updated at the moment and an enhanced version will go live in August, with games getting a greater share of the acreage on the home page.

Download kiosks, meanwhile, will be in every store by the end of the month.

Gamerbase, the networked gaming centres it acquired in October last year, warranted a good share of the spotlight. Three are currently operational in London, Manchester and Edinburgh, with another major site opening in Glasgow in a couple of weeks, followed by four more big ones before the end of the year in Nottingham, Birmingham, Reading and Newcastle.

The firm is also looking at the potential for up to 30 ‘Gamerbase Lite’ venues throughout the UK. The whole concept will be promoted later in the year via a tour of 26 universities, utilising a ‘portable Gamerbase’.

There was still time to talk of Pure, the loyalty card that HMV insists isn’t just a loyalty card and which is being currently being trialled in two regions ahead of a nationwide roll-out later this year. The chain is clearly mighty fired-up about Pure, and is looking to work with partners to provide card-holders not just with a bit of money off after months of swiping and collecting, but with ‘money can’t buy’ redeemable prizes. The most quoted example being a tour of EA’s studios (presumably those in the UK).

STEPPING INTO THE GAP
All of this renewed activity, however, comes as part of an overarching strategy at HMV to fill the space left by Woolworths and Zavvi.

Marketing spends have been upped significantly to try and make a mark in the market share land grab that followed the disappearance of two chains. Last Easter HMV spent 300k on marketing, this year it spent 450K.

HMV has bought 23 Zavvi stores and is looking to attract a large chunk of former Woolworths customers, particularly around calendar events, such as Mothers Day, Easter, Halloween and Valentine’s Day. The defunct department store used to exploit impressively through special offers and in-store branding, Fox conceded.

He added that, in the 12 months since the last presentation, the competitive landscape had changed more than any of us could have then envisaged”. So whilst the demise of Woolworths and Zavvi were sad losses borne of tough times, HMV has seen the situation as an opportunity it wants to take charge of.