HMV's Amazonian problem

January 12, 2012, 10:55 AM GMT+0

BrandIndex compares store's scores to online giant Amazon to help explain the problems HMV is facing

On Monday, media store HMV reported a fall in sales over the Christmas period, and said it remains concerned about its ability to continue trading in its current form.

A look at YouGov’s BrandIndex tells an interesting story about the problems the retailer faces. What we often see with companies that have financial difficulties is that they have long had problems with consumer perception, and bump along with very low or negative BrandIndex scores.

But HMV does not fit into that mould. It is by no means a high scorer but it is in a perfectly respectable place. Its Index score (a composite of six key measures) had been in the low +20s until it announced difficulties this time last year, which caused a drop into the mid-teens (generally around +17 but falling to +14 as its woe this Christmas became known).

The issue for HMV becomes clearer when we compare it with retail giant Amazon. The online retailer is one of BrandIndex’s best performers, with an Index score consistently in the high +50s, some 40 points ahead of HMV.

If we turn our attention to Value, such a key measure in a sector where quality is largely a given, we see an even bigger disparity with Amazon on +56 and HMV on +5.

So the BrandIndex data shows that customers have a reasonable view of HMV, but have a considerably better view of Amazon. A clear lesson for high street retailers that compete with Amazon (or other online retailers) is that being the best on the high street is no longer enough. In order to survive they need to find a way of competing (particularly on value) with their online rivals as well.

This article also appears in City AM

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