HMV – A dead dog?

Consider this prime example of Grade A toe curling Corporate Guffitis;

“I am a huge admirer of the HMV and Waterstone’s brands, which are renowned for their specialist positioning, passionate employees and unrivalled range authority, and it will be a privilege to lead the Group. We all know that these are highly competitive markets, but I firmly believe that the stellar attributes which are in the DNA of the brands and operating culture will enable the Group’s businesses to successfully differentiate themselves and to compete effectively through a variety of complementary retail channels.”

So said Simon Fox when appointed MD of HMV in 2007. At the time I took exception with his upbeat Guffitis pointing out flaws in their customer offerings at HMV and Waterstone’s and suggesting that HMV Group were cruising for a bruising.

http://daithaic.blogspot.com/2007/08/hmv-deserve-to-do-badly.html

Well sometimes I’m wrong (you read it here first!) but in this case it was a question of timing as HMV were saved for a while not by their own efforts but by their competitors going down as Woolworth’s, Zavvi (formerly Virgin Megastore) and Borders went bust in quick succession and Britain’s most hopeless retailer, W H Smith, stopped competing.

http://daithaic.blogspot.com/2008/12/wonder-which-was-woolies.html

Faced with a clear run they could widen their margins in the face of reduced High Street competition. So £3 DVD’s became £5 DVD’s and their price differential on their website disappeared.



Now they have hit the wall with customers simply not buying from them and going to better priced outlets such as Play.com instead. HMV delivered more dismal sales figures after its Christmas was ruined by what they claimed was the weather but the malaise is deeper as their customer offer remains poor. The group, owner of book store Waterstone's, reported a 13.6% slump in like-for-like sales in UK and Ireland in the five weeks to January 1 and said profits for the year to April would be near the bottom of forecasts. As well as the disruption caused by snow and ice before Christmas, HMV said its core entertainment markets remained weak and underlined the urgency with which it needed to carry out its turnaround strategy.

HMV, which has been fought increasing competition from supermarkets and the internet, said it would exit about 60 British shops over the next year and take further steps to ensure it meets a test of its lending rules in April. Chief executive Simon Fox said the anticipated improvement in sales failed to materialise due to the weather and challenging markets. "Whilst HMV has had a challenging year to date, it remains a profitable and cash-generative business and a powerful entertainment brand," he said. "The pace of change in the markets in which we operate underlines the urgency with which we must continue to transform this business."



HMV admitted it is facing a battle to meet a forthcoming test on its bank covenants. It pledged aggressive action on costs and said it would close 60 stores across its UK businesses over the next 12 months and seek a further £10 million a year of cost savings. It has 285 HMV stores and 311 Waterstone's bookstores in the UK and Ireland. However, the company's shares fell 20 per cent today after the sales figures giving it a market cap of just under £100 million.

David Jeary, a retail analyst at Investec Securities, said the company failed to improve UK sales despite easier comparatives with a year ago. "While adverse weather undoubtedly was unhelpful to the business in the UK, the core HMV division remains under considerable stress as a format and this must raise questions over its long-term future," he said. His Master's Voice was originally launched as a record label which then opened an Oxford Street store. The name was abbreviated to HMV and the store went on to become a nationwide chain.

As well as the issues with pricing, consider the customer feedback on one site;

“My experience of HMV in November was poor. An HMV gift voucher cannot be redeemed online - only in a store. To use the voucher an order for a CD pre-release was placed in an HMV store on the Wednesday preceding the Monday release date. It was not delivered to the store until the following Wednesday.

When chasing it on the Thursday the counter staff had to go hunting for it "upstairs" as they had "not had time" to process their previous day's deliveries. Another copy was ordered from Amazon online the day before release. It arrived quickly - and cost £3 less than HMV charged. Why bother with HMV?”

My own experience going into my local HMV (for research purposes!) this New Year was instructive. None of the crowds and footfall of yore but loads of “HMV Sale” banners hanging down from the ceiling. But a closer inspection of the DVD’s and CD’s revealed NO price reductions from the pre-Xmas prices and no new stock. Indeed none of the “Sale” Banners or flash cards made any claims of price reduction. Maybe I lack a conceptual brain but a “Sale” without any price reductions is certainly a novel concept – and judging by the empty shop not one which was taking off. Who do they think they are fooling? Certainly not their customers.



Going into Waterstone’s in the same centre revealed a similar tired and dumbed down offering; a parade of cookbooks and celeb biographies – books written by people who don’t write aimed at people who don’t read. And to think how fresh and novel this chain was when Tim Waterstone changed the face of bookselling? A survey has declared, once more, that people are reading less. Indeed, 25% of British people admit that they haven't read a book for a year - while half shove Ulysses in their pocket to appear more intelligent. Obviously, people still troop to Waterstones and have a look on "the table" (such is its publishing power), but clearly the books they see there do not inspire them to actually buy them.

HMV and Waterstone’s have nowhere to go in their current format and it is increasingly difficult to believe that HMV has any long-term future. They are being whittled away by the likes of Amazon, Play, iTunes and the supermarkets. I think the only future for Simon Fox and his DNA is on the Jeremy Kyle show!


Nipper, the "His Master's Voice" dog

Tighten your Belts!

Headquarters of Deutsche Bank AG in Frankfurt am Main
We have all read about the instability in financial markets and the effect of the crisis in global liquidity on financial institutions and individuals. But it is the heart rending human interest stories which really bring it home; the repossessed homes, negative equity, declining home prices and in a report in the papers on April 23 2008 the truly tragic story that Deutsche Bank employees, who number 78,000 workers worldwide, have received a stiff no-naughtiness-on-the-firm's-plastic missive.

Deutsche Bank, Germany's largest, has been hit by the global credit crunch so badly that it has issued a memorandum to senior executives telling them that brothel visits and adult channels in hotel rooms cannot be claimed on expenses.

"Deutsche Bank does not approve of any adult entertainments, and such expenditures will not be reimbursed," said a memo that was leaked to the news magazine Spiegel. The memo further warns that the bank's credit cards must not be used for such purposes.

Nein! Nein! Nein!
Whether the edict was prompted by a recent upsurge in executives seeking relief from Deutsche Bank's sub-prime horrors – more than £2bn in write-down so far – via Germany's vast network of pleasure houses is unclear. Further belt-tightening at the bank includes the instruction that bosses must approve taxi journeys in advance, business meals must not exceed £50 per person, and train rides inside Germany must be second-class if they take less than one hour.


Oompah Verboten!

One further stipulation: employees on overnight flights who are expected to go to work or attend meetings on arrival must now shower at the airport instead of booking a hotel. Apparently, there have been "minor infringements" of late that the bank wants to stamp out.

A Deutsche Bank insider said: "In the good old days, you could pass off a trip to a knocking-shop as a restaurant if the name wasn't too obvious. But we're in an uptight, locked-down new Puritanism now, not helped by sub-prime or VW."

At Volkswagen, people have been jailed and fined tens of thousands of pounds after a secret plan was discovered whereby union bosses were to be paid off with prostitutes, sex parties and drugs in exchange for an agreement on downsizing.

Truly, in these trying times Deutsche Bank will not be alone in trying to squeeze corporate overheads!

Outsourcing or Ouch-sourcing?

Outsourcing has been described as company’s giving away their brains and the major consequence of doing this is it is very difficult to get your brains back in the future! However, in the U.K. both Private Enterprise and the Public Sector seem to have acquired a worrying addiction to frontal lobotomy!

The trend towards Outsourcing and Off shoring is driven by the Management Consulting industry who have a vested interest in “Change”. Let’s face it, at their extraordinary fees they are hardly going to come into an enterprise and tell you “It ain’t broke so don’t fix it.” But these same reassuringly expensive Consulting Firms often bring to the table generic solutions and very little emphaty with your business. More worryingly, they are very rarely objective as they are often owned by companies which profit from the downstream activities associated with outsourcing. IBM’s press release when it paid a small fortune for PWC’s consulting arm in 2002 summarises the point.

“These skills (of PWC Consulting) need to be combined with large-scale implementation capabilities such as outsourcing, IT infrastructure skills, key technologies, and financing, where IBM is the market leader. IBM Business Consulting Services is now uniquely positioned to advise and enable clients to fully leverage these new models of business computing, driving greater return on IT investments.” Since the takeover of PWC Consulting by IBM Outsourcing and IT related services account for over half its income.


Change Agents or The Great Unwashed?

As with every other new business trend, from process re-engineering to quality management, the promise of dramatic performance improvement gives way to surveys revealing widespread dissatisfaction with what is actually achieved. Although not many have re-absorbed activities that failed to work in the outside world, many have experienced much smaller cost savings and service gains than they expected. If it’s potentially so advantageous, why does outsourcing go wrong? The main business criticism of outsourcing is that it fails to realize the business value that the outsourcer promised the client. So how should companies approach the issue? The following 6 pointers should provide the framework to keep the delivery of outsourced fulfilment focused on your business’s strategic objectives.


1. Set targets to measure effectiveness.

The temptation to outsource because rivals are doing it, trusting in them to have done the right calculations, should be resisted. The costs and expected savings from large outsourcing deals – in the public or private sectors – are not transparent and are rarely revealed, and it can’t be assumed that all are making a respectable return. Without detailed costing and rate-of-return calculations in advance, it will be impossible to set targets for an outsourcing project, and to know how well it is performing.

2. Assess against future needs to ensure scalability and the ability to add to the project.

Problems often arise when an outsource meets or exceeds the improvement target for the work first assigned to it – at which point the excited client passes more work out to them, only to find that performance has suddenly deteriorated. Suppliers must be chosen with a view to what you might want them to be doing at the end of a 5- or 7-year contract, as well as what they will be doing in the first phase. Problems can also arise if the primary supplier agrees to take on extra work, and then sub-contracts it to other companies to access the capacity or capability it doesn’t have. This leads to a loss of control, and can run into trouble if the primary outsourcing fails to manage its own outsource competently.

3. Avoid becoming a hostage to one supplier.

If an outsourcing relationship succeeds, and widens into new areas of activity, it can become increasingly difficult to consider re-tendering for a contract and changing the service provider. Partners must be given a reasonably long contract if they are to invest in providing specialist services, and be motivated to suggest improvements. If they get to the end without problems, and have delivered identifiable savings or service improvements, there is a tendency to renew the contract with little thought for alternatives.

But unless the present provider is compared with others available, it can be impossible to know whether they are delivering as good a service for as low a cost as possible. Once they become assured that a contract will continue without further contest, once hardworking and pro-active suppliers can be tempted to slacken off, or assign lower-quality resources to a contract. So even if there is periodic review before renewal, outsourcing can lose its edge through loss of convincing benchmarks. The risks of disruption when a sole supplier fails to deliver, or suffers a quality lapse, are a further strong reason for limiting the use of single sourcing, unless reliable alternatives can be summoned from the market at short notice.

This is a difficulty seen in the U.K. where consolidation has meant that, for instance, IT support contracts can only be tendered to a small number of large companies. The example of the 11 year saga for a computer system for Magistrates Courts in the U.K. illustrates the issue.

“A report published today by the National Audit Office (NAO) today makes it clear that although plans to create an IT system for magistrates courts has been under development for more than ten years, such a system has yet to be completed. The report highlights a number of errors including the lack of "competitive tension" surrounding the project after only one formal bidder remained at the end of the procurement process.

In July 1998 the Government chose ICL (now Fujitsu Services) as the preferred bidder with its bid of £146m over 11 years. Six months later when the contract was signed the price had increased to £184m. Since then the contract has been renegotiated twice and in May 2000 the cost of the project rose to £319m.”


4. Protect external sources from internal politics.

Savings and service improvements are noticed when first achieved, but then get rapidly taken for granted – until someone interferes with the outsourced relationship, or something goes wrong with it. The possibility of such disruption arises as soon as the original sponsor of an outsourcing relationship moves upwards or out of the company, leaving no-one to argue its merits when questions are raised about it. The trigger for such disruption tends to be when new managers arrive at a division that has outsourced, and seek to establish their authority by implementing quick changes. Finding that key areas have been passed to an external supplier, and having to work through them, can be a source of frustration that causes the out-of-house work to be viewed unduly harshly.

Even if their original sponsor is still on hand to remind the company of why it outsourced, and how performance improved as a result, the supplier is recommended to make contact with new management to explain the rationale, and to suggest what could now be improved. This way, the new drive for change can be channelled into moving to the next level of outsourcing benefits, rather than swinging the pendulum and taking work back in-house – or changing supplier – only to discover that you can’t beat what was there.

5. Prevent ‘parallel insourcing’.

Keeping some of a division’s work in-house, and outsourcing another part, can be a valuable way of benchmarking the two options and avoiding the all-or-nothing risk of spinning everything out. But the division between what goes out and what stays in must be clearly drawn, and adhered to while the comparisons are being made. And this is often most appropriate in the early stages of outsourcing, when its feasibility and the best people to do it are still being assessed.
A more damaging tendency, which tends to occur when arrangements have been in place for longer, is to allow in-house activity to stray into the same areas that have been handed to an outsource. The U.K. Public Sector again provides an example where Governments (especially after two terms) are often accused of building up a ‘parallel administration’ of special advisers and chiefs-of-staff who start to duplicate, and ultimately override, the activities and decisions of the civil servants they are meant to work through. The same can happen in companies, as managers who resent the loss of operational control to an external supplier start to rebuild the same capacity in-house. This ‘creeping re-insourcing’ leads at best to a waste of resources, at worst to a loss of coherence as confusion grows over who is responsible for which task, and cooperation breaks down.

6. Move on from initial assignment to performance assessment and re-tendering.

While some areas are still going out-of-house for the first time, many long-established outsourcing arrangements are now coming up for renewal, often not for the first time. After the move from initial investigation of the outsourcing market to the award and management of the first contract, the management task evolves again, to the assessment of performance and arrangement for re-tendering. The renewal of a contract gives an opportunity not only to assess whether the outsource has done well enough within the contract parameters, but also to check that the parameters were sensibly set. When reviewing their initial experience.

While IT was initially popular because new computing and communication technology was seen as exotic, requiring handling by specialists, new and more user-friendly machines may allow the basic functions to come back in-house, with outsourced fulfilment needed instead for more complex functions such as software development, database management and analytics. So a contract may need to be re-tendered not just because other suppliers could do the job better, but also because a different job may need to be done.

Generally the U.K. Public Sector and the large grey area of the economy has had a bad record in outsourcing functions, particularly around I.T., and has not achieved an effective risk transfer to the Private Sector because they simply are not commercial and when placed head-to-head with sharp and incentivised negotiators on the other side they will have insufficient knowledge to achieve an optimum result. One area of giving part of your brain away is the issue of “Moral Hazard”.

Moral hazard is exemplified in outsourcing of public sector IT services. In outsourced public sector services, the supplier owns the intellectual property before the system is even delivered. Removing the supplier means, in effect, a total restart of the project. This is a significant, if not the major, risk (and moral hazard) in public sector outsourcing. Where private sector funding is providing the majority (normally 90 per cent) of the investment, it makes no sense in PFI contracts to call a halt to the projects. The most that government or public sector authorities may do is to extract compensation for failures to deliver, but this is normally capped in the outsourcing contract.

PFI contracts make no sense, where the supplier provides the investment, unless the public sector secures a charge over the intellectual property until it is satisfied with the delivery. Indeed, it would make more sense for the public sector to be an equal investor in the intellectual property. Providers would then no longer have the power of ownership over the intellectual property.

Finally, Best practice is key in the success of outsourcing projects, liaising correctly with all involved and working with suppliers to get the best deal. Handled properly, hopefully the public sector can work towards a more efficient, cost effective way of working, and to those departments that would like a helping hand there is always the NOA! Perhaps one of the reasons Public Sector outsourcing had had such a bad press is just that, the results are public and can be examined. If the interlinked Consulting, Outsourcing and Off shoring industries are to regain credibility there will need to be greater transparency in terms of costs and outcomes in the Private and Public sectors to make a proper judgement as to whether Outsourcing is really Ouch-sourcing?

Input and Output Measures.

The difference between Input and Output measures often is a source of confusion when discussing performance measures. This illustration may help to explain this difference.

The Arch Metropolitan Theodrakis Christodoulou was for many years the much loved pastor of his flock in his sprawling See in rural Greece. His family were of simple farming stock and the young Theodrakis was a keen student at the humble village school, walking bare foot 3 miles there and back in weather fine and foul and never missing a lesson. His application commended him to the village schoolmaster who took the young boy under his wing and lent him books his family couldn’t afford. These, the young Theodrakis devoured as if they were manna from heaven and when he graduated he had no doubt that his vocation was to serve God. He entered the theological seminary in Thessalonica where he excelled in his studies but moreover impressed all who met him with his piety and sense of purpose.

It was the proudest day for his mother and father when the son they had reared was ordained as an Orthodox Priest and nobody was surprised with his scholarship, piety and humility meant that many years later he was raised to the Episcopacy and later still conferred with the honoured title of Arch Metropolitan. As their Arch Bishop the poor and devout people of the diocese loved him for his holiness and charitable works and respected that he never spent money on himself, refusing to renovate the ramshackle Archbishop’s Palace or have an official car to travel across his far flung flock. Some said he had the loveliest smile, others testified to his saintly aura and some credited his laying on of hands with curing their ailments. After a long life of good works, God took pity on his ancient frame and called The Arch Metropolitan Christodoulou to him, causing great sadness among the faithful.

Soon he found himself making the journey for which he prepared all his life to meet St. Peter (Agios Petros) at the Pearly Gates. Old St. Peter greeted him warmly, despite the long queues, (demand management was difficult in Heaven, it was either a feast or a famine), he checked his clip board and addressed the Arch Metropolitan Christodoulou thus: “Welcome to heaven, your beatitude, we have allocated you a bronze seat, second class, in the upper tier of Heaven. It is a bit far back but you will have a clear view of the Heavenly Throne if you use the binoculars which you’ll find in the seat pocket in front of you.”

Christodoulou replied “by His Grace I am His humble servant, to be in His celestial presence is the greatest reward I who are not worthy can dream of!” and with that he shuffled off up the long flight of steps to his bronze seat, second class, upper tier.

As he stopped to catch his breath he noticed Costas the Coach Driver, who had died the same day when his liver packed in after a life of self serving drunkenness and debauchery, had rolled up to the Pearly Gates. Christodoulou allowed himself a wry smile for despite his piety he was human after all. He was really surprised that Costas had made it to heaven in the first place but was happy for him as he believed in personal redemption. However he knew Costas was due for a rough reception from St. Peter having spent a selfish life grubbing shamelessly for tourist tips on his coach tours, taking them to be fleeced at tourist traps where he got a rake off and behaving scandalously, particularly with those English girls who had a certain reputation.

Imagine his surprise as he heard St. Peter say to Costas the Coach Driver “OK Costas, I think you should be happy, you have been allocated a Gold seat, second class, front tier so you will be right in the centre of all that good God action!”

The Arch Metropolitan Christodoulou was stunned and then his astonishment turned to righteous anger as he thought of the honour conferred on Costas who had led such an unworthy life compared to his. Defying the habits of a lifetime he found himself striding towards St. Peter to let him know what he thought of this travesty!

“Good Saint Peter, I was happy with my lot in heaven until I saw the honour you have conferred on someone as unworthy as Costas the Coach Driver! “

St. Peter looked around sternly at the agitated Archbishop and his demeanour changed as he spoke in a strange tongue called Management Speak.

“Bish, get a grip I’m only following orders, we have a new performance regime for Heaven the reassuringly expensive Celestial Consultants have put in based on Output Measures.”

His Beatitude looked abashed at the change in tone and the strange tongue but eventually found his composure to splutter:

“I am a simple servant of God; I have no idea what you are saying to me!”

St. Peter tried to be patient as he explained.

“Look Bish, under the old fashioned system of input measures with your good life and works you would have come out on top but with these new output measures it’s all down to the bottom line and that is where Costas the Coach Driver comes out on top.”

The Bishop blinked and said lamely “I still don’t understand!”

“Bish, you need to change your ideas, as I said we are only interested in the bottom line for Heaven Inc. The Bottom line based on outputs is despite your good works you only got people to pray on Sundays. Costas the Coach Driver on the other hand had coach loads of tourist screaming with fear as he went too fast around mountain bends and forced them to pray seven days a week!”

The Arch Metropolitan Theodrakis Christodoulou realised that he didn’t count in the new output based performance regime installed by Celestial Consultants and, making as little noise as he could, quietly shuffled off to his bronze seat, second class, in the upper tier of Heaven.

Business Jargon

Somebody at work once told me he was having ‘negative start-up synergy’. I, of course, asked him what that meant. It turns out he was just screwing things up badly.

The hypothesis I'm proposing is we all need to take a stand against mindless management babble and confusing corporate jargon - it says the person using it has no emphaty with the people around them and all too often it suggests that The Emperor has no clothes but doesn't want to appear naked. I’m hearing more and more of the same dreadful drivel around these days and reading it on various Internet sites. So I find I can no longer sit on the fence. It’s time for me to take a stand and advocate simple, plain English in the workplace.

Disintermediation. Now there’s a classic word. Or how about its first cousin, reintermediation? Any idea what either of them mean? Actually, you’re not supposed to know. Corporate jargon is deliberately designed to disguise true meanings and confuse listeners.

You’ve probably heard of euphemisms – substituting mild expressions for more blunt ones. Nothing is wrong with that in most circumstances, but lately they have been abused. Companies frequently use euphemisms when they don’t want something to be fully spelled out or understood. Take the word ‘empowerment’, for example. Companies like to think that it means giving workers more autonomy. But it’s really just a euphemism for work intensification. Or how about the words ‘delayering’, ‘downsizing’ and ‘rightsizing’? These are all words used to disguise redundancy. Pretty insulting, isn’t it?

Equally insulting is the new phrase ‘human capital’. It’s supposed to describe the value a staff member brings to a company. I find the phrase downright degrading to employees. ‘Human resources’ is already bad enough. I think both phrases should be banned. Then there’s the grammatically suspect development of turning nouns into verbs. Consider words like ‘diarising’, ‘visioning’, ‘headquartering’ and ‘incentivising’. I blame Kiwis who have long been "Flatting" in London!

Where will it all stop? I suppose it will change when we no longer know or remember the difference between a noun and a verb. Also it’s irritating and silly to talk about ‘growing’ a business or a product range when neither are plants. What’s wrong with saying that a company is ‘building its business’ or ‘expanding its product range’? Those sound much more appropriate to me. I also prefer the simpler phrases of ‘partnership’ and ‘international growth’ to their recent replacements: ‘corporate alliancing’ and ‘global development’. Who do the users of this new management-speak really think they’re fooling?

We all know that the promise of a ‘competitive salary’ in a job advert really means the company remains competitive by paying less than its competitors. And an invitation to ‘join a fast-paced company’ means the company has no time to train you and you’ll be horsed to death. A company ‘requiring team leadership skills’ means you’ll have the responsibilities of a manager but neither the salary nor the support.
Companies need to cop on. It’s really very simple. You’ve got to communicate clearly if you want to be understood and if you want to make an impact. So let’s cut out the confusing jargon. It doesn’t impress anybody.

Oh … and just to put you out of your misery, ‘disintermediation’ means cutting out the middle man, while ‘reinternediation’ means creating a new form of middle man to be reinstated. Impressive, isn’t it?

A Consultant Responds

The UK government spends nearly £2bn a year on external consultants, often without adequately measuring value for money, a committee of MPs has said.

Whitehall spent £1.8bn of the public sector's £2.8bn bill for 2005-6, a 33% rise in three years, the report said. Public Accounts Committee chairman Edward Leigh said tighter controls could save £500m a year.

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A Consultant Responds

all – apols if you think i am needlessly modularising neurosis here but i feel i really must give you the heads-up on the quantitatively significant risk we are being rumbled. yes i know how difficult it is to underestimate the naivety of any client and when the client is whitehall it ought to be impossible to expect any insight whatsoever. but those do-gooders on the public accounts committee may not be quite the port-brained has-beens we’d assumed. they go way beyond descoping the challenges we face, skills-wise, in the bath-running department. besides, anyone who can’t componetize that disincent has no right to call themselves a management consultant. it’s the alarming enthusiasm for pushing the performance-related envelope that’s worrying me. gadzooks indeed. it looks like they might take the helicopter view of our 360-degree searches for innovative, right-sized, human resource-based, time-sheet completion programmes. sure, there is no harm if some end-users consciously keep us in chinos because we divert attention away from internal politicking. but how can we expect to find traction in the revenue field if it becomes common knowledge that the best thing we ever do is get bone-headed functionaries to talk to one another? we surely need to go live on some c-level bacon-smelling, asap. what say you we suggest a bottom-up repurposing of the delivery metrics with a view to ensuring soup-to-nuts focus on real-time achievement in the developing, understanding and influencing of mission critical functions in the customer/citizen support matrix? it will take them until the next reshuffle to work out the dismal meaninglessness of it all. it might get us to the next PAC report. vbest.

HMV deserve to do badly!

HMV recently reported full year profits halved from the previous year. HMV’s deteriorating results will be no surprise to customers like me who have endured their ineptly managed retail proposition. Contrast the reality with the lardy dose of Management Consultant Guffitis delivered by Chief Executive Simon Fox when he was appointed over a year ago.

“I am a huge admirer of the HMV and Waterstone’s brands, which are renowned for their specialist positioning, passionate employees and unrivalled range authority, and it will be a privilege to lead the Group. We all know that these are highly competitive markets, but I firmly believe that the stellar attributes which are in the DNA of the brands and operating culture will enable the Group’s businesses to successfully differentiate themselves and to compete effectively through a variety of complementary retail channels.”

No doubt the Staff and Investors receiving this high-carb dose got a sugar rush to the happy receptors in the brain but it hasn’t lasted, consider 3 recent experiences I’ve had.

HMV operate differential pricing for the same product in the same store. You can pay £19.99 for a DVD but if it is on promotion as a “stickered” product it will be charged at, say, £6.99. Present the “un-stickered” product at the till you will be charged the higher price and not be told it is available cheaper. As a retail proposition imagine if M & S or BHS charged you a higher price for a shirt because you hadn’t ferreted through the display and found the one with the sale sticker? When I fed this back to a store manager, Andy in Friars Square, Aylesbury, his response was I should try shopping somewhere else. I’m surprised HMV have not nominated him for the “Retailer of the Year” award! I don't see what was passionate or stellar about Andy telling me to shop elsewhere?



Similarly, I ordered a DVD from HMV’s website for Mother’s Day in March. After chasing they emailed me at the end of May to say they could no longer obtain it from their supplier. Strangely, when I checked Play.com, CD.Wow and Amazon.com and 3 other sites the same day they all had it in stock. They took over two months to tell me they had a stockout and only after I chased on their not too clever and overloaded "Helpline" twice. Is this an acceptable CRM standard and is the advantage of of websales not that they can have real time stock information? What is the failed call ratio on their "Helpline"??

As for Waterstones, this used to be staffed by literate people who cared about books not the lift and shift operation it is today with display positions and promotions going to publishers who pay for them. The change is best illustrated by a recent anecdote (in Aylesbury) where I asked if they had the Histories of Herodetus in stock to get the response from one of the staff, wearing her "We love books" badge - "Is this a recent publication?" Indeed written about 420 BC and slightly out of copyright! She then responded to my query by checking the stock system and telling me they didn't have the book in stock. I then went and found this "out of stock" item on the shelf myself. "unrivalled range authority"? "specialist positioning"??

In a competitive market lazy retailers like HMV will be deservedly punished by consumers. If you agree / disagree with me let Simon Fox know at simon.fox@hmvgroup.com . He just loves to hear from real customers and will no doubt respond whilst singing his signature tune “Hey,hey,it’s in my DNA”!