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Protecting and revitalising our core retail business
The revitalising of our core retail business is underway. In HMV UK & Ireland our mix of products is being broadened to include portable digital audio products, including MP3/4 players, DAB radio and range of associated accessories. We expect such products to become 13% of store sales by 2010. In addition, 3 Network, the UK's leading retailer of music-enabled mobile phone handsets, will oen concessions in a number of HMV stores. these initiatives will further reduce our dependence on the declining physical music category.
At Waterstone's, as market growth continues to come mainly from new channels, we are devoting greater space to children's books, which is a part of the market less prone to online purchasing, and we expect the children's category to become 18% of Waterstone's mix by 2010. We are also adding high quality gift stationery to the Waterstone's store offer.
As shopping patterns evolve, we clearly need to improve our understanding of consumer behaviour. We must do more to encourage the continued patronage of our regular and highest spending customers. To these ends, we are launching an innovative loyalty programme that will operate across both brands and all sales channels. Rewards money cannot buy will be tailored to the holder's taste in entertainment or books.
To further protect our core retail business, we are evolving the HMV store format to become a more inspiring place to shop, with hubs containing online access and the ability to browse our vast music catalogue of products and even to burn music onto CD or memory devices. There will also be spaces to experience the latest games and consoles. |
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Growing revenue from new channels
As we protect, we must grow. And to grow, we will adapt to the new multi-channel environment. Here we are investing in our existing transactional sites, HMV.com and Waterstones.com, by integrating them into our stores and increasing the level of marketing support they receive. By 2010 we expect HMV.com to become 20% of HMV UK & Ireland's sales and the more recently launched Waterstones.com to represent 9% of Waterstone's sales.
HMV's digital offer will be integrated within HMV.com to provide customers with physical or downloadable product from a single site.
In recognition that today's consumer is absorbing entertainment content from non-traditional channels and sources, leveraging the strong relationships it has with suppliers, HMV UK will launch a new social networking website. Delivering film and music content to its online community, our new site will allow users to create home pages, meet like-minded people and access film previews, behind-the-scenes footage and music performances. |
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Driving cost efficiency
The third strand of our strategy is to save by fundamentally restructuring our cost base. We are streamlining the supply chains for HMV and Waterstone's by delivering products to single, cross-dock consolidation locations instead of to each and every store.
We are also exploiting Group synergies by centralising the procurement of goods not for resale and consolidating certain back office functions. |
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