HMV shares services and overhauls supply chain

HMV has partnered with logistics firm Unipart to revamp its supply chain, and plans to transfer to a new and improved consolidation centre in the spring, it said yesterday.

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HMV has partnered with logistics firm Unipart to revamp its supply chain, and plans to transfer to a new and improved consolidation centre in the spring, it said yesterday.

The music and books retailer has also rolled its finance and IT functions into a new shared service centre that is supporting the operations of its HMV music stores in the UK and Ireland and its Waterstone’s bookstores.

It said the shared services centre was already making savings by centralising the group’s procurement of non-resale goods.

The operational changes – announced as HMV revealed a reduced first-half loss to 27 October of £21.5m – represent the first moves made by the retailer since its set out a three-year business transformation plan back in March designed to “protect and revitalise” the business.

Faced with the threat posed to its business by online music sales, HMV has also invested heavily its online channel and said web sales were up by almost 70% in the six months to 27 October, boosted in part by “new branding and customer communication”.

It said that in the next six months it would also complete the integration of music downloads onto its site, giving customers a choice of buying either a physical or a digital album online.

HMV said back in June that it is expecting its online business to account for a fifth of sales by 2010 and will launch its own social networking site to drive sales.

And chief executive Simon Fox has made clear the company must grow by adapting to a new multi-channel environment, with a strong online focus.

In the past year HMV has also integrated recent acquisition Ottakar’s into its Waterstone’s business. The integration was “completed successfully and on time”, HMV said recently, with the Waterstone’s stock management system introduced into all stores and Ottakar’s back office integrated with Waterstone’s in time for the Christmas sales surge.

Further consolidation of back office systems and centralisation of procurement across the group is expected to deliver cost savings of £40m a year by 2010.

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