HMV acquires Zavvi stores and makes a serious move into live music

O.K, its time for another retail update from The Gen - This time the news is thankfully concerned with expansion rather than retraction and collapse.

High Street music retailer HMV recently confirmed that it is purchasing 14 stores from its collapsing rival Zavvi, five of which are based in Ireland. The rest of the stores are based in Crewe, Glasgow (two stores), Peterborough, Plymouth, Salisbury, Stockton and Southend.

This move will clearly establish HMV outlets in towns and cities where the retailer hasn’t previously had much of a presence, alongside saving the jobs of many Zavvi employees in those locations.

Furthermore, HMV also announced that it was forming a new joint venture with the MAMA Group, an ever-expanding UK live venue operator whose current estate includes venues such as the London Forum and the Edinburgh Picture House alongside The Fly Magazine and Supervision Management, the company representing the interests of artists such as Kaiser Chiefs and Franz Ferdinand.

HMV and MAMA Group are set to become new owners of a joint venture that will use the Mean Fiddler name, which MAMA Group acquired when it bought the existing network of Mean Fiddler operations for a reported £6 Million in September 2007.

This new company will take ownership of all 11 venues across the U.K in the existing MAMA Group portfolio. In addition to those mentioned above, these interests encompass the Hammersmith Apollo, The Garage, Heaven, G-A-Y Bar, G-A-Y Late, The Borderline and the Jazz Café in London alongside The Birmingham Institute and Moshulu in Aberdeen.

Some of these venues will adopt the HMV name; in fact the 5,000-capacity Apollo has already effectively been re-branded as the HMV Hammersmith Apollo for promotional advertising and ticket sales.

In an official statement on the MAMA Group website, it is revealed that the deal will see HMV pay MAMA Group an estimated £18.25 million, the exact figure depending on the new company's financial performance in 2009.

The two business partners will each have a 50% stake each in the new company, which will be primarily run day to day by MAMA Group.

Simon Fox, HMV's Chief Executive elaborated on the motivations for the deal in an interview with the Telegraph newspaper, stating: "The physical music market is changing structurally, and we need to diversify. Live music is an important and growing part of the UK music market”.

Fox added that as part of the strategy of integration, HMV outlets will use the venues to reward its loyalty card holders with priority tickets, good seats and opportunities to meet artists backstage, meaning that it will use its stores for cross-promotional activity with the venues.

Have your say! Is it now necessary for major music retailers to diversify and get involved in Live music venues? Is this further evidence of the collapse of traditional retail as we have known it? What are your thoughts on the HMV Hammersmith Apollo?