“I’ve been very fortunate to develop a career within one organization,” says HMV Canada’s CFO, Harvey Berkley, who began his career 27 years ago when he saw HMV UK’s ad for a management accountant in the Financial Times. Over the years, he’s been involved in the growth of the company from a UK-based organization to an international conglomerate. See how he and the business are still prospering in spite of an increasingly digital age.
Founded in 1921 in London, HMV is a music and movie retailer with 93 years of experience. In 1988, it established a subsidiary in Canada after the purchase of Mister Sound by EMI Music Canada, and it has since grown from a small retail-music chain to a nationwide market leader, with 111 stores spread throughout the provinces. “Our objective has always been to offer our consumers myriad ways to experience the products they love,” Berkley says of the company, which generates about 50 percent of its sales from movies, 35 percent from music, and 15 percent from related items.
In 1985, Berkley received his Chartered Institute of Management Accountants (CIMA) designation, an internationally recognized qualification. “I don’t think the qualification alone will provide an interesting and challenging career, but it gives a good foundation that can enable one to take advantage of opportunities as they arise,” he says. “One of the most important values I learned from having the qualification is to understand the positive impact that finance can have on an organization.”
8,000 square feet
In 1988, HMV Canada opened its first superstore, in the Square One Mall in Mississauga, Ontario. The location won the Retail Store Design Award from Canada’s International Council of Shopping Centers, and in the same year, the Canadian music industry named HMV Canada the Music Retailer of the Year—an award it has now won for 20 consecutive years.
The rise of the CD in the early 1990s kick-started significant growth at HMV, which, from that point, expanded internationally—into Ireland, the United States, Japan, Australia, New Zealand, France, Germany, Hong Kong, and Singapore—and Berkley was a big part of that expansion. He took on his current role in 1998, after moving first to New Zealand to work as a finance director and then to the United States to serve as vice president of finance for HMV USA. He considers himself very fortunate, having had the opportunity to work in three different countries and be part of the company when it went public, among other milestones.
Over the years, the entertainment industry has had to adapt to an ever-changing landscape. Specifically, as technology has advanced, consumers have satisfied their entertainment needs in different ways. “Music and film are now available to entertainment enthusiasts through a number of different mediums, forcing the music industry, which includes HMV, to change with the times,” Berkley says. “Digital downloads have been part of our business since 2009.”
As digital technology has advanced, HMV Canada has seen declines in sales of physical products. That said, the physical market is still a multimillion-dollar business and represents 58 percent of the total music sales in Canada. “Consumers still love the idea of owning a physical piece of product,” Berkley says. “You can’t replace the feeling of unwrapping a CD and reading the liner notes or putting a needle on your piece of vinyl.”
In June 2011, HMV sold its Canadian stores to Hilco UK—a private-equity firm that specializes in failing retail stores—for $3.2 million. Since then, the company has improved profit margins by dropping its low-margin video game business, working closely with suppliers, and scaling back its unproductive real estate portfolio.
40,000 square feet
Over the years, HMV Canada has broken its own store record time and time again, and in 2005, it acquired and took over a 40,000-square-foot Virgin Megastore space in the heart of Vancouver. The key to such continued success has been staying innovative.
“These days, our product is used as a loss leader with most mass-merchant retailers,” Berkley says, “and for HMV to stay competitive, we have to give good value to our consumers in innovative ways.” For example, the company bundles DVD and CD products with gifts (such as a collectable Batman cookie jar with the Batman DVD release), and it has introduced a loyalty program.
“We continue to test and explore a number of ways to deliver music and film to our customers and, at the same time, grow the revenue of sales-related items like clothing and collectibles,” Berkley says. He expects related items to grow from 15 percent of overall revenue to 20 percent in 2014.
Most recently, the company has enhanced its digital experience by offering a state-of-the-art mobile app that lets customers discover music through image- and sound-recognition technologies. “Streaming music and film is definitely part of the future, and we are looking to develop the service that will best suit our customers’ needs and expectations,” Berkley says.
THE BOTTOM LINE
Years in the business
Where did you start your career?
I started at HMV in the United Kingdom in 1986 as a management accountant.
Describe yourself in three words
Driven, personable, confident.
Advice to those just starting in finance
Decide if you are going to be a chartered accountant or develop your profession through the CIMA program.