HMV

HMV Group is a leading UK high street retailer selling music, DVDs and games, as well as books through its Waterstones chain. It is currently benefiting from the demises of Woolworths and Zavvi to grab swathes of market share, as well as diversifying its sales channels through a growing online offering and international expansion in Singapore, Hong Kong and Canada. The key to its medium-term success will be the ability to offset the decline of physical media (CDs and DVDs) by in-store innovation, such as the installation of MP3 booths and gaming stations. The rock solid balance sheet and lack of direct competition will mean that it has a good chance to do this.