HMV continued to fill the void on London's high streets after year on year sales volume increased by 11.7% last quarter.

Despite years of rejigging and revamping and rebranding, it seems the implosion of rival Zavvi is the main reason things have turned around.

HMV boss Simon Fox admitted that his firm's good fortune in growing even its music sales, while CD sales continued to decline market wide, was much to do with "changes in our competitive landscape" since Christmas, the demise of Woolworths and Zavvi in particular, of course. He added that his team had been "working hard to take advantage of the opportunities arising from those changes".

Physical sales continue slump

Despite the temporary boost following their competitors' demise, Fox says that he recognises that his company's physical music sales will continue to decline, adding that his business plan accounts for an annual drop in CD sales of 10% per year for the foreseeable future.

DVDs already amount for 50% of the entertainment retailer's business, and games are about to overtake music to be the second of the firm's three main products (music and gaming are currently more or less equal).

Though, of course, while DVDs and video games may help HMV overcome declining CD sales in the short term, as the digital delivery of movies and games starts to properly take off, physical DVD and gaming sales have a limited lifespan too.

Which is why the retail chain are busy diversifying even further.

Moves into live music, mobiles and cinemas

In his financial report this week, Fox again noted his company's previously reported alliance with the MAMA Group, which took the retailer into the live music space, and also announced a new partnership with Orange which will see the mobile firm have a in-store presence in HMV shops, initially in fifteen stores, but potentially across the chain in due course.

The entertainment seller is also dabbling with cinema, having formed an alliance with independent film distributor Artificial Eye, who run the Curzon arthouse cinemas in London.

"Mini cinema" pilot in Wimbledon

The plan seems to be to put mini cinemas into some of the retailer's stores, piloting the venture in Wimbledon. Fox said yesterday:

"We are really focused on opening our first one or two trial cinemas before we decide exactly the pace of rollout. Around 20 stores could have the capability to operate cinemas within a few years".

Which is all well and good, but what about recorded music, is that set to just become an occasional sideline for the iconic record shop brand?

Well, Fox hopes not. He stressed that he is still very much interested in the digital music business - of course HMV do sell downloads via their website - though he didn't want to be drawn on what the future of digital music may be, or HMV's role in it. Admitting that he admires new streaming services like Spotify, he added:

"Spotify and others are yet to be profitable. Our focus is to be profitable".