Pedestrians walk past the closed down HMV flagship store in central London, Feb. 6, 2019.Hannah McKay/Reuters
Canadian entrepreneur Doug Putman is making a big bet on the return of old-fashioned vinyl records after snapping up 100 HMV music stores in the United Kingdom and more than doubling the size of his Sunrise Records chain.
Mr. Putman emerged on Tuesday as the winning bidder for what’s left of the iconic music retailer, which filed for bankruptcy protection in Britain on Dec. 28. Details of the purchase haven’t been announced and the deal comes two years after Mr. Putman bought 70 HMV Canada stores, also for an undisclosed sum out of bankruptcy protection. The Canadian and British HMV stores were owned by London-based Hilco Capital, an investment fund that specializes in restructuring.
It’s a bold move by the 34-year old businessman from Ancaster, Ont., who cut his teeth in retail running his family’s toy and game-distribution company called Everest Toys. Mr. Putman has only been in the music business since 2014, when he bought Sunrise Records, which had been closing outlets in Toronto for years and was down to just five stores. He quickly doubled that to 10 before acquiring the money-losing HMV Canada stores, which he rebranded as Sunrise.
Ancaster-based Sunrise is a throwback to record shops from a bygone era, where vinyl albums are front and centre along with compact discs, cassettes and DVDs. There’s also a range of movie memorabilia, T-shirts, turntables, speakers and board games. Mr. Putman is a firm believer that a growing number of consumers want to browse record stores and flip through album racks. “There’s no doubt that online is a big part of overall retail sales,” he told the BBC on Tuesday. “But people like to come into a store, have an experience, talk with someone who understands music, loves music, loves video and entertainment."
He’s hoping to cash in on a revival of vinyl and CDs. Sales of vinyl LPs hit 4.2 million in Britain last year, the highest total since the early 1990s and up from 205,000 in 2007, according to figures from the British Phonographic Industry. In Canada, vinyl-record sales jumped 27 per cent in 2018 and topped one million units, according to Nielsen Canada.
Customers browse through the records and accessories at the Sunrise Record store at Cloverdale Mall in Etobicoke, Ont., on Feb. 5, 2019.Fred Lum/Globe and Mail
Mr. Putman plans to keep the HMV name in Britain and his deal did not include 27 stores that he said were just too unprofitable. While it’s not clear how much he paid for the stores, he managed to outbid Mike Ashley, owner of sporting-goods giant Sports Direct and the House of Fraser fashion chain.
It’s far from clear Mr. Putman’s strategy will work. Sales of CDs have been falling and, despite the new interest in vinyl records, they account for just 3 per cent of all music sales in Britain while streaming services such as Spotify and Amazon represent 64 per cent.
HMV was once a dominant player with 400 stores worldwide and a history dating back nearly 100 years. But it filed for bankruptcy protection twice in the past six years. Sales have fallen from £365-million ($621-million) in 2014 to £277-million in 2017, the most recently available figures.
Pedestrians walk past an HMV shop in central London, Britain on Dec. 28, 2018.PETER NICHOLLS/Reuters
Hilco spent years trying to turn HMV around. It bought the Canadian stores for $3.2-million in 2011 and sank $25-million into the chain before it went insolvent in 2017. The firm bought the British stores in 2013 for £50-million and poured £25-million into the business. It reduced the number of outlets, added more T-shirts and other merchandise and worked with landlords to restructure rents. HMV managed to grow its share of the British market for vinyl records and CDs to nearly 33 per cent, but it still couldn’t fend off the huge growth in streaming services. It also faced an increasingly tough retail market in Britain, which saw 7,500 net store closings of all types last year, a 36-per-cent increase from 2017.
“That someone has taken on so many stores is a welcome surprise, but it is difficult to see how the market for physical music and DVDs can sustain a 100-store chain in the long term,” said Patrick O’Brien, British retail research director at GlobalData.
Paul Waldie