HMV sells Canadian arm

[45 RPM]

Original Title: HMV mulls sale of Canadian arm

Is this the end of stand alone music retailing in Canada?

Will HMV join the likes of Kelly's, A&B Sound, Sam The Record Man, A&A Records, Virgin, Tower, Big K etc?

All that seems to be left now is Wal-Mart, Future Shop and Best Buy.

http://www.cbc.ca/news/business/story/2 ... -sale.html

[jon]

I was going to respond saying that Calgary and Edmonton have Megatunes. A quick Google and I discovered they closed both stores last summer!

Other than a liquidator who sells at Sears locally, I've bought everything on-line for years. And now I plan to pass on the Sears liquidator, even for their frequent sales at $2.50 a CD, now that I've found oldies.com, thanks to a mention by Cousin Brucie on XM/Sirius 60s on 6.

[Mike Cleaver]

Even Best Buy and Future Shop CD displays have been getting smaller and smaller.
Lots of DVDs, Blu Rays and games though.
Most people now get music through downloads, both legal and illegal.
The best CD buying is on the net, with many specialty sites where you can find both new and old material.

[drmusic]

I think I've bought one CD in five years, and it was the remastered Abbey Road.

[Mike Cleaver]

Last CDs bought for me in this house, The Beatles Box Sets, both mono and stereo versions.
My partner still buys Japanese CDs, on the net or at Book Off in downtown Vancouver.

[jon]

Does Zellers still sell CDs? Last time I noticed, they did, but I'm not positive.

I just checked and Chapters/Indigo still sells CDs on-line, so they might also still sell them in their Bricks and Mortar stores.

On a slight tangent, I can understand why Indigo keeps Coles and Chapters stores separate, but I don't see enough of a difference between Indigo and Chapters to warrant running both as separate stores. Why don't they just brand all Chapters and Indigo stores with signage for both outside?

[jon]

HMV Canada sold to British turnaround firm
Hollie Shaw Jun 27, 2011 – 7:22 PM ET

TORONTO — The future for big music and DVD retailers looked increasingly grim Monday with the announcement that HMV Canada, the country’s biggest record-store chain, had been sold to Hilco UK, a British retail restructuring specialist, for $3.23-million.

Industry experts say the announcement in conjunction with the bankruptcy protection of Blockbuster Canada this month is a signal that digital media has won the format war, and the era of buying and renting CDs and DVDs at retail megastores is over.

Hilco will give HMV Canada $25-million to fund the “continued evolution” of its 121-store business as it expands into more digital and streamed content, the company said.

Paul McGowan, chief executive of Hilco UK, said HMV Canada will introduce new products to sustain sales during the transition into the digital realm. Officials at HMV Canada, a unit of British entertainment conglomerate HMV Group PLC, were not available for further comment, saying they will discuss future plans in coming weeks.

It’s not clear how well HMV’s brand would fare as a relative neophyte in the digital realm, a field dominated by established players such as iTunes, Netflix and on-demand television and movies from cable and satellite providers.

“The HMV that will exist in a couple of years, if it exists at all, will look very different from the HMV of today,” said Rick Broadhead, an author and technology analyst.
“It is a bleak future for their traditional business if they go digital. How are they going to compete with iTunes, which seems to have established itself as the de facto model?”

Buying digital music at a store is counterintuitive to the now-established practice of downloading at home or on mobile devices, he said, and breaking into new areas may be a challenge given that HMV’s brand is associated with products that are on the decline.

Three years ago, HMV Canada heavily promoted a new “store of the future” concept that attempted to woo more digitally savvy consumers with added video games and electronics.
Some locations featured in-store computers for consumers to download digital material or conduct research.

“To get into the e-reader market or the tablet market, for example, is already pretty saturated,” Mr. Broadhead said. “To most consumers [HMV] is seen as a declining brand with nowhere near the status that Apple holds in the market.”

Joseph D’Cruz, a professor of strategic management at the University of Toronto’s Rotman School of Management, called the announcement tantamount to “the obituary for HMV. The stores will eventually be picked up by other retailers.”

After rumours of a possible sale circulated earlier this year, HMV’s 35,000-square-foot Canadian flagship store on Yonge Street in Toronto downsized back to its original 25,000-square-foot space as other locations trimmed square footage.

For the year ended April 24, 2010, HMV Canada generated sales of $360-million, an operating profit of $3.7-million, and counted gross assets of $75-million.

HMV’s news follows a long slide for traditional music retailers in Canada. HMV took over the Virgin retail store business in Canada in 2005 and iconic Canadian music chain Sam the Record Man closed its last store in 2007. Popular Western Canadian chain A&B Sound shut down in 2008.

The decline of CD and DVD sales in the exploding digital era has been complicated further by a downturn in overall music sales due to worldwide digital piracy.

The top 50 debut album unit sales fell 77% between 2003 and 2010, according to the London-based International Federation of the Phonographic Industry. In Canada, which IFPI decried in 2009 for having “some of the world’s weakest legal defences against piracy,” it said music sales fell 50.5% between 1999 and 2009.

HMV Canada’s first store opened in 1986 and expanded after buying the struggling Mister Sound chain two years later.

HMV never developed significantly in the United States, where it opened some stores in the eastern part of the country that were overseen by HMV Canada until they closed in 2004.

[Buckley]

Brutal... I buy all my movies physically, via DVD (and recently a few BluRays). I don't want a "digital" solution, I like the boxes alphabetized in a row on my shelves; looking for a movie from a menu or in a windows folder isn't satisfying at all (and what happens when they all get deleted or wiped out in a HDD crash, and the site you bought them from goes out of business or uses some DRM solution that is no longer supported in 10 years?). I've done a lot of business over the years with HMVs too, in fact I still remember going into the two floor HMV in Toronto (technically 3, they added a basement a few years back) and buying about 15 or 16 movies in one go (and this was when 2 for $30 would be considered a deal, never mind this 2 for $20 or 3 for $20 stuff you see now), with a clerk following along carrying them in a basket (possibly to prevent me from stealing them all but I liked to think of it as excellent customer service) and helping me find titles I couldn't normally find at the smaller outlets.

I suppose if HMV closes, retailers will still sell physical discs, places like Wal-Mart and Best Buy that have more than just movies and music to keep them afloat, and I can still buy them from Amazon. I have to imagine there'll still be physical copies of movies and music for a long time, but they'll really only end up purchased by collectors. Stupid annoying kids forcing change

[PMC]

It wasn't piracy that killed off HMV, it was their prices... they were charging $25 and $30 for CD's. A new competitor came along selling used CD's for a couple of dollars, and then places that sold/rented used CD's. Some of these places continue to exist, but few of them make enough money to pay the high rent and taxes.

When the business overhead costs are high, you have to move alot of product to survive, and it then becomes a losing proposition. It was the same for the small business computer stores 15 - 20 years ago, and now none of those exist. It is all Best Buy, Future Shop... which are the same company.

If the existing HMV expects to survive on selling tech toys, it isn't going to happen, because the existing discount stores will bury them.