Sun­rise Records chief be­lieves he can suc­ceed where HMV failed

The Hamilton Spectator - - BUSINESS - DAVID FRIEND

TORONTO — Sun­rise Records is plac­ing a ma­jor bet on Cana­dian mu­sic sales with plans to move into 70 re­tail spa­ces be­ing va­cated by HMV Canada.

The On­tario-based mu­sic re­tail chain has ne­go­ti­ated new leases with mall land­lords across the coun­try.

Sun­rise’s ex­pan­sion gives the com­pany a quick foothold in the Cana­dian mu­sic scene just as the in­dus­try’s largest re­tailer closes shop. Stores will be­gin to open this spring af­ter HMV liq­ui­dates and re­moves its signs.

“It’s a good op­por­tu­nity for us to get a lot more stores open,” Sun­rise Records pres­i­dent Doug Put­man told The Cana­dian Press in an in­ter­view.

“We think there needs to be a great out­let across Canada to buy mu­sic.”

The 32-year-old ex­ec­u­tive’s in­vest­ment comes at a time when many are dis­miss­ing phys­i­cal mu­sic sales as more lis­ten­ers shift to stream­ing op­tions.

Com­pact disc sales fell 19 per cent to 12.3 mil­lion units last year, ac­cord­ing to data com­piled by Nielsen Mu­sic Canada. Mean­while, on-de­mand au­dio streams ex­pe­ri­enced dra­matic growth, ris­ing 203 per cent to 22 bil­lion streams, helped by ser­vices like Ap­ple Mu­sic and Spo­tify.

Put­man isn’t con­vinced the data sig­nals the end of phys­i­cal me­dia.

“A lot of the younger con­sumers still love hav­ing some­thing tan­gi­ble,” he ar­gued.

Put­man has long be­lieved in buy­ing mer­chan­dise you can hold in your hands. He grew up work­ing at the fam­ily business, Ever­est Toys, a man­u­fac­turer and dis­trib­u­tor based in An­caster.

He bought the Sun­rise chain from Mal­colm Perl­man in Oc­to­ber 2014 just as stream­ing was go­ing main­stream. Perl­man had spent the pre­vi­ous few years shut­ting down most of the Sun­rise stores in the Toronto area, of­ten blam­ing higher rent.

When Put­man gained con­trol of the com­pany, there were five Sun­rise Records stores left. He’s since dou­bled the num­ber by open­ing in On­tario cities like Ot­tawa and North Bay. He said all of those stores are prof­itable.

In court doc­u­ments filed last month, HMV painted the im­age of a hem­or­rhag­ing business where sales were pro­jected to slide to $190 mil­lion in 2016, af­ter grad­u­ally weak­en­ing over the pre­vi­ous cou­ple of years.

Over­all, HMV said it was los­ing $100,000 a day.

For­mer HMV lo­ca­tions fac­tored into the deal rep­re­sent roughly $100 mil­lion in sales, Put­man said. Lo­ca­tions in­cluded among the new lease agree­ments are the two-level store in West Ed­mon­ton Mall, a store in the Limeridge Mall in Hamil­ton, as well as lo­ca­tions in malls in Burn­aby, B.C., Win­nipeg and Mis­sis­sauga.

The com­pany will out­line a more ex­ten­sive list of stores as the full leases are signed, Put­man added.

The com­pany was un­able to reach new terms for about 30 of the clos­ing HMV stores, Put­man said, in­clud­ing the com­pany’s flag­ship lo­ca­tion at Yonge and Dun­das streets in Toronto. Some land­lords weren’t in­ter­ested in a “pop cul­ture” chain, he said.

Stay­ing ahead of trends will be one of the big­gest chal­lenges Sun­rise faces as it de­fines it­self as a hy­brid mu­sic re­tailer and cul­tural mer­chan­diser.

Aside from CDs and DVDs, Sun­rise will hedge its bets with board games, themed toys and a wide se­lec­tion of mu­sic, film and TV ap­parel.

HMV tried that strat­egy too, but Put­man be­lieves he can do it bet­ter with a broader se­lec­tion. He’s also putting a ma­jor fo­cus on grow­ing in­ter­est in vinyl records, which will be placed at the front of stores.

Vinyl sales grew 29 per cent last year to more than 650,000 units, and Nielsen fig­ures show growth this year re­mains steady.

AN­DREW VAUGHAN, THE CANA­DIAN PRESS

Sun­rise Records is tak­ing over 70 lo­ca­tions that HMV Canada is va­cat­ing.

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