Sunrise gets ‘physical’ with HMV purchase
Sunrise Records CEO claims the days of the record store are still here
You’ve heard about the British invasion — all those rock bands from the United Kingdom that stormed North America in the 1960s?
Well, this week there’s a new musical offensive, only this one is going in the opposite direction.
Doug Putman — the 34-year-old Hamilton-born owner of Ancasterbased
Sunrise Records — has struck a deal to buy 100 bankrupt HMV stores in Britain, pushing aside sporting goods billionaire Mike Ashley, among others, to do it.
It makes Putman the head of the only major record-store chain in the U.K. — one that has $400 million in annual sales — and it turns him into one of the world’s leading proponents of “physical media.”
“We know the physical media business is here to stay and we greatly appreciate all the support from the suppliers, landlords, employees and, most importantly, our customers,” he said.
Putman, who’s also chief executive officer of Everest Toys, which operates out of the same administrative offices in the Ancaster Business Park, contends that a substantial number of consumers are turned off by cold digital world of MP3 computer files and long for music they can touch.
Vinyl in particular has been experiencing a comeback, with collectors enjoying the larger format liner notes and also contending analog sounds better than its digital counterpart.
Putman said the physical media trend also extends to toys, games and DVDS. “Consumers want physical entertainment products of all types,” he said in a telephone interview from London, England.
Sunrise Records and Entertainment Ltd. will take on 1,487 store and head office employees with the 100-store acquisition. As well, an additional 122 employees at warehouse operations will be retained to assist in “winding down operations.”
The Ancaster company took a pass on 27 other stores that had employed 455 people.
The sale of HMV in Britain — that Putman said will cost about $10 million to cover the purchase and getting the chain back on its feet — is the second time his Sunrise Records has bought into an HMV operation.
In 2017, Sunrise took over more than 70 liquidated HMV Canada stores across the country by essentially moving into leased space the stores were vacating.
He now has 84 Canadian stores branded as Sunrise Records, including one at Lime Ridge Mall in Hamilton.
He said the British deal is different than the Canadian one. “I actually bought the company in Britain” and he is keeping the HMV brand there.
But there will be changes in merchandizing and marketing.
“You’re going to see a lot more vinyl. You are going to see a fresher, newer look as we revamp the stores,” he said.
“It definitely needs a lot of capital injection, and we plan to do that.”
But some have doubts Putman will be successful.
“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, from the data
analytics and media company GlobalData.
“GlobalData estimates that the market for physical music and video will continue to decline, from ($1.7 billion) in 2018 to just ($1 billion) by 2023. Sunrise Records will have to do more than merely increase market share of the music and video market — which is itself difficult given the continued rapid growth of Amazon Prime. It will need to get much greater support from suppliers, landlords and widen its proposition in other categories.”
Brian Jasson , owner of Cheapies Records on King Street East in Hamilton, said, “Vinyl has had a big resurgence and became kind of a fad,” but the movement is declining.
“There are people who want to get out and touch, look and feel and smell and do whatever. But
the problem is that the number of people who are actually doing that continues to go down,” he said.
Asked how he is managing such a big investment on the British HMV deal, Putman said, “We work hard and we have a lot of different businesses, and we’ve used that money to fund this.
“I run a very tight ship. I’m a very hands-on owner. I watch every penny. You have to make sure it is run very lean. And you have to listen to what your customers are telling you to make sure what they are telling you is something you are doing in your stores.
“You have to make sure they are happy and keep coming back to spend money.”