Like it or not, Musica may stop the beat
● The Clicks Group, the owner of the country’s largest music store chain, Musica, is open to the sale of the business.
“I’m just not certain who is going to buy it,” David Kneale, CEO of the group, said in an interview with Business Times.
“Musica is a heritage business that, if you were setting up the business again today, you wouldn’t go into.”
Traditionally, the chain has sold CDs and DVDs, and in recent years has expanded the product range of entertainment products to include headphones and speakers.
Music retailers have faced a tough market in recent years, with brick-and-mortar operations closing down as changing consumer tastes and digital music consumption have taken up a large chunk of the market share.
When probed about the possible expan- sion of Musica into different business models such as music streaming, Kneale said the group was focused on its health and retail business.
The reason for not focusing on Musica, said Kneale, is that it makes up a small fraction of their operation and revenue base.
Outside of Musica, which contributes 3% to their bottom line, the company owns Clicks and The Body Shop.
“We [The Clicks Group] are not putting any investment into Musica because the future of the group is health and beauty,” said Kneale.
So why not close down the business as a whole?
It turns out Musica is still making money despite some negative perceptions in the market.
“We have 109 outlets that are profitable, so it makes no sense to close them down,” said Kneale.
Arqaam Capital analyst Daniel Dias said Clicks management had said that unprofitable stores were to be closed down.
Kneale is set retire from the group on January 1 2018.
After 25 years with the group, Vikesh Ramsunder, the COO of the Clicks chain, is set to be his successor.
The future of Musica looks precarious. Clicks has a chain that is making money but falls outside of its core business.
Wayne McCurrie of FNB Wealth and Investments said finding a buyer for the Musica business is unlikely in its current form. He said “the impact of technology is more evolution than revolution”.
The business is unlikely to shut down overnight as some people still buy CDs but its demise is inevitable if it does not change its business model.