HMV’s new owner Doug Putman tells Retail Week about his plans to revive the retailer
After entertainment specialist HMV plunged into administration at the end of last year, many feared that for the famous name, the music had stopped for good. That there was no bark left in its familiar trademark dog, Nipper.
It was the second time in a decade that HMV had hit the buffers as changes in the entertainment market, such as the rise of music streaming, meant the retailer found it hard to chart with shoppers.
“There isn’t anyone that doesn’t remember some sort of experience with HMV. We’ve got to make sure we give that experience to a new generation”
Doug Putman, Sunrise Records and HMV
But Doug Putman, owner of Canadian music retailer Sunrise Records and now owner of HMV in the UK too, believes that HMV can be top of the pops with customers again – and that it can do so by focusing on old-fashioned vinyl.
Sunrise acquired 100 UK HMV stores, preserving 1,487 jobs. Putman, a vinyl enthusiast whose favourite album is Fleetwood Mac’s Rumours, thinks that a new generation of music fans raised on digital entertainment is discovering physical product for the first time and forging a deep attachment to it.
He tells Retail Week: “UK people are very passionate about this industry and I think you can see that with the outpouring about the loss of HMV and then obviously when it returned.
“There isn’t anyone that doesn’t remember some sort of experience with HMV.
“We’ve got to make sure we give that experience to a new generation and let them understand what is so great about what HMV is.”
Changing the record
Along with the vinyl product there is likely to be increased focus on the in-store experience such as meeting and greeting customers, greater independence for managers so that they can reflect local demographics and a revamped online service.
That is all to come. “The first and easiest thing is getting stock out to stores because it’s been a while since the stores have got new stock,” Putman says.
“Longer term we have to take it a day at a time, watch and listen to what the customer is telling us and make sure we react accordingly.”
A similar approach has brought Putman success in Canada, where he bought five-store Sunrise in 2014. Then in 2017 he bought 70 of HMV’s Canadian branches out of administration, bringing his store count in the country to 84.
Sunrise’s success has been driven by its range. It stocks more than 10,000 titles, nearly 70% of which are classed as either catalogue – a release 18 months and older – or deep catalogue, which is three years and older.
Sunrise has turned a profit for the past three years, and Putman aims for the UK business to be profitable “by the end of the year”.
To do that there has been some immediate focus on business basics. While he bought the bulk of HMV, he chose not to take on 27 stores, including those trading in high-profile locations including Oxford Street, Westfield London, Manchester Trafford Centre and Bluewater.
“You don’t need a massive shop to sell games and DVDs any more”
Jonathan De Mello, Harper Dennis Hobbs
He explains: “Ultimately you have to make decisions on how viable the business is with the information you have, and it just didn’t make sense to have them. Rates, rent – we were losing so much money with them. Unfortunately, you just can’t keep going that way.”
Property firm Harper Dennis Hobbs’ director of retail consultancy, Jonathan De Mello, believes that makes sense because in high street locations HMV will not face the levels of rent and the service charges that come with high-profile locations.
He observes: “You don’t need a massive shop to sell games and DVDs any more because everyone downloads them, so you need something smaller and more focused on the collector, because that’s who’s going to be shopping now,” he says.
However, former HMV chief executive Alan Giles, while relieved that so many jobs have been saved, was struck about some of the shops that were not retained.
Giles, who ran the business for seven years until 2006, says: “Those stores obviously have the highest rent and rates, but it’s not going to help the diversity of tenant mix in those centres to see such a differentiated retailer as HMV, which appeals to a different demographic than most tenants, disappear.”
Property considerations aside, GlobalData UK research retail director Patrick O’Brien is concerned about the prospect of vinyl-driven stores, noting that Entertainment Retailers Association data at the beginning of January showed vinyl growth fell to 1.6% in 2018.
That is a steep slowdown on the double-digit growth in other recent years.
O’Brien believes that to succeed in the long term there will have to be more emphasis on the online offer.
He says: “HMV has never done particularly well online so maybe it should be thinking of expanding. It’s going to have to think about something like subscription services.”
Putman says he has plans to overhaul the site and understands the importance of developing this area of the business.
“The most successful online websites are the ones that not only stock the record that you’re after but have got really sophisticated recommendation software”
Music journalist Pete Paphides
“Definitely online is a big focus for us. We have plans to revamp the site to allow customers to see inventory levels by store, so we will continue to push hard online,” he points out. “We know that it’s got a lot of opportunity.”
Music journalist Pete Paphides believes record shops have to “literally be a shop window for a successful business in the online world”.
He thinks HMV can enhance its appeal to vinyl customers by doing more events along the lines offered by independent music retailers such as Rough Trade, which has frequent Q&A sessions with artists, or by having in-store cafés.
But he also believes HMV should sharpen up its online offering.
“The most successful online websites are the ones that not only stock the record that you’re after but have got really sophisticated recommendation software,” Paphides says.
“It tells you what other records people have bought, gives you sound clips of every single record that you’re interested in buying and suggests records that you didn’t even know you were interested in buying.”
As HMV comes close to its centenary year, Putman seems confident that customers’ love and support for the brand will keep it going for a “very long time” and that the business will change as appropriate.
He says: “The customer is telling us they want more vinyl and so we have to listen to that – and as much as I love it, I try not to be too biased.
“Ultimately if the customer tells us they want more we listen to that, whether that’s vinyl or whatever the case may be.”
As far as he is concerned, there is still life in the old dog yet.