HMV has become the first major high street music retailer to explore the factory outlet centre market. Competitors Tower Records, Virgin and Borders have yet to test the outlet centre market and challenge XS Music & Video - the sector's sole established music operation that operates a 20-strong chain of factory outlet units.
Negotiations have been concluded for HMV to open an outlet at Berkeley Commercial and Land Securities' Gunwharf Quays factory outlet in Portsmouth. The retailer has taken a 10-year lease on the 9,200 sq ft (855 sq m), two-level store at a base rent of£175,000 a year, plus turnover top up.
The deal was brokered by Churston Heard, which continued to handle negotiations for Gunwharf Quays, despite being axed as a letting agent on the waterside outlet scheme last year.
'We bought HMV's interest to the table and stuck with it because of the detailed negotiations,' said Churston Heard associate director David Rawstron.
HMV insists it has no outlet expansion strategy in place. HMV head of property Mark Bowles said the music retailer had been attracted by the retail and leisure mix of Gunwharf Quays. 'It suits our profile and promises to be a profitable location for us, which will also increase our trading presence along the South Coast.'
David Allen, joint founder of outlet centre specialists Allen Hodkinson, said music retailers had been courted extensively by the outlet market, but had difficulty operating profitably in the sector.
Promotions, such as multi-buys, special offers and other promotions will be used extensively at HMV's Gunwharf Quays store. 'They have become a matter of fact for the past 10 years,' said a spokesman for HMV. 'The public has an expectation that they are now part of the mix.'
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