What’s Next to Fall after HMV Canada’s Departure?

29 Jan

HMV.jpg

By Ed Sum (The Vintage Tempest)

The Internet age has killed the retail star. Large or small, some operations can not compete over the ease of purchasing online. When a consumer is uncertain if they want the product or not, the option to preview it does not always exist when buying from the Internet. When music (CDs) and videos (DVDs) are concerned, I prefer taking a look at the back of the packaging to see what the bonus content consists of before buying.

With the recent news about HMV Canada closing all its stores by April 30th, their website to buy products and Pure Rewards program will no doubt follow. To have an operation not clearly catering specifically to the collector and/or mass consumer can make or break a business. This conflict explains why some audio video outlets are not around.

Liz Braun of the Sun Times wrote, “As fewer people invest in CDs and DVDs, and are able to stream or download the music and movies they want, retail outlets such as HMV will continue to move toward extinction.”

Not everyone is like that, because those people may not be aware that unless they have an unlimited data account, streaming and downloading might potentially cost more money in the long run. Internet Providers will not hesitate to charge for data overuse. Services like Amazon, iTunes and Google Play do not explicitly warn that additional charges may be incurred by the Internet service and takes for granted most consumers of data simply know. Since it is contributing to putting an end to storefront businesses, there’s more to the problem with HMV Canada closing shop like Sam the Record Man in 2001 and A&B Sound in 2008. They all ultimately declared bankruptcy.

According to Karen Bliss’ article on Billboard:

A Globe and Mail piece, published prior to the hearing, quotes [Chris] Emmott [Hilco Capital investment director], also a director at HUK 10, from an affidavit: “Unfortunately, the debtor has been unable to reach an agreement with the major suppliers on mutually beneficial terms that would allow the debtor to address its immediate cash flow needs.”

Hilco UK acquired HMV Canada in 2011 from the UK’s HMV Group plc, for a total of GPB £2.05 million ($3.3 million CAD at the time). It provided $25 million CAD initially to help with restructuring (the retailer expanded into more DVDs, plus collectibles, clothing and headphones) but court documents show it now owes $40 million and has not made a payment since November 2014. (Hilco bought the rest of of HMV in 2013.)

Annual sales slipped to $193-million at the end of last year from $266 million in 2012, they say. “These financial difficulties, combined with the further decrease in the debtor’s sales expected over the coming years, means the current situation is not sustainable,” Emmott said.

Everything HMV stores have now is being liquidated and the debt is unlikely going to be settled. No new product will be offered and that ends my visits since I’m after new releases. I wonder if any other operation will rise out of the ashes like a phoenix. Sadly, the places that remain do not even maintain a decent selection. Walmart only touches titles believed to be good sellers and the Best Buy I visit barely maintains a shelf of weekly releases. They have a minimal section of top hits.

The used market is hanging on. Odd gems might surface but most of the titles I regularly see like Hudson Hawk are better off sitting in a landfill. Unless there’s some way to convince consumers to part with the better titles, like offering higher trade-in value, perhaps these businesses will be next to go. Thankfully there will be thrift stores where you can find DVDs by the dozens. They have become the new VHS. Chances are better to find the oddity there than a used video outlet.I lucked out and found Popular Mechanics for Kids, a very good educational television show.

There’s no win for the collector who prides in showing off his or her library. Thankfully optical and vinyl discs will continue to be made and sales are moreorless steady. The only problem is that those folks who want a physical product will be going online instead of visiting a shop to buy it.

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