The Ontario music chain Sunrise Records is planning a Canada-wide expansion by acquiring 70 HMV Canada locations and re-branding them by July.
Sunrise President Douglas Putman makes clear that his company isn't acquiring the HMV brand. "We didn’t purchase HMV, and we have nothing to do with their leases. We had to go to each landlord and negotiate each lease to the best of our ability.”
When HMV was placed in receivership last month it operated 102 stores and financials showed it losing as much as $100K a day.
Putman and his team opened discussions with property owners and found some had already found new tenants for existing HMV locations, and others wanted a different type of retailer in the mall.
The youthful Putman purchased the Sunrise chain from Malcolm Perlman in October 2014 and has increased the number of Sunrise locations in Ontario from five to nine. “Sunrise was definitely a learning experience when we got it with five stores,” Putman tells FYI. “I’m glad we’ve had these couple of years to understand retail even better.”
“In buying Sunrise we had always been waiting for the right opportunity to expand. When we heard the news about HMV, you are shocked at first and surprised but then you start saying ‘ok, what does this mean for us?’
"We had to make a decision very quickly. Either we decide to expand now or walk away from that and say we’ll just stick with what we’ve got and what we know. The consensus from my team was ‘let's expand. Take what we do and grow it.’”
He adds that “I’ll be the first to say it is really sad to see HMV go. They were a great retailer and they really helped the physical business in Canada.”
A company press release states that Sunrise’s acquisition of HMV locations “includes Metrotown Burnaby, BC, Polo Park Winnipeg, MB, Limeridge Mall Hamilton, ON, Square One Mississauga, ON, Promenades St-Bruno in Saint-Bruno, Quebec, and a two-level, 20,000 square foot store in West Edmonton Mall.”
“At this point, we don’t have a deal on a downtown Toronto street level location, but we are working on it," says Putman. "We are just trying to find the right place for us to be, but I wouldn’t be surprised if we are back in a street level location in Toronto in 2017.”
He stresses that his company is keen to hire HMV employees. “We definitely want to keep as many of the people as we can and convert them to Sunrise employees,” he says. “They had some amazing people so why wouldn’t we want to keep them in our doors.”
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Putman acknowledges that gaining the confidence of suppliers who have sustained losses with HMV’s demise has been a challenge. “Whenever you have a situation where somebody has lost a substantial amount of money and someone comes in and says ‘hey I’m going to do a similar model,’ I think you’re always going to have a struggle in convincing them why yours is different, why yours will work."
"The one thing we have going is that we have had a couple of years working with Sunrise. They know me personally and what I stand for and believe in. That has been half of the battle, being able to have that relationship with them.
"The majority of suppliers have been fantastic. They believe there needs to be a place in Canada to buy their physical product.”
The Sunrise press release notes that Jeffrey Remedios, President & CEO of Universal Music Canada, is on board, quoting him as stating, “The Record Store remains a vital place in our ecosystem for both artists and music fans. More than this, it is a community hub where passions are shared, art is explored, and lasting journeys begin.
“Everyone has a record store story from their formative years – including me: my first job in music was at Sunrise Yonge Street! Doug Putman’s leadership and unswerving dedication to developing Canadian artists have the enthusiastic support of Universal Music Canada. Sunrise's further commitment to the national music industry is most welcome."
Sunrise stated in the release that it will work to broaden the assortment of music that HMV carried, with a planned 50% increase in CDs, an expanded apparel section including music and entertainment-related merchandise, licensed figures, plush characters and board games.
Putman has experience in this area, having worked in his family's business, Everest Toys, a toy and game distribution company representing such name clients as Mattel and Hasbro.
He tells FYI that “we know the customer loves the accessory product, so there is definitely more focus on all that pop culture product. We are going to grow the CD business and the vinyl business too.Y ou just can’t say enough about how much vinyl has exploded over the last few years.
"There is going to be a lot of vinyl. You can’t just put in 300 titles and expect it to work. The customer wants to shop, they want thousands of titles and we’re going to deliver on that. The same with CDs. Every time we add more depth to the catalogue, the business grows.
"What we have learned is that you can’t dabble in anything anymore, you have to just jump into it.”