Doug Putman, CEO and owner of Canada’s Sunrise Records, made headlines when he swooped to save HMV. The retailer has closed 27 stores – including the famous Oxford Street branch - but 100 remain open with around 1,500 jobs secured.
Speaking in the latest issue of Music Week, Putman is bullish about the outlook for the last music chain as it emerges from administration for the second time in six years. The UK music industry has voiced its hopes for the future of HMV under its new owner.
Here, Putman opens up about negotiating with landlords on the branch closures, the prospect of a new flagship store and doubling down on vinyl….
What happens next for HMV following the deal with KPMG?
“Right now, what we’re doing is trying to work with the team and let them know that there’s always changes but we’re trying to come out of this in a more positive way. We’re certainly working with the landlords, obviously we did have store closures but interestingly enough some of those landlords in the places we closed may be able to make a deal. We’re hopeful that we can make it less than that and go out for new opportunities.”
How many could stay open?
“At this point, it’s so hard [to say]. It could be none but we’re hopeful that maybe there will be a few. That’s one of the hardest things, you just don’t know. But even if any of those 27 doesn’t happen, certainly we’re always looking at new areas to open up in and we are not in non-growth mode. If there’s a great up-and-coming area, let’s make sure we’re a part of that.”
Thanks for all your kind messages, likes & support over the last few days. It really is much appreciated. It’s great to be back! From all @hmvBath ????— hmv Bath (@hmvBath) February 15, 2019
You’ve experienced strong growth in Canada…
“Yeah, we’re at 85 now, so every year we’ve grown and I think we expect the same thing to happen here.”
Does it feel like a quick rise to now have almost 200 stores across Sunrise and HMV?
“It really has, from zero in 2014 we took over Sunrise and had five stores. We’re very excited. We feel there is a great, long life in this business and as such we’re going to continue to grow and expand in this area.”
Was the closure of the Oxford Street branch unavoidable?
“It’s just so hard, the rents commanded at Oxford Street are just so substantial. Look, you obviously never want to close anything - especially something as great as that, because it’s just such an amazing store. But we were willing to operate that store at a loss of several hundred thousand dollars, and that just didn’t work at this point for the landlord. But you can’t lose millions of dollars running a store, and truthfully it was losing millions so there’s a point where you just can’t make that work.”
We’re going to go a lot heavier on vinyl and live events - we think both are fantastic
Could you open another flagship store in the capital?
“We want something, it doesn’t have to be ‘flagship’. I always think of a flagship [store] as being on that really high-priced street. I think you’ll see us open a really nice big cultural haven of products. It may not be in the highest-end area but we’ll still give that great experience. So I do believe that you will see that from us, and I think you’ll see it this year from us.”
Previous owner Hilco cut costs and HMV was outperforming the overall market. What does the future hold for HMV?
“We’ve got the absolute best people, they’re passionate, they’re knowledgeable, you really can’t ask for more than that. We want to continue with that passion and knowledge and try to make sure that we maximise every person we have. And we want to think creatively and differently. We have to think about how do we go to that next level, and that’s where you have partnerships with your managers, partnerships with your customers, partnerships with your suppliers, just to keep thinking creatively and to come up with new ideas.”
What are the ambitions for vinyl and in-stores at HMV?
“We’re going to go a lot heavier on vinyl and live events. We think both are fantastic. You’ve got to have a depth of catalogue, you’ve got to have those great products so we just want to make sure we keep doing that.”
Can you grow HMV and – just as Warner Music is increasing physical sales - even help grow the market?
“We think we can. We did it in Canada, we believe we can do it here as well. For us as a chain we can grow it. Can the overall market grow? I don’t know - but I know we can. We’ve got the right people to grow this business.”
How about changing up the product mix and focusing more on music?
“DVD is still a great [product], it’s a very large business [but] certainly it’s seeing decline. We know we want to double down on vinyl and get a bit more vinyl in there. Overall, we think the mix is somewhat healthy. The sales are pretty good at £250 million [in 2018]. I’m less concerned about the sales and more concerned about making sure all our expenses need to be in line. We need to just keep being creative and keep pushing the boundaries, and seeing what we can do with that number. But it’s a pretty healthy number.”
Have you been cheered by the industry reaction?
“It’s very supportive. Everybody knows everybody, I think they know what was happening in Canada and the success we’ve had. So that makes it a lot easier for them to be happy with. We’re experts at the categories, so it’s a really nice fit.”
How will you judge success in a year’s time?
“We need to have those stores be profitable and we need to be going down a new path. The stores need to look different, feel different, be different. We do have the best staff, so we want to make sure that we keep having the best talent. If we can just give ourselves a fresh look and fresh ideas, that really is going to be good. Clearly from a business perspective, profitability is a critical thing for us to stick around, so we need to get profitable. But we also need to make sure our customers are still happy and engaged and loving what we’re doing.”