Friday, Oct 31, 2014
Jam
Music
      Artists A-Z
      Album Reviews
      Concert Reviews
      Concert Listings
      Pop Encyclopedia
      Music Blog

Movies
Television
Video
Theatre
Books
Country
Celebrities




Video Gallery
RSS Feed

SJP

Music at the Crossroads

Independent CD stores struggling

By -- Sun Media

The independent CD store isn't dead -- but it does smell funny.

That's the opinion of one retail music wag, borrowing Frank Zappa's famous line about jazz to sum up the state of his business.

To others in the quickly shrinking music marketplace, however, it's anything but a laughing matter.

Especially when a former behemoth such as Music World, the last Canadian-owned national music store chain, fell under bankruptcy protection two weeks ago and announced it will shutter its stores nationwide.

"It is concerning," says Darren Throop, president and CEO of Entertainment One, which owns and operates about 90 CD Plus outlets across Canada. "We opened two new stores recently, but we've closed 12 stores this year."

And that's the good news -- many of his competitors are faring even worse.

"If you look at the SoundScan physical sales numbers and compare them to ours, we're well ahead. We've certainly felt the contraction, but not as much as the rest of the industry."

The squeeze continues to get tighter: The number of CDs sold has dropped about 11% so far this year, according to Nielsen SoundScan. Even worse, that's just the latest drop -- the industry is now selling about half as many CDs as it did in 1999, according to figures from the Canadian Recording Industry Association.

And digital sales -- which are stuck at about 6% of the ever-declining market -- aren't about to take up that slack. "We've been playing around with some kiosk environments," Throop says, "but quite frankly, if I can go to my home PC and download it, why do I need to go to a retail store?"

Not everyone is feeling the same pinch.

HMV Canada president Humphrey Kadaner says his chain's sales have climbed 15% over the past four years. Along with that, the chain has become one of the top three DVD retailers in Canada, and is increasing its footprint in the videogame and digital marketplaces.

"47% of our sales come from items other than CDs. The days of HMV as a music-only retailer are well in the past," he says, adding the chain just opened two new stores and has two more planned for the first quarter of 2008.

Some argue that many of HMV's gains come at the expense of other retailers losses, and point out that their practice of offering deep-discounted catalog titles makes for smaller profits.

But with HMV now accounting for some 15 million CD sales per year -- nearly one-third of the Canadian market -- there's no arguing with success. So other retailers are marching to their drumbeat, changing their tactics and focus. Some, like the Sunrise chain in Southern Ontario, specialize in harder-to-find indie releases and imports. Others like CD Plus, which puts its stores in smaller markets where it can be the only fish in the retail pond, has begun focusing more on books and other pop-culture items.

"We're trying to become entertainment destinations," Throop says. "We're having a bit of an identity crisis right now."

Don't expect that evolution to end anytime soon. Bad as business is, the prediction is that it's going to get worse before it gets better.

"There's a lot of data out there that shows music bottoming out this year," Throop says. "And that we're going to see some compound annual growth over the next four or five years of modest single digits."

If those predictions hold water, expect to see even fewer CD stores in the malls this time next year, says another industry veteran.

"I'll tell you this: If it's a s--ty fall, if it's a s--ty Christmas, look out," cautions one label insider. "You're going to see the retail landscape change in some big ways.





Has the Writers Guild of America strike affected you?
Yes, I don't like watching reruns
No, I didn't know it was still happening


Results