Posted Jun 30, 2005, 9:53 AM
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samsonyuen
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Join Date: Apr 2005
Location: Canary Wharf->CityPlace
Posts: 4,241
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I wonder if they (Virgin) decided to exit Canada after losing the Metropolis site to Canadian Music Hall of Fame. It was after all, the only site they had for expansion in Canada. Or maybe it took too long to build. Or did CMHF take the site after Virgin decided it was going to leave.
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Virgin's withdrawal music to HMV's ears
By MARINA STRAUSS
Wednesday, June 29, 2005 Updated at 12:56 AM EDT
From Wednesday's Globe and Mail
While a flashy music retailing icon is pulling out of Canada, the country's dominant merchant in the sector is mapping out expansion plans — even as the industry is being hit by competition from discounters and on-line music downloaders.
HMV Canada Inc., with 102 stores here, is eyeing another 50 over the next several years. At the same time, it is snapping up the Vancouver mega-outlet soon to be abandoned by Richard Branson's Virgin Entertainment Group Inc. “While there are, of course, challenges in the market today, as there are in many industries, we are of the opinion that there are also opportunities, and we are actively pursuing those,” Humphrey Kadaner, president of HMV Canada, said in an e-mail interview.
HMV was helped by its decision about two years ago to bolster the number of DVDs it carries.
Meanwhile, British parent HMV Group PLC closed the last of its money-losing U.S. stores late last year — having abandoned that market just before Virgin decided to exit Canada.
It's an example of how global retailers must sometimes turn up the volume in countries where they can dominate, and switch off in markets where they can't be a leader, said David Gray, a retailing consultant at Sixth Line Solutions in Vancouver.
He said Virgin has made a conscious decision to focus on its U.S. superstores, while HMV is doing what it can to boost the business in Canada.
In an industry as tough as music retailing, something had to give, he said. “It's just been a bad stretch for music,” Mr. Gray said. “The guys that really get squeezed are the retailers.”
It was almost nine years ago that the flamboyant Mr. Branson rappelled down the side of the five-storey building, spraying champagne onto the crowd during a celebrity-studded event to mark Virgin music stores entry into Canada.
But it was risky from the start. After all, Vancouver has been one of the most competitive music markets, with perpetual price wars that have led to some of the lowest prices in the world, according to a number of observers.
“I don't see anything on the horizon that suggests a real turnaround in the fundamentals of the industry,” Mr. Gray said.
Despite the challenges, HMV Canada has seen improvements.
Its parent reported Tuesday that the Canadian division's annual sales of about $370-million rose, on a same-store basis, by 13.5 per cent in the year ended April 30. For the seven weeks ended June 18, same-store sales jumped 12.3 per cent. Same-store sales are those at outlets open a year or more, and are considered a key barometer in retailing.
More than 40 per cent of HMV Canada's sales now comprise DVDs, and that business is growing, Mr. Kadaner said.
He is also closely following the parent company's move into the digital world. In late 2004, HMV Group teamed with Microsoft Corp. to develop software for the retailer's new digital downloading service for Britain. It is to be rolled out in September.
Music retailers have been forced to find new areas of growth — especially in DVDs — over the past few years to deal with the challenges in their core field.
The pressure was evident in early 2005 when the venerable A&B Sound Ltd. of Vancouver filed for bankruptcy protection. It was another victim of Wal-Mart Canada Corp., Best Buy Canada and others, all selling music at deep discounts.
Meanwhile, everybody has had to deal with competition from free on-line music downloads.
Virgin said Tuesday that it will close its sole mega-store in Canada, never having gone ahead with a planned expansion. It had slated Toronto as its next destination for another huge outlet.
“It is not feasible to continue to run a single store in Canada any longer,” Virgin's North American entertainment division said in a statement.
The move means that Virgin will no longer make plans for stores in Canada, a spokeswoman confirmed.
It will allow Virgin to focus on investing in its U.S. business.
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