Nine months after being bought out of administration, HMV’s new boss Doug Putman talks to Retail Week about its newest store opening in Birmingham today.
At 25,000 sq ft, HMV’s new concept-store The Vault is its largest store to date and Europe’s biggest music and entertainment retail space.
Full to the brim with 100,000 vinyl records and CDs and 60,000 DVD titles to choose from, it’s a cratedigger’s dream. The Birmingham store also boasts a music library offering 7,000 music-related books alongside music-inspired fashion and merchandise.
This weekend, customers will also be treated to performances by former One Direction member Liam Payne and X Factor winner James Arthur on the dedicated in-store stage.
“Retail offers two things a purely digital experience of music simply can’t,” says boss Doug Putman.
“The opportunity to experience the biggest acts live in our stores and our ability to offer a platform to new artists in the communities where we operate, as well as opportunities for fans to come together and share their passion for music and film with our dedicated staff.”
The Canadian-born retailer also owns Sunrise Records, which acquired 70 HMV Canada stores in 2017. Since HMV in the UK was bought out by the music mogul in February, Putman has set to work to turn the entertainment retailer’s fortunes around.
The Vault store is just a sample of what’s to come for the British heritage brand.
Back in tune
As streaming services continue to dominate how we listen to music and watch TV – with Spotify and Netflix boasting 170 million and 150 million subscribers respectively – is a store selling physical entertainment media in step with today’s shoppers?
Putman firmly believes so and is adamant that “physical media is here to stay”.
“We believe there’s a huge population that wants to be part of it and they want to be in an authentic, culturally relevant store. And that’s what we’ve done here,” he says.
The Vault is part of a wider revival of the iconic brand following its collapse into administration last December and subsequent sale in February.
And with that came some pains in the tune of store closures.
“The reality is when I came in [in February] I wanted to keep every store open. Every store that we couldn’t keep open bothers me,” says Putman.
Out of the retailer’s 125-strong store estate, 27 were closed with immediate effect upon HMV falling into administration last year, which resulted in 455 job losses.
Putman acquired 100 of the retailer’s stores when he bought the business out of administration and managed to reopen some previously shuttered stores after negotiations with landlords, leading to the final number of store closures reducing to 15.
“I wish we had to close none but sometimes landlords can’t do any more or aren’t willing to negotiate any further,” he explains.
A particularly bitter pill for Putman to swallow was the closure of HMV’s iconic Oxford Street flagship.
“Obviously, Oxford Street is one that really sticks out, especially as it’s still vacant,” he says.
“That’s one we shake our heads at.”
“A lot of people say the customers are old at HMV but we’re not seeing that”
Doug Putman, HMV
While Putman is frustrated by the closure of the retailer’s Oxford Street branch, it has allowed the business to cut costs significantly. Annual rent came in at £3.2m while business rates were charged at £1.4m, according to previous owners Hilco.
Putman says HMV will “100% be profitable by the end of the year” – a bold claim, given that the business has not made a pre-tax profit at group level for nearly a decade. In its 2010/11 financial year, it registered a pre-tax profit of £3.3m but has been in the red ever since.
The retailer attributes its imminent return to profitability to a combination of tightening up expenses and renegotiating leases, as well as closing “highly unprofitable” stores, such as its Oxford Street flagship.
Despite the boon of these cost savings, Putman has plans to expand HMV’s store estate, focusing on new locations across the UK and rolling out more Vault store concepts.
During his brief time at HMV, Putman has ploughed money into not only multimillion-pound store investments but also upgrading its online offering.
The entertainment specialist will relaunch its website next month, which Putman says will enable customers “to order every product imaginable”.
“We spent a lot of money upgrading it,” Putman admits.
And although a lot of his focus is on getting people back on the high street and into its stores, Putman says online is an area that is “definitely growing” – and he is keen to stress that this momentum is being driven by younger shoppers.
“A lot of people say the customers are old at HMV but we’re not seeing that,” says Putman.
“K-pop – Korean pop bands – has been really big for us. A younger generation is coming in for that and with vinyl, it’s the same thing.”
Although younger shoppers have been raised with Amazon a click away and skipped straight over cassettes, CDs and even iPods to land straight on to streaming services, Putman believes Gen Z consumers still have an appetite for bricks-and-mortar shopping in a place that resonates with their values.
And values are something that resonate with him. Putman speaks highly of his family and even flew his father over to Birmingham for the opening of The Vault. The boss admits he still seeks business advice from his dad, the founder of Canadian toy retailer Everest Toys.
With a seven-month-old daughter, Putman admits being away from his family so much is very hard while he spends time between the UK and Canada.
But the “surprising” level of love that UK shoppers have for HMV is spurring him on to get it back to the top of the charts.
“And when you have that [love and passion] it’s all on us to give them what they want,” he says.
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