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Sun Not Setting Yet on CDs

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Canadians no doubt know about the fate of HMV, the ubiquitous music chain that reigned coast-to-coast in this country for a number of years. With the decline of physical media sales in the wake of the rising tide of digital downloads, the company accumulated considerable debt. By early 2017, that number had risen to $39 million dollars and the company decided to close up shop. After a massive prolonged blowout of remaining stock (I spent about $300 on Blu-rays and DVDs at my local store), HMV closed its doors.

However, something very interesting and unexpected happened a few weeks before that. Just when the death of HMV seemed to signal a definitive end to physical media, the Sunrise Records chain (which had recovered from its own financial doldrums and recently changed hands) announced that it would be taking over many of the shuttering HMV locations.

The company announced that this was financially feasible, thanks to rising vinyl sales. On the face of it, that sounded like an insane gamble. Surely, while more popular than in a long time, vinyl was almost as much of a niche format as VHS. 500,000 records were sold in Canada in 2016; hardly enough to build a business on.

As it turns out, vinyl is selling at Sunrise, but so are CDs. And not just to the middle-aged people who make up that format’s primary demographic these days. A significant number of millenials are coming into Sunrise and buying physical media: vinyl, CDs, DVDs, and Blu-rays. A lot of these are not just new releases either. The company reports that many catalog titles have been moving in their locations, an area that new release-obsessed HMV did not exploit to its fullest.

Sunrise is very pleased with how things have been going since the takeover and plan to add another 85 locations to their current crop by year’s end. By employing new approaches and maintaining experienced HMV talent, Sunrise looks to be the surprise Canadian business success of 2017.

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