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CC-011 Music chain · UK 2019

HMV — Britain’s record shop died twice and was bought back smaller

ecommerceacquired2010s
Lifespan
1921–2019 · 98 yrs
Peak Stores
~200+ (mid-2000s)
Killed By
streaming + downloads (rescued, reduced)
Status
Acquired

Summary

HMV was Britain's iconic music-and-film chain, and on 5 February 2019 it was sold out of administration to a Canadian record-shop owner for £883,000 — a price that would barely buy a flat in the postcode of its old Oxford Street flagship. Founded in 1921 as the retail arm of The Gramophone Company, trading under the "His Master's Voice" name and the painting of Nipper the terrier listening into a gramophone horn, HMV spent most of a century as a fixture of the British high street: the place a generation bought its first single, its first album, its first DVD. At its 2000s peak it ran more than 200 UK stores and was the country's dominant specialist music retailer. Then recorded music went to downloads and then to streaming, film went the same way a few years later, and the chain that sold physical entertainment found itself selling a category the market was abandoning.

The decisive verdict is properly read as an acquisition in much-reduced form, because HMV did not so much die as collapse, get propped up, and collapse again before being bought small. It entered administration in January 2013, was rescued by the restructuring firm Hilco in April 2013, traded on for nearly six years under new owners — and then, in December 2018, went into administration a second time. The afterlife was not liquidation but a buyer: Doug Putman, owner of Canada's Sunrise Records, who acquired roughly 100 of the 125 remaining stores and close to 1,500 jobs, and kept the brand and the dog alive.

What was lost in the rescue was scale and history. Twenty-seven stores that Putman did not want closed immediately, costing 455 jobs — and among them was 363 Oxford Street, the world-famous flagship that had carried the brand on and off since 1921. The chain that emerged was real, still trading under the HMV name, and smaller and humbler than the one that had once defined how Britain bought music.

The mechanism was the same one that emptied record shops worldwide — the iPod, the download, the £9.99-a-month all-you-can-hear subscription — applied to a retailer with high-street rents, business rates, and a product whose unit sales fell every year. HMV's distinction is not that it avoided the fate of Tower or Virgin, but that, unlike them, it found someone willing to keep the name on the door.

Timeline

1921
The first shop
The Gramophone Company opens a "His Master's Voice" store at 363 Oxford Street, London — the composer Edward Elgar reputedly among those at the opening — branding it with Nipper, the terrier and gramophone trademark.
1960s–1980s
The high-street institution
HMV expands into a national chain of music shops, becoming a default destination for records, then cassettes and CDs.
1998
The HMV Group forms
HMV is grouped with the Waterstones and Dillons bookselling businesses, later floating on the London Stock Exchange in 2002.
Mid-2000s
The peak
HMV operates more than 200 UK stores as the dominant specialist seller of CDs and DVDs, just as digital downloads begin to bite.
2007
The squeeze begins
Downloading, supermarket CD discounting, and online retailers erode HMV's core; profit warnings and store rationalisation follow over the next several years.
15 January 2013
First administration
HMV Group appoints Deloitte as administrators, putting about 4,350 UK staff and roughly 220 stores at risk.
5 April 2013
Hilco's rescue
The restructuring firm Hilco buys HMV out of administration in a deal valued at around £50 million, saving 141 shops and about 2,500 jobs.
28 December 2018
Second administration
Under Hilco, HMV calls in KPMG, blaming a "tsunami" of retail pressures; about 2,200 jobs across 125 stores are at risk.
5 February 2019
Bought, reduced
Doug Putman's Sunrise Records acquires roughly 100 stores and close to 1,500 jobs for £883,000; 27 stores close with 455 redundancies.
2019
The flagship goes dark
363 Oxford Street — the original 1921 site — is among the closed stores, ending nearly a century at the address.
2019 onward
A smaller HMV
The brand trades on under Putman in reduced form, later reopening a new central-London flagship and leaning on vinyl's revival.

The Voice on the High Street

HMV's authority came from being early and being everywhere. The "His Master's Voice" shop that opened on Oxford Street in 1921 was a retail outpost of The Gramophone Company, one of the businesses that effectively invented the recorded-music industry, and it carried with it the most recognisable trademark in the trade: Francis Barraud's 1898 painting of Nipper the Jack Russell, head cocked at the horn of a gramophone, "listening to his master's voice." For most of the twentieth century the dog and the three block capitals were a guarantee — that this was where the records were, all of them, in depth, sold by people who knew the catalogue.

By the CD era HMV had translated that authority into a national chain of more than 200 stores and a place in the culture: the flagship browse, the listening posts, the midnight launch for a big release, the in-store signing. Grouped from 1998 with the Waterstones and Dillons bookshops and floated in 2002, HMV Group was a genuine high-street power. The trouble was that its power rested entirely on the physical disc — and the disc was about to stop being how people bought music.

A Tsunami, Twice

The decline arrived on a familiar schedule. Apple's iTunes Store and the iPod unbundled the album into the 79p download; supermarkets used chart CDs as loss-leaders; Amazon undercut everything on price and stocked everything on shelf space HMV had to pay rent on. Recorded-music revenue migrated first to downloads and then, fatally for any physical retailer, to streaming subscriptions, where the marginal cost of one more listen was zero. DVD and Blu-ray followed a few years behind as film moved to download and then to Netflix. HMV was a specialist in two categories that were both going digital, holding leases on prime high-street property and paying the business rates that came with it.

The first reckoning came in January 2013, when HMV Group appointed Deloitte as administrators — about 4,350 jobs and roughly 220 stores in the balance — after a disastrous Christmas. In April 2013 the restructuring specialist Hilco bought the business out of administration in a deal valued at around £50 million, saving 141 shops and about 2,500 jobs. For nearly six years HMV traded on under Hilco, and for a while it was even, by the modest standards of physical music, a survivor: the last big specialist standing as Britain's other record chains vanished.

But the underlying trend never reversed. On 28 December 2018, HMV called in KPMG and entered administration for the second time in six years. Hilco's executive chairman, Paul McGowan, blamed a "tsunami" of challenges — business rates, the relentless move to digital, a "dramatic change in consumer behaviour in the entertainment market." About 2,200 jobs across 125 stores were now at risk, and HMV traded through the new-year sales not knowing whether it would have a buyer.

The Dog Keeps the Name

It did. On 5 February 2019, Doug Putman — a Canadian entrepreneur who had built Sunrise Records from five stores to dozens and had already absorbed most of HMV's collapsed Canadian operation in 2017 — bought HMV out of its second administration for £883,000. He took roughly 100 of the 125 stores and close to 1,500 jobs, beating reported interest from Mike Ashley's Sports Direct. The brand, the name, and the dog survived intact.

The cost of survival was the rest of the chain. Twenty-seven stores Putman did not acquire closed at once, with 455 redundancies — and the casualties included 363 Oxford Street, the address where HMV had begun in 1921 and to which it had returned. The flagship that had defined the brand in the public mind shut, while a leaner HMV carried on in the towns and retail parks where rent was bearable. It was a rescue measured not in revival but in subtraction: a real retailer, still trading, on a fraction of its former footprint, betting that the vinyl revival and a stripped-down cost base could keep physical entertainment alive for the people who still wanted to hold it.

The Five Factors

01
The format, not the firm, was obsolete
HMV did not lose to a smarter competitor; it lost because the CD and the DVD stopped being how people consumed music and film. When the product category itself migrates to downloads and then to streaming, even a dominant specialist is selling a shrinking thing in an expensive room. No amount of retail skill reverses a category in structural decline.
02
High-street property is a fixed cost that does not fall with sales
HMV's prime-location leases and UK business rates were sized for a chain selling tens of millions of discs a year. As unit sales fell, the rent and rates did not, turning the flagship footprint from an asset into a recurring liability — the same trap that crushed Virgin Megastore on Manhattan rents.
03
A propped-up business is not a fixed one
Hilco's 2013 rescue saved jobs and bought nearly six years, but it did not change the demand curve. Restructuring can stabilise a balance sheet; it cannot make people buy CDs again. The second administration in 2018 was the first one deferred, not avoided.
04
Being the last survivor is a position, not a strategy
Outlasting Tower, Virgin, and the rest left HMV with a near-monopoly on a market that was itself disappearing. Inheriting the remaining buyers of a dying category delays the ending; it does not change it.
05
A beloved brand can be worth buying even when the business cannot pay its way
What survived was the name and the dog, not the old economics. Putman paid £883,000 — a rounding error against HMV's history — precisely because the brand still meant something, and rebuilt a smaller, cheaper operation around it. The affection had residual value; the cost structure did not.

Aftermath

The 2019 rescue saved close to 1,500 jobs and cost 455, and it ended HMV's run as a major chain. Under Doug Putman the business kept trading in reduced form, eventually reopening a new flagship in central London and leaning into the vinyl revival that had turned records back into a desirable physical object for a younger generation of buyers. The result was a genuine retailer rather than a zombie website — HMV stores you could still walk into — but at a scale that bore little relation to the CD-era empire of 200-plus shops.

The lasting mark is the closure of 363 Oxford Street, the address where the His Master's Voice shop had opened in 1921. For most of a century that store was the brand made physical; its shuttering in 2019 was the image that fixed HMV's decline in the British memory, even as the company itself carried on elsewhere. HMV's story sits beside Tower Records and Virgin Megastore as the British chapter of the same global death of the record shop — distinguished mainly by the fact that, alone among them, it found a buyer willing to keep Nipper on the door.

Lessons

  1. When the product category itself goes digital, treat the decline as structural, not cyclical: a beloved specialist selling a dying format is running a clock, and restructuring resets the clock without stopping it.
  2. Match the property footprint to the demand trend, not the peak: prime high-street rent and business rates are fixed costs that will not shrink as fast as disc sales, and a flagship can become the heaviest liability on the books.
  3. Do not confuse being the last survivor with having solved the problem; inheriting the final buyers of a vanishing market buys time, not a future.
  4. Separate the brand from the business — a name with real public affection can be worth acquiring and rebuilding around long after the original cost structure has become unpayable.
  5. For lenders and restructurers, recognise that a rescue that does not change the demand curve is a deferral; price the second collapse in from the start.

References