The plan behind Sunrise Records 'insane' move to bring back record stores

Sunrise Records, now headquartered in Ancaster since it was bought by Hamilton native Douglas Putman in 2014, is planning to expand its horizons. Putman says he has a plan to make the record store business profitable in the age of digital media.

In February, Sunrise Records announced it would take over several former HMV locations

Sunrise Records is now headquartered in Ancaster, Ont., after being bought by Hamilton native Douglas Putman in 2014. So far it hasn't reclaimed its old flagship Toronto store that closed earlier that year, but it's expanding to old HMV locations, and Putman is optimistic about its success. (CBC)

Hamilton-born entrepreneur Douglas Putman, the owner of Sunrise Records, says he's going to make the business of brick-and-mortar record stores viable in an age where people have abandoned the CD stacks for the Spotify playlist.

"We know we can make it work," Putman says.

In 2014 the Canadian company, which was founded in Toronto in the 1970s, closed its flagship store on Yonge Street.

That closure was part of the squeeze that music stores had felt tighten each year, as the rise of peer-to-peer music sharing in the early 2000s gave way to popular digital platforms like iTunes and Spotify. 

The disconcerting fact for Sunrise Records and stores like them is that a lot of music lovers haven't bought music from a physical shop in years.

2014 was the same year Putman bought Sunrise Records and proceeded to open new locations. And after the industry giant HMV went into receivership in January, Putman announced that Sunrise Records would be expanding into 70 of that store's former locations — one of which is in Hamilton's Limeridge Mall.

Other people in the record industry have called the move "a big gamble."

Ben Frith, the manager of Vancouver's Neptoon Records, was interviewed by CBC News in March about Putman's ambitions.

"It's hard enough to get one store up and running smoothly, let alone 70 all at once," Frith said. "In this day and age, it seems insane."

But Putman, whose first successful business venture started when he was 16 and involved recruiting his friends to sell fresh local produce, isn't going into this blind. He has a strategy.

An old-fashioned, personal touch

The crux of Putman's plan is to leverage two things: the renewed interest in vinyl records, and people's passion for local music.

"We had all the stores from Sunrise, and with vinyl doing as well as it is, we knew we could make it work," he said of the decision to acquire the former HMV locations.

The classic vinyl record has been booming in popularity in North America and western Europe since around 2007. In 2016, vinyl sales hit a 25-year high.

The cause for the boom is up for debate, but it seems to be driven by a "retro-chic" quality that younger people (who aren't old enough to remember when vinyl was the primary format) see in buying and owning the records, as well as an increased appreciation for the high-resolution analog signal of a record that gets lost in digital production.

Vinyl records have seen a huge resurgence in popularity, and owners of music shops say the beloved old format now accounts for a huge chunk of their sales. (Shutterstock / Larina Marina)

Some record store owners have said in the last few years that vinyl is now their "bread and butter," bringing in better sales numbers than CDs.

"Our focus is very heavy on vinyl," said Jimmy Donnelly, who manages Taz Records in downtown Halifax. He told CBC News in February that vinyl records account for about 70 per cent of his sales.

Along with banking on vinyl sales, Putman said that each Sunrise Records store will emphasize music that's local, as well as music that's popular locally.

"Managers have the ability to bring in anything they want," he said.

While a large portion of any store's catalogue will be the same as other stores, Putman promised that another big chunk will be unique.

I think you lose something when everything's exactly the same.- Douglas Putman, Sunrise Records

"Essentially every store has a different assortment. If metal is really big in that area, they can stock more of that."

This "different assortment" approach is a departure from the prevailing orthodoxy in franchise brand management, which tries to ensure customers get the same experience at every store.

​Putman said that may work for some, but he sees Sunrise Records' willingness to diversify as a strength.

"Tim Hortons in Halifax and Tim Hortons in Vancouver might be exactly the same. But maybe the people in Halifax really like fish. I think a store should cater to that," he said.

"We're taking the approach that we like certain things about being corporate, like the money and resources that affords you. But I think you lose something when everything's exactly the same."

But will it work?

Mark Furukawa, owner of Hamilton's Dr. Disc, an independent record store, said the "economic reality" makes Putman's plan far-fetched.

"I don't think the model will work based on what I've seen in my time in the industry," he said.

"What Sunrise plans on doing—paying attention to local demand—any mom and pop store, like ourselves or any independent store, already does that."

Furukawa added, "If Sunrise really wants to become a player in the game and have some kind of longevity, they're going to have to echo our model in a sense that they're really going to have to emphasize customer service, and providing the goods or the titles that customers want." 

Then there's the challenge of convincing music lovers to take the trip to the neighbourhood music store instead of downloading music.

"I think it's a reality of the business that it's very challenging. What we have to focus on is that core customer, who maybe does use Spotify or iTunes or whatever that may be," Putman said. "But there is some research suggesting that when people stream music they like, it can lead to wanting to purchase a physical album too."

And when people want to expand their musical horizons, Putman said, there's value in having skilled staff on hand to help.

"I think Spotify and some of these things can be daunting when there's an unlimited selection."

Putman feels that going to a store helps people narrow down their options, "instead of going on Spotify and finding, here's 10,000 albums to choose from — now pick one."

dave.beatty@cbc.ca | @dbeatty