HMV Canada, the country’s leading music retailer with more than 104 stores, revealed today that it was cutting its catalogue pricing by up to 33%.
“Lowering prices will lead to greater value and offer more to our consumers,” said Humphrey Kadaner, president of HMV Canada. HMV Canada is a division of HMV Group PLC, based in London, and operates 104 stores in the country.
Kadaner said HMV had been testing the concept in past months at its stores in Edmonton, Alberta, where prices were cut by around 20% on about 60% of compact discs for sale. The move was well received by HMV customers, he added, and the chain decided to continue the pricing cuts across the country.
“We wanted this move to be participative and involve the labels in the decision,” said Kadaner. “The truth is that if we don’t improve [back catalogue] sales, we’ll have to look at reducing inventory.”
The price cuts come at a time when music sales in Canada have slumped dramatically. According to the Canadian Recording Industry Association, the net value of wholesale physical music sales fell 35% in the first quarter of 2007 to $68.7 million, from $105.6 million a year earlier. Unit sales of CDs and music DVDs fell 30% during the quarter to 7.1 million. These figures have had many in the industry – both in retail and Canadian recording companies – concerned, especially since CD sales in the country had already declined by 7% in 2006.
Kadaner said both HMV and Canadian record labels were lowering their margins in the hope of increasing the volume of sales. Though Canadian recording companies have fought with HMV over pricing in the past, they publicly put a brave face on the price cuts.
“We applaud HMV for having the smarts to retain their depth of catalogue while offering lower pricing for consumers,” said Randy Lennox, president of Universal Music Canada.