Last Wednesday, legendary Canadian music retailer Pindoff Record Sales sold off their 72-store Music World chain. Two days later, the new owners filed for bankruptcy protection and and will likely lay off 648 employees by the end of January. And so it goes.
According to court documents, Music World plans an “orderly wind down,” including closing stores and liquidating inventory. The retailer has been in dire straits for years, propped up by the Toronto-based Pindoff family, who are now owed $30 million from new owners Kai Voigt, Stephen Granovsky and Lawrence Pollack. Some of Music World’s more profitable stores could be sold to independent franchisees, or retailers like the British-based HMV.
With Sam The Record Man shuttered, Music World became the last remaining Canadian-owned national music chain. Founders Kroum and Eva Pindoff came from humble immigrant beginnings, starting their business by selling records out of their car to Ontario convenience stores and pharmacies. The Pindoffs are now renowned for their significant philanthropy, and their company still holds interests in CD and DVD wholesale and distribution operations.
Media reports were quick to blame Music World’s bricks-and-mortar downfall on declining CD sales, file sharing, online music services, and big box stores like Wal-Mart (which consists of about half the market and often sells CDs at a loss). While those may have been contributing factors, longtime music insider Larry LeBlanc says there’s more to it.
“Music World’s previous owner should take much of the blame,” LeBlanc says. “If Music World had invested and evolved, if it had branched out into other entertainment product lines, and if it had not lost such key staff in recent years, it would probably not be bankrupt today.”
LeBlanc continues with some more choice words: “In the end, the Pindoffs cash out with the sale to new owners; the new owners cash out by attaining the bulk of their purchase price funded by selling inventory to liquidator, and possibly being able to sidestep staff liability by filing for bankruptcy as well as reducing or dropping their retail business; and the Music World employees face getting screwed.”
When Music World finally closes its doors, 118-location HMV will be the only national music chain left in Canada. Half of HMV’s Canadian business comes from non-music sales, like video games and DVDs. In the first quarter of this year, CD sales in Canada dropped 35% from the previous year, according to the Canadian Recording Industry Association.
Vintage ad, circa 1972, courtesy of Jamie Bradburn.