How Golden Discs quietly staged Irish music's biggest comeback

We're streaming more and more TV and music – but the iconic Irish retailer is back opening new stores...

How Golden Discs quietly staged Irish music's biggest comeback

Golden Discs vinyl / Joseph Conroy

When it is put to Golden Discs' managing director Stephen Fitzgerald that is seems counter-intuitive that his business is making money and opening new stores at the tail-end of 2016, he laughs and replies: "It does, you're not the first person to say that."

The company hopes to be the last retailer standing as the market for 'physical' entertainment products finally bottoms-out following a dramatic decline since Napster went live at the turn of the millennium.

"Yes – it's a competitive space – and digital streaming subscription services are available but physical product still has plenty of life left in it," Fitzgerald tells Newstalk one week after the company announced plans to partner with Tesco Ireland to supply 80 of its stores.

Golden Discs has also recently announced major store openings on Dublin's Henry St and in Dundrum Town Centre.

Survivor

Both of these space previously housed HMV stores. The brand pulled out of the Irish market for the second time during 2016.

The British retailer previously left Ireland in 2013. In both instances, HMV's problems have been turned into business opportunities for Golden Discs.

"They first closed their Irish operation in 2013 and we felt there was a lot of business that was left that wasn't catered for, so we opened half a dozen stores," he reflects, adding that while the market for DVD's, CD's and BluRay has shrunk demand is still there to be fought for.

David Gray's White Ladder was released in 1998 - at the height of the 'CD Boom.' It remains one of the highest selling CDs in Ireland

He adds that international trends suggest that declines in physical sales have ceased – and vinyl's comeback looks like a trend which is set to continue:

"Our CD business is actually in growth. We are seeing huge growth on vinyl. Vinyl is something of a phenomenon at the moment. Vinyl sales in the last two years globally have more than doubled."

Its new shops offer more floor space to vinyl and it's no longer mainly "males in their 40s and 50s" who are picking them up.

The key market for the retro format in 2016 is 16-25 year olds who are likely to also be users of services like Spotify. In fact, studies have shown that streamers are much more likely to collect vinyl than those who do not use these services.

Rolling News

"It's not that one person is just streaming and one person is just buying physical. There is a lot of crossover. They can both, I think, co-exist," Fitzgerald adds, arguing that these services are valuable discovery tools for music fans who also want to own physical products.

Rent Day Blues

The company's outlook hasn't always been so rosy – it entered examinership facing debts of almost €12m in 2009.

"The examinership always comes up whenever I talk to journalists – 2009 – we are never going to shake it. The examinership at the time was just the right thing to do at the right time and it worked very well. We were in upward-only rents and some of our leases were doubling and trebling. Rents were just astronomical."

Looking back on the process, he believes that it offered the company a valuable opportunity to downsize and restructure – saving the brand and some 100 jobs.

The company also got an opportunity to renegotiate some of its Celtic Tiger rent deals.

When scouting opportunities to open new outlets, it looks for a "sweet spot" of high footfall, without facing sky-high rents.

Into the Black

"Black Friday is a line in the sand – from here on in we start to see exponential growth in sales, week on week, day on day right through to Christmas," the MD says on the eve of the day of sales.

The company does half of its turnover the fourth holiday quarter – gifting is one area where retailers like Golden Discs have a clear advantage over digital alternatives.

Micheal Buble

As Stephen puts it, "It's difficult to gift your mum a download of Michael Buble – at this time of year people will buy a Buble CD."

The company has already identified "five or six" regional locations to open new shops in 2017.

It is also launching a new online store during the first three months of the new year.