November 24, 2018 12:00 pm
Updated: November 25, 2018 12:14 am

The rise and fall of A&B Sound: Iconic record store chain went bankrupt 10 years ago

(Aired March 2005) After years of declining sales, A&B Sound applied for bankruptcy protection in 2005.

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There was a time when a stretch of Seymour Street in downtown Vancouver was a mecca for music lovers.

Long before Spotify playlists and Soundcloud uploads, fans would seek out new music by strolling the aisles of independent record shops like Odyssey Imports, Track Records, and Collectors RPM — which had a Beatles museum on the top floor — or chains like A&A Records and Sam the Record Man.

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Tucked under the arms of many who walked along Vancouver’s so-called “Record Row” were square, bright orange plastic bags containing albums bought at A&B Sound, a record store chain that at one point dominated music sales in B.C. and had stores in Alberta, Saskatchewan and Manitoba.

“We had customers back then who spent the entire day there,” said Lane Orr, A&B Sound’s former vice-president, of the flagship Seymour Street location. “They’d be there in the morning when you opened at 9 and they’d still be there at 6 and they had an armload of of classical and jazz [records] and whatever else.”

WATCH: (Aired Dec. 1995) A&B Sound says it can fend off competitors through a business model that relies on high volume and low prices.

Vinyl destination

Founded in 1959 by Fred Steiner, A&B Sound prided itself on selling a deep catalogue of music at rock bottom prices. Their relentless pursuit of bargain prices frustrated competitors and distributors. In its prime it had enough size and influence to ensure that customers in western Canada enjoyed some of the lowest music prices in North America.

“The prices were incredibly low,” said David Ian Gray, a retail analyst with DIG360. “They were benchmark pricing that other retailers had to fall in line with.”

“We were very polarizing in the industry,” said Bob Hitchcock, A&B Sound’s former senior director of marketing. “I think some of our competitors and some suppliers that we didn’t do business with considered us to be sort of cowboys in that respect.”

Hitchcock said A&B’s competitive prices on records and CDs built customer loyalty.

“The customer at 12 and 13 years old was buying albums and then buying CDs,” he said. “It became natural for them to come in to buy their first portable stereo system or their first car stereo system and later on their audio system and their computer,” he said.

“So for me it was a dynamic that wasn’t replicated during that period by anyone else in North America.”

Hitchcock said A&B Sound prided itself on cheap prices and deep discounts during its big storewide sales, most famously its Boxing Day sale, an annual tradition that saw customers line up hours before opening to get a chance at huge discounts on audio and video equipment.

Stores like A&B Sound were a valuable link between music fans and record labels. Crowds would form lines outside stores not just for sales, but to meet musicians who often came to A&B Sound to hold autograph sessions for fans.

Global News cameras were there when 80s artists like Platinum Blonde, Glass Tiger and Maestro Fresh Wes came to meet fans at A&B Sound. In 1997, a visit by Marilyn Manson turned ugly, with fans breaking the front window of A&B’s Seymour location.

WATCH: (Aired Jan. 1997) More than 1,000 fans lined Seymour Street to get an autograph from Marilyn Manson 

‘A fight to the bottom’

For the longest time, A&B’s business model worked. At its peak, the company had 60 to 70 per cent of the local music retail business and $300 million in annual sales, according to a 1993 Financial Post report.

With success came competitors who tried to cut into its market share.

In the 1990s, the company engaged in a public war of words with Future Shop, with accusations of shady sales tactics on both sides.

The rivalry made its way to the courts.

WATCH: (Aired July 1995) The retail war between A&B Sound and Future Shop hits fever pitch 

In 1995, A&B Sound was taken to court over an ad that questioned Future Shop’s claim of having “Canada’s absolute lowest prices” and featured a picture of a man with a Pinocchio-sized nose.

Future Shop agreed to stop using the phrase and a judge rejected its request for an injunction to stop A&B from using Future Shop’s name in ads for the sake of price comparisons.

A&B Sound obtained a court injunction prohibiting all Future Shop employees from entering its stores. The company accused Future Shop of making its staff visit A&B Sound locations as secret shoppers to waste the time of A&B employees.

READ MORE: From Apple Music, to Spotify: How do streaming music services compare?

Craig Duncan, who served as general manager for Virgin Megastores in Canada, said the battle ended up hurting both businesses.

“I interviewed most of the key buyers for both A&B and Future Shop at that time prior to opening Virgin,” he told Global News.

“I found it interesting that they were in a fight to the bottom for price. A&B set their price and Future Shop would follow. It was heavily ego-driven and also, in A&B’s case, I think it was to help cash flow.

“There was no need to set the prices at the level they did. It made absolutely no sense. They could have been so much more profitable and consequently invested more in the look and feel of their stores and invested in staff.”

Virgin Megastores, along with HMV, posed yet another challenge to A&B Sound. Then came Best Buy, which snapped up Future Shop.

Death by download

The intense competition took its toll on the company, but its greatest challenge came with the development of the MP3, the small digital music files that were easy to download.

Orr said things started to turn around 2000. One of the first signs of the problems ahead came when customers started taking advantage of the store’s liberal return policy.

READ MORE: Online streaming of artists like Drake, David Bowie boost music industry growth

“We started to see Napster and all those things come along and we had what you’d call ‘burn and return,'” Orr said.

“We had a lot of people coming in, they’d pick up a CD and they’d burn it and bring it back and say it’s defective. Return policies allowed that. As soon as things went digital, it became a much different animal.”

Efforts were made to stem the digital tide.

In 2003, the company announced it would slash prices even further.

“It’s a risk we have to take,” Orr said at the time. “A&B Sound is not anti-downloading, we just believe that if the price is ‘right,’ consumers will again purchase CDs.”

READ MORE: Spotify just turned 10 — here’s how it’s impacted music: Alan Cross

The company also tried to expand to online sales, but Orr said their efforts were doomed to failure.

“We were a bricks-and-mortar chain and we just never really went at it because I think deep down we knew that that just wasn’t the model,” he said. “At that time, we had Best Buy coming in from the US doing a few billion dollars a year and they bought Future Shop and so it was one of those things. Do you want to pour money down this sinkhole?

“Building a website to deliver a CD, it just didn’t make sense.”

Hitchcock said the company explored the idea of using its deep catalogue to start a music streaming service in the late 1990s, but it never got past the discussion phase.

In 2005, A&B Sound applied for bankruptcy protection, claiming it owed creditors more than $50 million.

The chain said it had revenues of approximately $200 million in 2004, down from about $300 million in 2001.

U.S.-based Sun Capital expressed interest in buying the company, but it was ultimately sold to Seanix, a Richmond-based computer manufacturer, for an estimated $25 million.

The company wasn’t able to turn things around and closed stores.

The flagship Seymour Street location closed in August 2008. Months later, on Nov. 7, 2008, A&B Sound quietly declared bankruptcy, ending a business that lasted nearly five decades.

WATCH: (Aired March 2005) After years of declining sales, A&B Sound applied for bankruptcy protection in 2005 

Today, 17 properties that were home to A&B stores are owned by Steiner Properties Ltd., which is owned by Nick Steiner, the son of A&B Sound founder Fred Steiner.

Among those properties is the former A&B Sound store located in the heart of downtown Nanaimo, which has been without a tenant since it closed its doors in 2008. Earlier this year, homeless camps were set up on the property located on the corner of Commercial Street and Terminal Avenue before Nanaimo Fire Rescue urged campers to relocate.

The company says it has no update on the future of the property.

READ MORE: How times have changed — music then, and music now: Alan Cross

Orr and Hitchcock say there were plenty of missteps along the way that led to A&B Sound’s demise. But they also acknowledge that ultimately there was nothing that could have been done.

Although A&B did its best to expand into computers and other forms of consumer electronics, the company was ultimately a music store, and no amount of business savvy could have saved it from the sea change of digital music and streaming.

In the 10 years since its bankruptcy, there has been something of a record store renaissance with small independent retailers catering to audiophiles who prefer the vinyl to digital. Major retailers still sell CDs.

READ MORE: Online streaming of artists like Drake, David Bowie boost music industry growth

Gray says that even though there is still an appetite for physical media, A&B Sound’s size — too big to be a boutique record store, too small to compete with box stores — would have made it difficult to survive.

Gray and others say there’s nothing the one-time retail giant could have done.

“It’s just one of those iconic stories of the death of a sector because of the internet and no matter how good they were they just weren’t able to withstand what was happening with online music.”

© 2018 Global News, a division of Corus Entertainment Inc.

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