The Rs 14,000 crore RP-Sanjiv Goenka group is moving out of the music retailing business for good. It is in the process of shutting down all its music retail stores under the Music World brand across India. The largest of them all, the store on Park Street in Kolkata has been a crowd puller always and the highest revenue grosser in the whole chain. Even that is planning to down shutters from July 1, 2013.

Top company honchos attribute the group’s decision to exit the music retailing business to the consistently falling margins and sales of pre-recorded stored music due to a variety of factors including piracy, digitisation in the industry and increasing option of being able to download music straight off the internet. “The combination has sounded the death knell for CD shops and made the whole business model itself unviable. We have therefore decided to wind up Music World outlets in the country,” said a company source.

Sanjay Gupta, group corporate head, marketing, confirmed the decision to exit music retailing business. Gupta said: “Music World has for the last 16 years been India’s premier music and home video retail chain. However, in the last few years, the onset of digitisation in music and the shift in consumer preferences towards music and video downloads have rendered the business model unviable.” Information trickling in suggests that the group felt the impact more strongly over the last six months to a year, with sales dropping over 50 per cent. Revenues dipped to Rs 35-40 lakh a month in 2013 from Rs 70 lakh a month in 2012.

Music World outlets were all taken on lease. Therefore, the closure of these stores will not saddle the company with idle real estate. Although the stores would be closed down, the group will retain the Music World brand because of the strong brand equity among consumers. Employees of the music retailing business are being absorbed into other companies of the group.

Incidentally, Music World is a wholly-owned subsidiary of Spencer’s Retail which, in turn, is a subsidiary of power producer CESC, the group’s flagship. The group is now merging the bleeding music stores chain Music World with Spencer’s Retail. A formal decision to amalgamate Music World with Spencer’s has already been taken by the boards of the respective companies and necessary documents have been filed with the Kolkata High Court.

Music World retails audio CDs, DVDs, gaming consoles and software, besides other music accessories and home videos of leading brands. It was one of the early entrants into the speciality retail space, opening its first store in 1997, and then taking the franchise route in 2003. The company, which had some 40 shops across the country, spread over 50,000 square feet approximately, has been scaling down its operations since the beginning of April 2012.

“We have closed all the shops. Our flagship store on Park Street will be the last to down shutters this month-end,” the company official pointed out.