High rent and an increased trend to online sales have forced music retailer HMV Canada to close the doors of its flagship store at Burrard and Robson this January, the company announced Thursday.

"It's regretful, really," Nick Williams, president of HMV Canada, said in a telephone interview from Toronto.

"The last thing that we want to do is leave Vancouver's downtown ... but a store of that magnitude unfortunately does not fit into our long-term real estate strategy."

The closure of the 50,000-squarefoot, three-storey Robson location, as well as a smaller retail space in the Richmond Centre, will affect the jobs of more than 60 employees.

Williams said a portion of the staff will be moved to HMV Canada's nine remaining locations in British Columbia. But, he added, "Clearly we won't be able to do that for everyone."

HMV, a British-owned entity, took over the space in one of Vancouver's most-visible retail spots in 2005 after another Brit, tycoon Richard Branson, sold his Virgin Megastore operation in the same location and bailed out of the Canadian music entertainment market.

Branson - founder of the global Virgin business empire - personally opened the Vancouver store with tremendous fanfare in December 1996 by rappelling down the front of the building before thousands of cheering onlookers. The stunt generated valuable publicity but didn't kick-start the kind of sales the company expected and Virgin never opened another store in Canada.

HMV, eager to expand its presence in the city, quickly transformed the outlet into the largest of its kind dedicated to music and DVD sales in Canada, offering more than 400,000 titles.

These days, that retail model is under attack. The rise of digital options has taken a toll on the overall sales of CDs, with 30 per cent of music consumers in Canada now choosing to shop online.

DVD sales in Canada have decreased by an estimated five per cent. In the United States and United Kingdom, the decline in physical entertainment sales is closer to 50 per cent.

Struggling with debt, HMV sold its 121-store Canadian unit to Hilco UK as part of a refinancing deal earlier this year to form HMV Canada.

Williams said HMV Canada remains a strong presence in the country, with 116 stores that will continue to operate nationwide. The company has also expanded into the digital world, offering more than 10 million MP3 tracks for download and an 800,000-member customer rewards program.

Williams said HMV Canada plans to open a smaller storefront in the downtown core in the range of 5,000 to 10,000 square feet.

HMV Canada's decision to close the Robson store follows a trend among large-scale retailers, said James Smerdon, director of retail consulting with Colliers International in Vancouver.

The increase in Internet sales, combined with the high price of Vancouver's prime retail space, has seen many companies scale down their physical operations.

"Gone are the days when we see the 400,000-square-foot Hudson's Bay, Eatons and Sears opening up new downtown locations," he said.

Smerdon said prime retail space in downtown Vancouver costs upwards of $200 per square foot. He estimated HMV's rent at closer to $60 to $80 per square foot because of the large size of the store.

Smerdon said the space will likely not stay empty for long once its current tenant closes shop. Its location in the heart of the city's retail district continues to make it an attractive venue in terms of sales and marketing.

Smerdon said there are "a handful" of global brands in the city that could potentially lease the entire space, "but it's more likely to be parcelled up into a number of smaller units."

In the meantime, customers can look forward to scoring some deals on movies and music at both the Robson and Richmond locations. Beginning Saturday at 9 a.m., both stores will be holding sales on CDs and DVDs, with prices marked down by 20 to 50 per cent. Discount vouchers will also be issued to be used in other HMV locations in B.C.

"That's our way of saying thanks and goodbye to that store and giving anyone who spent a lot of time in the store, and enjoyed it, the opportunity to benefit from that," Williams said.

[email protected] Twitter: @darahhansen

TWITTER REACTIONS TO HMV'S DOWNTOWN STORE CLOSURE

Following the announcement that the downtown Vancouver HMV store was going to be closed as of January 2012, Sun music writer Francois Marchand (FMarchandVS) couldn't help but wonder if this was just a sign of things to come in an age where digital is overtaking the music world and the advent of cloud technology is seen as a game changer for the industry.

So he went on Twitter and asked the following question: When was the last time you bought a CD at HMV downtown?

Here's what some readers had to say:

@Sir_Lau: CD would have been the last Black Keys probably in May I think?

@kirkofdoom: At least a couple of years - but i haven't bought a CD at a big box store in just as long. mostly merch tables now.

@PolarisPrize: On the bright side, we'll be there in a couple of week to take advantage of the sales.

@allanregan: Been here 3 years and not once. Used to buy 3 or 4 CDs a week years ago. now all digital

@dylan_redekop: What?! Will this be a national trend? (Purchased @libraryvoices latest there in August)

@penguinstorm: I bought firefly on DVD there - four years ago I think? Probably the last time I even went in (frequent Zulu and red cat more)

@penguinstorm: now that I think about it, I bought the alien quadriology at HMV three Christmases ago. In Burnaby, mind you.

@redbirdmusic: I do runs there at least every month or 2. Last one was to get new @arkellsmusic @danmanganmusic and @BlitzenTrapper.

@musicvsmisery: Used to buy CDs there all the time, but I had a staff discount.

Since I moved out and no longer work there, can't afford music

@stefalexandru: So sad. Am I one of the last people who still buys cds?

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Blog: vancouversun.com/awesomesound twitter.com/FMarchandVS