Musica is facing an uncertain future, due to the growth of digital music and video streaming services in South Africa.
The Sunday Times reported that while Musica is not making a loss, it is not thriving. “Same-store turnover went up by just 0.4%, and if you strip out price inflation in their goods, it appears their volumes were negative,” said Alec Abraham, a Sasfin equity analyst.
The report stated that Musica is the last big CD and DVD retailer standing, and now controls 60% of the music CD market, and 43% of the DVD market.
However, with shrinking CD and DVD sales, it is not a good market to be in – especially with the recent launch of ShowMax and Netflix in South Africa.
One of Musica’s biggest competitors, Look & Listen, filed for business rescue in 2014 following poor sales and store closures.
Statistics from the International Federation of the Phonographic Industry showed that sales of recorded music on physical media in South Africa is shrinking faster than the average global decline.
The research further showed that the rise in digital music sales is not enough to offset the decline in physical music sales over the last 5 years.
Despite this gloomy outlook, Musica holding company Clicks Group said it is not planning to sell any of its stores.