When HMV went into administration at the beginning of the year, many saw it as proof that no one was interested in physical record stores any more. It was simply the latest in the line of nearly 2,000 record shop closures around the UK. Yet, last week, HMV's new owner Hilco reopened the chain's flagship store at 363 Oxford Street.

So is the company flogging a dead horse? Not necessarily. But it needs to learn from previous mistakes, and could do worse than learn from Rough Trade East, a thriving record shop in London's Brick Lane. The Rough Trade record store brand, which includes the original Rough Trade West shop, is doing so well that it is about to open a 15,000 sq ft sister shop in Williamsburg, New York, next month.

"The internet has polarised record stores," says Rough Trade East's store director Stephen Godfroy. "At one end of the spectrum you have the complete commoditisation of music, and at the other end the specialists that celebrate music as an artefact. The ones that fall inbetween fail – which is the reason HMV failed."

The East branch opened in 2007, the same year that the Fopp chain went into administration and Virgin Megastores were closing at an increasing rate. It's since proved to be not only a viable business, but also a significantly profitable one.

An important part of its success comes down to curation, with detailed descriptions displayed on each record allowing people to browse without having to know precisely what they're looking for. "We're as defined by what we don't sell as what we do sell," explains Godfroy. "We encourage that serendipitous discovery that can't be replicated online." It's way more sophisticated than the Amazon algorithm – online, people tend to just "drill down" into an area they already know.

Rough Trade East customers may purchase an album, a book – or even a £2,000 analogue synthesizer – but don't expect to see any "two for £10" bargains advertised around the shop. "Of course some people bookmark records they see in our store and then go and buy it cheaper online," admits Godfroy. "You can't pretend it isn't there, but you can't let it dictate your strategy."

Godfroy thinks many of the independent stores that shut were distracted by media reports claiming that lowering prices is the only way to compete. "It isn't," he declares. "It's as much about providing a refuge from the high street – a place for people to hang out and meet likeminded people."

The shop's clientele dispels the myth that the only people still interested in physical records are men over 40. The average age of its customers is in the lower 20s, with an even split between male and female. The younger people are less "format prejudiced" than the older customers, says Godfroy, and they often opt for vinyl.

East has a café area where many of the area's entrepreneurs hold meetings with clients (the shop is located down the street from "Silicon Roundabout"), which Godfroy puts down to the pride they feel about being associated with the venue.

Further proof of the record shop as a community hub is East's immensely popular photo booth, used by both artists and customers. Initially installed to "fill a bit of dead space" and give people a chance to take a souvenir away with them when leaving the store, the booth is now such a success that during the weekends queues of teenage girls wait to use it. Many of them also upload the photos onto the Rough Trade website.

"When I sit in the office in the mezzanine above it, if I hear laughter it always comes from the booth," says Godfroy. "The act of purchasing is just 1% of a much larger experience. We want to defy expectation, so on each visit there's something different to see and appreciate – as a destination store, you can't be predictable."

Though no one is allowed to see pictures before the opening, he assures me that the New York store is truly unconventional: "There's no other store like it on Earth – and I know that for sure – not just in terms of the interior and the aesthetic, but also in terms of what it offers."

Like Rough Trade East, it will include a live music area, though the one in New York will be more defined, with a 300 capacity, a balcony and bar. Godfroy says there's a bit of a "bar epidemic" in Williamsburg at the moment. "Even Urban Outfitters are trying to obtain a liquor licence for its store," he laughs. "It's as if all commerce has got to come with a drink."

Some would say opening a record shop in the US is a risky proposition. The decline in physical sales has been steeper there than in the UK, and last year CDs and vinyl accounted for only 43% of all sales of recorded music.

This may of course be because, these days, Walmart, Best Buy and other outlets that only sell mainstream top 40 albums are pretty much the only physical record shops around in the US. It's next to impossible to find a place where music lovers can simply browse and discover new artists.

Unlike Walmart, Rough Trade even sells records by unsigned artists. "Artists come into the stores asking if we would sell their 7-inch records," says Godfroy. "If we like the music, we say yes – customers recommend as much to us as we do to them."

"It's exciting to walk into a Rough Trade store, because you feel like you're in an environment that bleeds music," he adds. "There aren't enough places like that."

Martin Mills, founder and chairman of independent record label group Beggars, concurs. "Rough Trade's success in east London shows that there's a growing appetite for music retail done on a curated scale and serving a musical community," he says. "The even larger size of the Brooklyn store will, I believe, revolutionise record retailing in the digital era. As Don Letts famously said: 'If music is your religion, Rough Trade is your church.'"

It remains to be seen if Hilco's HMV is a church that will attract a big congregation or merely another record shop treating music as a commodity.