 The New Ranking Of The Top 200 Dealers
Retailers across the board, from the smallest to the largest, described 2007 as a “challenging year,” citing consumer uncertainty, slumping housing prices, high gas prices, and withering competition as serious assaults on their profitability. While this assessment is no doubt accurate, it’s worth pointing out that since we began ranking the industry’s retailers in 1992, there has yet to a year that retailers didn’t describe as “challenging.” Perhaps that’s because the fickle nature of the buying public combined with consistently narrow profit margins makes retail an inherently challenging business in just about any economic climate. The Top 200 ranking certainly bears this out. Over the past 16 years, a period that saw several booms and busts, no fewer than 77 retailers who once appeared on the Top 200 ranking have either closed down, shrunk their way off the list, or been swallowed up by a competitor. Thus, the fact that 2007 was the cause of heartache, anxiety, and a few sleepless nights for music retailers made it no different than any other 12-month time period we’ve reported on over the past century.
What is noteworthy about the Top 200 in 2007 was the fact that the group posted such positive results in the face of a relatively uncooperative economy. Music products are routinely described as luxury, discretionary items that are easily deferred in tough economic times. Yet cautious consumers apparently felt that music products were more essential than automobiles (down 11%), home appliances (down 8.9%), and even beer (off 1.1%). Cumulative sales at the country’s 200 largest music products retailers inched up 2% in 2007 to hit a record $4.70 billion, versus $4.58 billion in 2006. With this modest sales gain, the Top 200 captured a record 62.4% of the $7.5 billion U.S. market for music products.
National polls routinely highlight a certain perceptual schizophrenia in citizenry: Some 70% describe their own circumstances as “very satisfying” while simultaneously fretting that the country is going to hell in a handbasket. Management at the Top 200 seems to suffer from the same malady. Although most Top 200 CEOs cite high gas prices, housing woes, job insecurity, and a laundry list of other national issues as “serious challenges,” they also express surprisingly high confidence in their ability to prevail. Summing up a widely held point of view, one retailer commented, “Work hard, be there for your customers, and everything has a way of working out.” A piano dealer commented, “It’s not easy, but by focusing on promoting outside of the store and working on building our lesson program, we have done better than I would have expected.”
There were a number of other telling indications of confidence on the part of the Top 200. 45% reported that the combination of housing woes and high fuel prices had no measurable impact on their sales, and 27% noted only a slight impact. Furthermore, 115 of the companies posted sales gains in 2007, versus 85 that had no change in revenue, or a decline. This is a stronger showing than we saw in 2006, when only 103 retailers posted sales gains, but it is off the banner pace of 1997, when no fewer than 180 retailers saw their top lines rise. There is no shortage of data to .....READ MORE
 $4 Gasoline Does Not Slow The Music Market
Consumers are clearly pinched by rising energy and food costs. However, incoming sales data for the quarter ended June 30 reveals that they continue to buy the products they want and need. The chart below is the U.S. Census Bureau’s compilation of sales results from all of the nation’s retailers for the most recent quarter. On the whole, the government report shows that life is not so bad for retailers that are not aligned with autos and building supply industries.
Data gathered for The Music Trades’ quarterly sales report from music store owners for this last quarter reveals a similar trend and points to a market that is remarkably healthy. Although total sales advanced a scant .7%, the underlying trends point to strong levels of consumer demand and overall interest in music participation.
Guitar sales.....READ MORE
 Best Buy Music Store Roll-Out Nears
Leading consumer electronics retailer Best Buy is apparently in the final stages of a national roll-out of its “music store within a store” venture. The first of these music stores was opened at a Best Buy location in Riverside, California. Since then the design and merchandising concepts of the store have been continuously refined. The latest version of the Best Buy music store in Northridge, California will reportedly be the template for other stores across the country. The 2,800-square-foot store, located in the rear corner of a 40,000-square-foot Best Buy, stocks approximately 2,800 SKUs, including guitars, drums, keyboards, recording equipment, and p.a. gear. Manufacturers....READ MORE
Constant Promotion Pay Big Dividends For Piano Gallery
“Location, location, location.” If ever this familiar prescription for business success was true, it certainly is for Piano Gallery-Dallas. Owner Bob Rosenthal moved his single store in August 2006 to “one of the nation’s premier retail locations” in the Dallas-Fort Worth metroplex. Though the new store is just six blocks south from its previous home, the move has transported Piano Gallery, in Rosenthal’s words, “from Little League to the majors” almost overnight.
Situated on “the most traveled freeway in all of Dallas,” the new store provides easy freeway access, and the enormous billboard that came with the property is visible to approximately 200,000 cars a day. Furthermore, the former furniture store is in an area known for furniture retailers, another huge advantage, particularly since Dallas remains relatively unscathed by the nation’s economic downturn and real estate meltdown. Rosenthal reports that roughly 50% of Piano Gallery’s sales are to people moving into new homes. The relocation was..... READ MORE
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