Keys to Success in an Unstable Market
MMR recently spoke with piano dealers from around the country to get a sense of trends in the market and how businesses are coping with an unstable economy. Like many, dealers expressed concern about the spike in gas prices and explained the adjustments they have had to make. Despite new economic challenges, for both dealers and consumers, most dealers report that sales of digital pianos have remained strong. However, most report that overall sales in 2008 have been down. Some dealers are choosing to refocus on institutional sales, while others are looking to gain new customers from the student market and recreational music making.
“In terms of overall sales, we’re off about 10 percent from last year, but sales were actually up for May and June. We’re hoping this trend will continue. I don’t think it will be difficult to have an increase from the second half of last year. Clavinovas and high-end, home-style verticals are strong sellers right now, but grand piano sales are down across the board. Institutional sales have stayed about the same. We have a lot of churches here and they don’t seem to be impacted by the downturn in the economy. The plunge in the economy and the rise in gas prices have caused us to watch our spending much closer. We’re also paying close attention to freight costs and, unfortunately, we have had to pass these costs on to the consumer.
“Currently the stronger sellers for us are the used console pianos. Although, I still get some customers who have not been affected by the bad economy and have no problem purchasing an expensive grand piano. Sales for 2008 are definitely lower than 2007. The plunge in the economy and the rise in gas prices have forced me to raise my price for piano tunings substantially, and it has helped. People realize that everything is going up and understand that I have to raise prices. I do most of my own piano tunings now. I do mostly everything now including sweeping out the store. I’ve picked up some rebuilding jobs from customers who want their Steinway grands rebuilt over the summer while they are on vacation. This has been very helpful over the slow summer season. Institutional sales have slowed down to a trickle. Most of the schools are content right now to have their old pianos tuned and repaired.”
White Plains Piano
White Plains, N.Y.
“Sales this year are about the same or maybe just a bit lower than 2007. Customers seem to be comparison-shopping more. They are looking for the best deal, whether they’re shopping on the Internet or in a music store. This has prompted in-store salespeople to improve their product presentations. Our stores really need to be retail-ready in such a competitive market. We’re working harder, smarter and longer. Today’s consumer is more educated and informed before he or she walks into a retail store. People want good value for their money along with good service. The best customer service usually wins out.
“Our strong, consistent sellers are digital pianos. Our music education programs have also done well—people still want to play. Institutional sales are about the same as last year. I predict an increase in the church organ business for the fall. The steps that we are taking to increase sales are focused on creating new music makers through our teaching programs. We are also focusing on publishing a new adult recreational music making piano method book this month. We like to get out of the store and see people. That’s the first rule of sales — see the people.
“Surges in sales can occur in a good or bad economic climate, depending on the products that are being offered and how they are presented or marketed to consumers. I believe that a demand for playing a musical instrument can be created. Attitude is everything, and I always believe that the glass is half full.”
“Over the last two years we have seen a definite shift away from decorator furniture upright pianos in favor of taller upright vertical pianos. The entry-level digital piano continues to erode the entry-level new and used acoustic vertical piano sales. We are finding more and more that customers in the market for a used piano are using online resources. In grand piano sales, Steinway sales have been strong, and we are seeing a trend away from wood color finishes in favor of ebony finish. Our acoustic piano sales declined 10 percent over the first six months of 2008. However, our digital piano sales increased by 10 percent over that same period. Player grand sales units, such as Yamaha Disklavier and PianoDisc have been strong sellers over the last six months. In March our roll-out of the new Yamaha Clavinova CGP1000 grand helped sell quite a few of the Clavinova CVP407 and 409′s as well as some of the new CGP1000′s. Our total piano business is off seven percent this year versus last year.
“Of course the rising gas prices may be causing customers to not feel good about spending money on any major purchase. However, in my opinion, the major cause of the decline in our piano sales has been the declining values in the housing market. Customers don’t have the equity in their homes to make major purchases like grand pianos. The housing market and the unstable stock market have slowed down the piano traffic in our stores.
“As a result of the economy, we are trying to go outside of our store to get piano sales. We are very active in the Costco piano road shows. Costco promotions are definitely a plus for business and great for prospective future sales. We also partner with our local orchestra organizations in our major markets. Using their mailing lists and facilities for a piano sale gets us customers who normally would not come to our stores. We also demonstrate our keyboard products at the Minnesota State Fair. With so many people attending the fair, it’s a great opportunity to expose our products. We have had a presence here for many years and, every year we find many new customers who buy throughout the year. We also try to take full advantage of the customers who walk into our stores. All of our acoustic piano shoppers are given a demonstration on the exciting player piano systems that offer a great entertainment package for the home. This is a great add-on package that increases our average sale dramatically. In addition, all of our digital piano customers are shown a Yamaha Clavinova CVP ensemble product, again in an effort to increase our average sale.
“In terms of institutional sales, we have always viewed them as a very important facet of the piano business. For a number of years now we have had a full-time sales associate focus on colleges and universities, as well as churches and local school districts. In our stores that are located quite a distance from headquarters in Twin Cities, we have the keyboard store managers working with these important clients. We consistently run house of worship promotions as well as institutional faculty dinner promotions in all of our major markets.”
Schmitt Music Company
Twin Cities, Minn.
“Although we only sell digital pianos, our sales in 2008 are actually up about 20 percent so far. I don’t think the rise in gas prices has affected us very much; maybe it has been offset by the stimulus checks. Our institutional sales have also been fairly good. In the aftermath of Katrina, all the rebuilding has caused a substantial increase in government sales tax revenues and many school boards have surplus funds. However, the continued negative news about the economy in general appears to be slowing our in-store traffic down.”
Baton Rouge, La.
“The current trend in the piano market is the absence of piano stores to help promote the idea that pianos and piano study are important. In our market we have gone from nine stores selling new pianos down to two, and one of those stores is full-line with much of their resources going to band and orchestra. People are no longer buying pianos for their home.
“The piano relevancy issue has resulted in a glut of used pianos, many being passed on to family or friends for little or no cost, and with the availability of cheap new stencil acoustics and digitals, we have had to focus on features and benefits not otherwise available. We’re running a little ahead of last year’s sales, with the strongest products being Disklavier and CVP model Clavinovas.
“The economy is less of an issue for our customers. Gas prices are like an awful tax that everyone pays, but our piano customer is an upper income consumer. Although, the negative press about gas prices and the economy hasn’t helped consumer confidence in general.
“Our strategy is to continue to promote the benefits of piano study and performance to the general public and show them the benefits of using the instruments that make playing fun. We’re not planning on making our living from the home piano buyers as we always have. Our concentration is on the people who use pianos regularly in piano studios, churches, schools, and funeral homes.”
Foster Family Music
“We are getting more adult students than ever, but they are spending less money on instruments. Overall, piano sales are down, but digital pianos are still selling well. Thank God for Lowrey Organs! The Kawai RX series are moving and, we are selling more Shigeru Kawai’s than we ever have. Institutional sales are still strong. Those customers still seem to have money.
“In addition to the bad economy and the rising gas prices, St. Louis has had some bad news lately with Chrysler closing their plant and Anheuser Busch being bought out by a Belgian company. We have found that if we offer our customers the lowest possible monthly payments, they won’t let a weak economy stop them from purchasing a piano. It might take a 15- to 20-year loan to make the payments affordable, but they’ll do it.
Selling instruments through recreational music making is still very effective. Programs like Lowrey Magic create the incentive to own a musical instrument.”
St. Louis, Mo.
“I have noticed that in order to grow our company to be the piano focal point of our community, it is vital that we do everything in our power to make our presence felt. Long gone are the days when you can depend upon walk-in traffic to pad your store’s revenue and only worry about salesmanship. Nowadays, you have to place as much emphasis not only on selling but also cultivating the need for potential customers to take a look at your product. We continually hold more and more sales events every year to create a necessary blend of exposure as well as urgency. As it stands, sales are up dramatically in 2008 due largely to a lack of complacency on our part.
“We are a full-line digital and acoustic Kawai dealer. With the exceptional product mix Kawai offers, at varying price points, it is our most consistent piano being sold. There are also customers who are interested in handcrafted and American-engineered pianos. Most of these customers fall in love with the Charles R. Walter product. Being a family owned and operated company, the Walter Piano product has the appeal of inviting customers to achieve greatness. It may not be for everyone, but for those privileged enough to bring one home, it becomes a part of an extended family dedicated to precision and excellence. Heritage speaks volumes to customers who are buying a piano as well as a story.
“As strange as it may sound, we have prospered during economic hardship. Interestingly enough, it seems to be easier to distinguish serious shoppers from fair-weather, window shoppers. The benefit of selling high-ticket items like pianos is that customers typically only buy one or two in their lifetime. Therefore, serious customers have made strides toward garnering economic security long before a recession could change their lifestyle. Our customers are smart, remain undaunted, and will not succumb to ants at a picnic. Through strong demographic research, we do our very best to become acquainted with those who stand to benefit from the exceptional service we provide. Our sales events fall in line with these demographics. We purposefully tailor our location to fit the needs of the clientele that our products are intended to serve.
“Some institutional sales take time. It is time we are more than willing to provide, while not sacrificing our day-to-day business. With every business, there must be a good blend of short and long-term goals and objectives. Institutional sales are no exception. We have seen an increase in companies pursuing institutional sales, which can have a negative effect because too many distributors are trying to copy what very few have perfected. Nonetheless, we are convinced we can find the right solution for any serious institution, as they perceive us as the experts in our field. Our reputation now is such that we will tell qualified institutions what they need to hear. Most times, what they need is to be reaffirmed that the benefits of a new instrument are long overdue. With regard to school sales, we think a better long-term option for schools is a piano loan program. Thereby, we have the ability to furbish the schools with new instruments every three years while conducting an annual sale on their premises. This benefits all parties because it builds a lasting relationship without sacrificing quality.”
Solich Piano and Music Compan