2013 Piano Survey
Are we out of the recession? Yes and no. Is the piano market healthy? Healthier.
The majority of those piano makers who participated in this survey found reasons to be optimistic, some citing that sales goals has been surpassed, even if just by a few percentage points. It seems the industry is willing itself out of the weakness it has experienced the last five or so years, a downturn seemingly more severe than even in other MI market segments.
“I think the worst is behind us with respect to the recession,” says Kawai’s Brian Chung. “But, as an industry, we’re all trying to figure out what the ‘new normal’ will be. Things will gradually get better, but the big question is: How much better?”
There was some damning by faint praise. Gary Girouard of Kurzweil: “All in all, it wasn’t a terrible year and there are signs of improvement overall.”
While some lament that cultural values in America are shifting away from the focus of having a piano in the living room, other cultures here (notably Asian) and other countries (notably China) are increasingly appreciating the importance of having the instrument in their house. That’s the good news.
But how does one make a softening market less soft? Larry Fresch of Young Chang offers this: “One of the biggest things dealers can do is stay focused,” he says. They should ask themselves, “What are they selling, and what can they make money with?”
“Try to convince people not to risk their money at the stock market but [instead] invest in a long term value receiving German made piano,” advises Burkhard Stein of Grotrian.
Perhaps the most indisputable counsel comes from Mason Hamlin’s Tom Lagomarsino: “Keep your heads down and your powder dry.”
“2012 was a good year for the Grotrian Piano Company,” says Burkhard Stein, adding that the Braunschweig, Germany company is looking to increase sales numbers about two percent above 2011’s numbers. “This is because of a still-growing market in China and Russia, but also because of the business in North America has picked up again.”
Looking to 2013, challenges include their main markets in Europe. “Because of the Euro crises and the downturn of the economies there, it’s been difficult. Nevertheless we plan to increase our sales at least by four percent compared to 2012. To reach this goal we will enhance our sales efforts in countries like Russia and China as well as North America by displaying our instruments at the NAMM, Shanghai, and Moscow music fairs.”
Their main markets in order are Europe, Asia, and then North America. “We sell about 20 percent out of our grand piano production in China. And believe it or not, we sold about 20 percent out of our upright pianos to customers in Switzerland!”
Stein says going forward they look to increase their dealer relations globally, and he’s optimistic that their dealer network on this continent will enjoy a slight increase this year.
“We have already introduced our newly designed concert grand piano in 2012 and have received a lot of positive feedback on it. In 2013 we will start to deliver it to our interested dealers and places which already have ordered it and are waiting to receiving them.”
Brian Chung reports that 2012 was a good year for both Kawai America Corporation and Kawai Canada. “We set some challenging sales goals last January and were really happy to have achieved them by year end,” he says. But “it’s been a long, slow crawl since 2008—and I don’t think any of us expects any quick fixes for the economy. So, we have to keep working hard and smart with the hope that piano sales will track upward, with the economy if and when it improves significantly. In the meantime, we’re planning for slow, steady growth.”
Chung is upbeat about their products, and has good reasons to be. They have won 29 major international awards for their products over the past fifteen years, including 12 MMR Dealers’ Choice Awards. “In 2012 alone, our top-of-the-line CA95 Digital Piano won four top international honors, including the award for MMR Digital Home Keyboard of the Year,” he says. “Our K-3 Professional Upright Piano was Acoustic Piano of the Year four years running from 2008 to 2011. Plus, we just introduced a brand new line of grand pianos, the GX Series, which is our first major grand piano introduction in 17 years. So it’s a very exciting time for us, and for our dealers.”
Looking to the future, he says, “If every piano dealer in the country would invest some time and resources to create fun, social piano teaching programs for the millions of people who never thought they could play, we could expand our base of future customers in a big way.” Traditional “serious music” teaching programs always have and always will be important, but they reach less than three percent of the population. “To grow the piano business dramatically, we need to invite the other 97 percent to try the piano–which requires a new approach. There are Recreational Music Making (RMM), piano classes popping up steadily across the country. But if we’re truly going to change the future of the piano business, we need to have everyone on board. If there are people reading these comments who want to get started with RMM piano teaching, I hope they will contact me personally.
“I’d be delighted to help them get started!” he adds.
Mason & Hamlin
“In light of the fact that 2012 was an election year with Q3 and some of Q4 not as vibrant as the first part of the year, overall 2012 was a good year with customer and dealer orders,” reports Tom Lagomarsino. “We exceeded our projections. As a company we accomplished many milestones resulting in advances in both product and company technology, as well as operational and production improvements.”
From his piano bench the leading economic indicators were somewhat positive during the year and there were interesting customer buying trends, yet “there is plenty of room for improvement, particularly in consumer confidence.” The devastation of Hurricane Sandy reached far, and had an impact on sales in the all important piano and keyboard market in the Northeast in Q4. Globally, they are continuing to see strong growth in Asia, plus emerging markets like the Middle East and Eastern Europe. “And South America is an increasingly significant market for Mason & Hamlin pianos.”
Lagomarsino has good reason to believe that solid growth is coming in 2013, and says that they are busy with promotional plans with product lines that will allow their dealers and distributors to capitalize on their tech-savvy advancements. Kicking that off were new products unveiled at the January NAMM Show including PianoTube LIVE, the first YouTube channel designed to broadcast together and play an iQ equipped piano with video, audio, and piano software. “Other additions include new hardware upgrade technology, improved free music package program for customers, additional streaming music stations, new music and a restructured music and video software pricing resulting in lower prices and better value for both consumers and dealers. It was also great to unveil our brand new Website at NAMM featuring MP3 downloads and video performances.”
The books at Kurzweil show that 2012 was relatively flat with some categories seeing modest increases and others seeing modest decreases. Acknowledging the “joke” in the piano market that “flat is the new up,” Gary Girouard adds that he’s “happy to wear the positivity goggles and call it a good year. Are we out of the recession? Maybe as an economy, yes. However, take off my positivity goggles and put on my piano industry ones, I see continued decline in demand due to cultural and values shifts away from piano study by children, with the exception being the Asian culture.”
But that’s all in the rearview as his expectations for 2013 have Girouard darning the “positive goggles.” He is looking forward to a breakout year. “I fully expect strong percentage growth in all categories,” Girouard says. “I know we all say that, every year, yet the piano industry is in modest decline, so someone or everyone must be stretching the truth. However, I really believe there are some great and unique events happening at Kurzweil that will be received well by our primary customers, the piano boutique retailers.” The message is coming out of Kurzweil is one of “new directions,” associated with their new connection to Hyundai Development Corporation [see section on sister company Young Chang]. “The key advantages we’ll be promoting is American design and innovation combined with the manufacturing prowess and cost-saving advantages of HDC.”
Kurzweil has expanded the lineup to include entry-level portables, student and performance model verticals and a compact upright hybrid piano, all of which are optimized with their award-winning PC3 sound engine. This exclusive Kurzweil sound technology layers up to 32 components per sound, to create the most resonant and realistic sound possible. Also, all the new Kurzweil home products are iPad-ready with USB and audio inputs. New models introduced at NAMM include the MPS-10 Portable Stage Piano, the MP-15 Student Model vertical, the MP-20 Performance Model vertical, and the CUP2 compact upright hybrid piano in Pearl White finish.
Meanwhile, though, he’s hearing that piano dealers in general continue to struggle. “I hear lots of complaints regarding Internet shoppers and ubiquitous distribution of name brand models at department stores and mass merchants. [But] the sad fact is the Internet isn’t going to change, so there’s a sense of desperation about how to restructure the piano store business model to succeed inside this new reality.” He again touches on the Asian community, saying that they “appear to value piano education much more than a typical American consumer. Therefore, I’d expect dealers with education programs and strong Asian community support to see their business strengthen.”
He has ideas of what is not working, saying outside promotions continue to be less effective, and a trend he expects to continue. “Many dealers have been forced to cut staff, even close locations. However, the ones that have smartly cut costs and added an extra dose of ‘hustle’ are seeing more profits even though their overall sales numbers are down.”
Girouard says he believes future success is specifically dependent on a retailer’s ability to promote the benefits of playing piano. He says he’s long embraced the mission “enriching lives through piano.” “I think this same message resonates with lots of people including teachers, salespersons, manufacturers, and parents. I meet people all over the place who just love piano, and believe in the benefits it provides. As an industry, we need to do a better job serving the market rather than taking from the market. It sounds trivial, but I really think this is a critical yet lacking component. Piano improves people’s lives, and I believe every home ought to have a piano. Yeah, that’s a little crazy, but I believe it would make this a better country. It would improve lives. It would help produce smarter and more creative kids. The benefits go on and on.”
Like others, he calls for a something similar to the wildly successful “Got Milk” campaign of the 1990s. “I believe it’s time for the keyboard market to come together with a unified message and vision that will help us all.”
More specifically, dealers developing group piano programs for children and seniors are increasingly seeing the benefits. “Use a digital piano lab system, run programs for adults in the morning, children in the afternoon. Promote the social and health benefit more than the music itself. Make it fun. Make them feel good when they walk in the door starting with know their names. Make them feel good when they walk out the door. Make it easy for them to get a starter digital piano for home. Make it easy for them to trade-up to an acoustic piano.
“Young Chang is the only company I’ve every known in all my years in this industry to change all the piano lines, top to bottom, all at once,” declares Larry Fresch. “Now every model in every line is completely redesigned by noted piano designer Del Fandrich, who was commissioned to overhaul the line in 2008 with the goal of making these new Young Changs really special.”
In what is a seismic shift in the relatively quiet world of the piano industry, South Korea-based Hyundai Development Corporation took over Young Chang in 2006. Fresch says the decision to drastically remake the brand happened immediately. “We didn’t want to be a copy of someone else’s piano, but wanted something completely different.” Research and development ensued and the new pianos now feature a unique scaling designs, floating soundboard, felt on the hammers that are from a cold formed process, and many more innovations, all resulting in “phenomenal tonal quality, phenomenal bass,” he says.
Like many he too wondered why Hyundai would want to buy a piano company. He learned that the ubiquitous cars aside, the multi-billion dollar conglomerate, whose holdings include buildings and a soccer team, focuses its reach largely in Asia. This was an opportunity to expand.
He also acknowledges that when typically when big company buys small one, the latter is negatively effected if not decimated [insert your own MI examples of this here]. Paradoxically, this situation was the happy opposite: “Instead of ruining the company, they gave us carte blanche,” statess Fresch. “They said make it better, and we did. Hiring Del [Fandrich] was the biggest factor in all this.”
He adds they had an exceptional NAMM show, and interest with dealers coming to them. “It’s an exciting time, and people are supportive. We’re not the cheapest piano out there, but we’re delivering on quality and price point.”
Weber Pianos were acquired along the way, and now those are being built by Young Chang in South Korea in what Fresch says is the last remaining Korean piano manufacturing facility. This will be their flagship model slated for the higher end market, with their Albert Webers aimed at the highest end. The Weber and Young Chang are voiced differently from each other, with the Young Chang voiced a little brighter and the Weber voiced with a more traditional warm, rich tone.
Speaking of change, Fresch has had quite a ride personally: He joined Young Chang in 1986, left in 1992, and returned in 2010 as a regional sales manager. His work for the company impressed the higher ups so much he was made national sales manager, though not for long, as the company just elevated him to COO of the company. “It’s a little overwhelming!” he admits. “But I look at it as: the company struggled for some years, but now we have the right product, the right people, the right attitude, and the right price point. These are the ingredients that made Hyundai cars so successful throughout the world and this is what will make Young Chang pianos so successful.”
Yamaha is bullish on 2012, with Paul Calvin saying that their pianos and keyboards showed growth. “But this didn’t happen by accident,” he assures. “Everyone came together to push through the rough economy and to build our respective businesses back. The end result was that we all found great opportunities with new products and applications while seeing a rebound in Yamaha’s core product groups.”
Yamaha expects 2013 will be a year of steady growth, and Calvin cites incremental improvements in the housing market assisting in piano sales growth. Innovation is the key, though. Anyone who went to Yamaha’s booth (suite, really) at the recent NAMM Show found examples of that in their products, applications, merchandising, communications, programs, and services.
“We are very fortunate to have an excellent and stable dealer network,” Calvin says. “I believe that most dealers are seeing growth once again and that promotional efforts are starting to reap rewards.” The most successful retailers are focused on solid business fundamentals, new and cost-effective marketing methods, and constant networking activities that get Yamaha product out of their stores and in front of entirely new audiences. “Last summer, we hosted 80 dealers at our Buena Park, California headquarters for training sessions that we called ‘Home Office Seminar,’” Paul recounts. “We were excited to see their strong interest in learning new skills, marketing ideas, and merchandising techniques. It was also refreshing to meet with many high-energy, enthusiastic newcomers to the dealer sales teams.”
Those who ventured into Yamaha’s “area” at Winter NAMM found new acoustic and digital products aplenty. There’s the new B series pianos that Calvin says are the most affordable instruments in Yamaha’s acoustic piano line, adding that they are a hit in Europe. The reviews for their new CX series have been stellar, due in large part to the fact that they include many features of the CFX Concert Grand Piano, in addition to offering unusual power and sustain. There’s the new CVP600 series that Calvin reports is a big hit with their dealers. In the past few years, Yamaha has seen many customers who desire products that bridge the gap between those two groups. “Our hybrid products (AvantGrand, SilentPianos and Disklavier) will continue to appeal to those customers’ desires,” Calvin says. “We introduced a brand new SilentPiano line-up, including the SH and SG2 models, that combine the authentic sound and touch of acoustic pianos with the convenience of digital models.”
He adds that they will be building on the success of their recent activities at NAMM surrounding DisklavierTV, powered by RemoteLive Technology which provides an entirely new way for our customers to enjoy live piano performances in their homes.
Beyond our shores, “There’s excellent growth in the Asian Pacific markets and China. Of course, there are also many Asian people immigrating to the United States who love our pianos, particularly the U1 acoustic upright. This is a driving force for the US market, and we think they will particularly enjoy the experience of our new NU1 digital hybrid, which offers everything our U1 has to offer, but in a lower priced instrument that weighs significantly less and never needs tuning.”
Dealers who attended Yamaha’s annual NAMM Breakfast [see page 54], saw that there was much to motivate. Otherwise, Calvin says Yamaha strongly encourages dealers to look deeply at their customers’ profiles: who are they, what do they want, how do they want to shop, and what is the most effective means of communication to reach them, where and when they think “piano”? “We also suggest that they enhance their value proposition to the consumer, by becoming a center of activity, complete with lessons, recitals and seminars,” he says. “Finally, and perhaps most important, schedule frequent activities outside of the store to target new customers, including networking with key influencers within the community.”
Basilios Strmec is also one who believes the November election adversely affected business. “We loved the start of 2012 and enjoyed robust sales growth,” he says. But then “election fever” took over and Strmec was concerned. However, by the NAMM Show as he, “met with [Hailun’s] merchant partners, [he was] surprised by their confidence in ordering inventory.” Now Basilios expects that, “2013 will be a great year!”
Semantics matter for Strmec, who declares, “I forbid anyone on our corporate team to refer to a piano merchant as a dealer!’ We have ‘merchant partners.’” He attributes this thinking to expanding Hailun’s network by 127 percent in the last two years.
Promotion-wise they continue Hailun’s “test the best” promotion, and Strmec says their partners “clamored” for them to run this promotion after they were awarded MMR’s “Acoustic Piano Line of the Year” Dealers’ Choice Award in late 2012. Partnering with retailers, Hailun invested $ 167,000 in this promotion that will culminate with testing participants visiting their local store to win a piano valued at $9,096. Hailun also has a program with General Electric Finance that allows them to offer financing to a broader base of merchants, and help extend terms and interest-free periods through GE.
Hailun is now introducing to the national market the Cline line. “Chester Cline was a piano builder and retailer who established Cline Pianos in 1889,” Strmec explains. The brand was owned by one of their partners, Dave Gatt of San Jose, who sold the brand rights to Hailun. “Introducing the Cline line allows us to offer the market a value instrument and also gives us the chance to test innovations and patents without compromising our well established brands in the process,” Basilios says. “Initially the Cline line will only offer upright pianos and we will gradually expand that.”
For Hailun acoustic pianos they are introducing the Sound Modulator, a system that is based on the HLPS 1 technology (a.k.a. the grand piano lid assist). This allows the pianist to open the grand piano lid to any position without the need of a prop stick. Strmec says it’s popular with all pianists, particularly women who identify it as a luxury feature.
He, too, reports that they are doing well in China, pointing out that the country buys over 300,000 acoustic pianos a year. “However, while there used to be over 180 different piano makers in mainland China, that number keeps dwindling down and the manufacturing side is consolidating. And one new message is steadily emerging, especially from China: customers will pay for quality. Thus sales of European brands are up in Asia.”
Strmec encourages Hailun’s partners to carefully position their stores: “After the downturn flushed out the big box retail concept, now might be the right time to step forward and carefully find a better and a bit larger location, to step up inventory along with promotional effort. I think it is time to step in.”