MI Retail 2009: Don’t Look Back in Anger…

With the first half of 2009 behind us and (knock on wood) some early indicators of a potential bottoming out to the current recession, things are (again, knock on wood. Vigorously beat upon any and all wooden objects) possibly beginning to look up for the U.S. and global economies.

MMR recently asked over 2,000 retailers to summarize their observations on the first six months of the year and to offer their projections as to how 2009 will wind up.

In the past six months, your sales numbers are:

What level of product is selling best?

What’s your forecast for sales during the remainder of the year?
“Not really sure… I think business might continue to be flat. The economy is still a very slow thing these days. People are watching what they spend in our area.”

Greg Allen
Long Island Drum Center of Nyack,
Nyack, N.Y,

“Seems to me that it’s looking up. We picked up a couple lines that cater to beginners, since there has been all this talk of the economy being really down – the theory behind it being that people are looking for things they can do at home instead of going out and spending money on entertainment. If you pay attention to the trends, any type of game – whether it is video games, board games, anything that makes for home entertainment – is really booming right now. So far this approach has paid off for us. Guitars that are $300 or under in electrics, and guitars at $139 or under in acoustics are flying off the walls. This also helps us to compete with the local Wal-Mart, we actually have a couple Jay Turser models that we sell for less than Wal-Mart is selling their comparable size guitars for, and these are much nicer instruments.”

Jon Hiller
Cowabunga Music
Anna, Ill.

“Over the counter sales will continue to be down until late August when the back-to-school market kicks in. Early indicators are that 90 percent of our programs will still be in place – not well funded, but in place.

Nick Rail
Nick Rail Music
Southern Calif.

“My forecast is not so good. We’d hoped to ride a good wave of rental renewals this summer, as last September rentals were strong. But so far, we’re only renewing about 15 percent of contracts. I suspect we’ll feel it in our other categories too.”

Spike Klein
The Magic Flute
San Rafael, Calif.

“The consumer will continue to buy conservatively perhaps buying a step down from normal. We need to convince them that music is one of their necessities for happiness and well being. We also need to show them that it is cheap entertainment in a troubled world economy. I believe that this downturn will last longer than expected. The recovery will be very slow.”

Ken Grayson
Grayson’s Tune Town
Montrose, Calif.

“I expect things will remain pretty flat. We’re still recovering from an awful Christmas – sales were down and then we had a big snowstorm that paralyzed the city one week before Christmas. We’ve also seen two of our best lines go from being independent friendly to jumping into G.C. and Musicians Friend.”

Jack Dolan
Sluggo Music
Tacoma, Wash.

What trends have you noticed in online vs. in-store purchases?
“We don’t care about online anymore, we are focused on what we have and try to give the best that we can. We are working the schools and the area around us. If someone can buy or get a better deal elsewhere, so be it. If it ends up in our shop, then that person wasted what her or she saved on the initial purchase and I get to make it right at a cost to the customer. That seems to be the trend!”

Kenn Gillett
L&W Music
Beaver Dam, Wis.

“Customers are getting tired of the run-around with online ordering. There’s no support, no one helps them with operation, and the full potential of the product is never realized.”

Joel Kipp
Musicians Pro Shop
Burlington, Iowa

“There has been a slight increase in our store traffic from customers that normally shop online. However, I think many consumers do not understand the importance of shopping for items from local retailers and the significant impact their purchases and sales tax revenue has on local schools and governmental services. When consumers continue to purchase out-of-state to avoid sales tax, they are taking from local and state government’s ability to serve the people.”

Randy King
King Music
Randy, Ill.

“Personal service is so much a part of the success of our sales effort that online shopping has become less significant.”

Mark Lisle
Lisle Violin Shop
Houston, Texas

“Craigslist seems to be gaining popularity over eBay as a competitor. I am not sure what to attribute that too.”

Jack R. Melvin
Keyboard Connection
Jacksonville, Fla.

What types of promotions have you found to be successful in the past six months?
“Fiddle Fair, Horn Extravaganza (step-up band sales), Summer Sidewalk Sale, e-mail blasts, Summer classes and workshops (Garage Band, piano class, kids percussion and LOTS more), live band contest is store parking lot (summer), etc.”

Russ Beacock
Beacock Music
Vancouver, Wash.

“Outside sales have worked to some extent. Results less than usual but at least some results. In store piano recitals and workshops have also resulted in sales but to a lesser degree. No magic bullet has been found.”

Sonny Wittkoff
Music City Spokane, Inc.
Spokane, Wash.

“Monthly Jam Session and Open Mic Monthly sound system training classes A ‘musician’s stimulus sale’ involving free restrings of their guitars with a donation to our local food bank Free introductory group guitar lessons Performing artist clinics/workshops”

James Nardi
Uptown Music
N. Keizer, Ore.

“That’s top secret…”

Patrick Redd
Funky Munky Music
Shawnee, Kans.

“VIP customer events Flatscreen TV giveaway we’ve also done an aggressive mystery shopping program to help ensure that we’re doing our best with the customers that we ARE seeing. we can’t advertise enough to get tons of folks through the doors so we need to maximize the opportunities we are getting.

Peter Sides
Robert M. Sides Co.
Williamsport, Pa.

“I just try to be on the sales floor and interact with the customers. I see if I can sweeten any deals to make the sale. I also let them know times are tough for me too and that I’m trying to work with them.”

Jack J. Dolan
Sluggo Music
Tacoma, Wash.

What’s the most significant recent trend you’ve noticed in MI retail?
“The continued trend of product available online at very low margin pricing, with free freight and NO SALES TAX. The customer will come to my store to actually see, feel, and check out the product, only to expect me to match the online price.”

Dan Jefferson
Strait Music Co.
Austin, Tex.

“eBay is huge. We feel it’s killing business on some level because a lot of retailers are out there putting a stick mark on a drumhead on a drum set and calling it ‘used.’ That way, they can get around MAP policies and sell it online for slightly cheaper. eBay is VERY misleading to us sometimes.”

Greg Allen
Long Island Drum Center of Nyack
Nyack, N.Y.

“The web has become the world’s storefront.”

Scott Freilich
Top Shelf Music
Buffalo, N.Y.

“down demand and Map reductions from the manufacturers to let the Internet capture greater share of the market& manufacturers selling the products directly to the consumer at Map and below.”

Roger Sparks
Sparks Music
Sparks, Nev.

“Manufacturers starting to listen more to independent dealers that got them there to begin with. The big box stores are obviously not carrying the weight.”

Steven R. Miller
Tri State Music
Bryan, Ohio

What’s your biggest concern for the remainder of 2009?
“Customers! Where are they? Delinquencies and defaults on our band and orchestra rentals are through the roof. This is getting to be a very serious problem.”

J.G. Jensma
Lynch Music
Fairview, Pa.

“That the economy may get much worse before it gets better. Here in Illinois, our state’s economy is not good, and our state government can’t seem to make up their mind on a budget for the year. We have a state-funded mental institution, and a state-funded Veteran’s home in our community, if they lose funding because of our state government’s ability to balance a budget, it could be really hard on our community, and our state.”

Cowabunga Music
Anna, Ill.

“What, me worry? We’re opening a new store; it’s a fantastic time to negotiate a lease. Our biggest concern continues to be not so much the world economy but the state budget in California; all bets are off on how that will go.”

Nick Rail
Nick Rail Music
Southern Calif.

“Sales or the lack thereof. It’s hard to look forward and find the light at the end of the tunnel. There isn’t enough good news out there to make a prediction that we are turning the corner. Keeping our staff and re-inventing the way we do business to remain successful is our utmost goal.”

Sonny Wittkoff
Music City Spokane Inc
Spokane, Wash.

“Over the last two years, we have seen three of our suppliers go out of business, making us have to “scurry around” finding other distributors that can fill our product requirements. Greatest fear is that the remaining suppliers may not weather the economic recession and go out of business as well.”

Michael Tyler
Computer Music Products
Brunswick, Ga.

“As floor planning is no longer available – small to mid size dealers will not be able to offer the selection that consumers are used to seeing. Also – if the current online retailers continue to offer prices that are so close to cost – they will put increased pressure on the industries ability to serve the BEGINNING market – it has yet to be proven that the “majority” of the beginner market can be served by online retailers. MOST of this demographic prefers to shop at their local store – the stores that handle the BIGGEST share of beginners – as the industry continues to cut-off these stores, there will be fewer entry level players that will then, in turn, erode sales across the entire spectrum of music buyers. (Intermediate to Professional).”

Robert R. King
King Music, Inc.
Bradley, Ill.