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-Table of Contents
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-Our 25-year magazine retrospective begins on p. 20 and runs all of the way to (with some stories in between). Wow, a lot has happened in that time.
-Whoa Canada! Attendees were upbeat during MIAC, which took place in Toronto in October. Is the Canadian MI retailer different than the U.S. one?
-Percussion Pointers. We serve up some tips about how you can help band directors select the right percussion products for their schools.
-The Survey Says...Reader surveys always reveal a lot of information. This year is no different. Find out what you said about several topics, including how your holiday sales are expected to stack up this year.
-Rode to Success Rode Microphones made a big splash, literally, with the launch of Opal from its Event Electronics division. Find out much more about the Las Vegas bash and the studio monitor that packs 750 watts of punch.
-Under Lock and Key
In our third annual Independent Retailer Roundtable,
we gather more participants, who provide even more information. Which manufacturers are you happy with? Find out. Did Summer NAMM work out? Find out. What bothers you the most? Find out.
-DJ For Hire These manufacturer employees still find the time to perform DJ/lighting gigs.
-An Early Summer Night’s Dream!NAMM returned with a vengeance in Nashville. Learn what people were saying and why there could be a rebirth of independent retailers in the future.
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-The Latest, Industry, Dealers, People and Product Buzz and Showcases.
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-The Music & Sound
Independent RetailerWe honor Lou Kraus Music in Nebraska, celebrating 25 years of service and California's Zone Music, celebrating its 25th anniversary.
-Bags/Cases Update Marty Harrison of Access Bags and Cases, Agatha Gerutto of Road Ready Cases, and Jonny Edwards of Coffin Case give you tips on selling bags and cases in these brutal economic times.
-Special Guest
EditorialMusic & Sound Retailer assistant editor Michelle Loeb reflects on her past five years with the magazine.
-Spy Travel & Leisure recently said Charleston, S.C., has the nicest people and best antique shops in the country. But, does it have the nicest store owners and best music instrument stores? Let’s find out.
-Five Minutes Hohner’s Scott Emmerman talks about the huge Bob Dylan harmonica launch and a whole lot more.
-Sales Guru.Gene Fresco explains why you MUST set goals as a salesperson.
-Veddatorial.Dan Vedda opened his store right around when the Music & Sound Retailer began. He takes a look back at how he became an MI dealer and reflects on his 12 years writing this column.
-MSR Anniversary
—Lee Oskar.We take a look at 25 years of Lee Oskar by asking the man himself. We talk about how the company got started, what he thinks of the market now, and his times with the ultra popular band War.
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-Vikki Hayward, Gator Cases marketing manager, was a huge fan of the company years before she joined it. Learn about her future goals, why she enjoys her job, and much more.
-Roxana Ramirez, Being in the music industry, you’re probably very aware of the soundtrack of your life. If Roxana Ramirez were to have a theme song, it would probably be “We Are Family.”
-Susan Lipp, is always busy. She helped break ground on the company’s huge future facility in Madison, Wisc., last month. She does NAMM Congressional “fly-ins” too
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-Steve Stevens, Rock and Roll may be known for its wild behavior, but the genre has at least one law abider in Steve Stevens.
-Frank Black of the Pixies credits Haley's Comet for starting him on his career path?
-KT Tunstall dismounted from her horse and climbed out of her cherry tree to talk with us.
-Peter Frampton comes alive to tell us what guitars, effects, and amps he loves.
- John Flansburgh, They Might Be Giants’ John Flansburgh is a big fan of several independent dealers as well as a host of manufacturers.
-Matt Rubano the bass player for the red-hot band Taking Back Sunday. Even better, he likes to shop for MI gear.
-Paul English ,Willie Nelson has had four wives in 40 years, but only one drummer in that same time frame.
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Talking Heads:
The Sequel
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| By Brian Berk |
[July 2008 - Page 3] |
M&SR: Great! Thanks to everyone for helping out. How about question No. 2? Airlines and shipping companies can invoke fuel surcharges on their customers to help assuage high oil prices. Is there something similar you have done or can do to help mitigate the fuel price problem?
Since all of our products are imported from the Far East, shipping charges are crucial to our landed costs and a big determining factor in our pricing,” said Nady. “Additionally, we’ve offered free freight programs for years for qualifying large orders. In the past, these costs have been factored into the pricing per predictable formulas, allowing us to effectively control our margins. As shipping costs have risen rapidly, and somewhat erratically, it has become more difficult to accurately predict our cost of goods and cost of sales, requiring—at times—more guesswork than we would like. For incoming goods, we now shop around more aggressively for the most competitive freight deals. Also, to add some stability to our sales margins, we now limit free freight programs for qualifying orders to only up to a preset percentage of the invoiced sale.”
“We thought of renting the Budweiser Clydesdale Team to deliver guitars, but that might be distracting and we would certainly have to check out the product in the back of the wagon, for quality assurance, of course,” joked Hawkins. “The bottom line is we simply pay more in multiple ways. We own our factory, so we have all the carrier costs and higher metal costs on top of the ever increasing oil prices. The costs are real and somebody is going to pay for it. We have changed specifications on a few models as we move from Grover tuners to premium die-cast tuners on a few of our lowest priced acoustic models to help ease any price increase. It is the lower end that gets hit the hardest since the shipping container and truck company doesn’t really care what price point the guitar in the brown box sells for at Joe’s Guitar and BBQ Shop. It’s all about dimensional weight. A great US- made electric guitar which sells for $1,800 is affected less (as a percentage of cost) than a $140 Indonesian-made guitar. The freight is the same. For our community music stores, we will offer free freight deals and believe we really can make it up in volume.”
Said Xavier: “At Hanser Music Group we have worked diligently to avoid passing this cost along to our customers. We have generally worked to protect our dealers’ prices and profit stability. With the daily increases in energy costs, this is becoming increasingly difficult, but we will continue to do all that we can to minimize the impact on our customers.”
“We have not invoked any special charges other than those that are part of the charges of the main shipping carriers,” said Rhodes. “We are working to place our factory orders more effectively, by carrying a deeper inventory which translates into a lower overall percentage of freight cost that we have to pay to bring in inventory. This also results in better inventory levels so that we fill a higher percentage of orders that are placed, which reduces the overall percentage of freight that a customer pays for shipping. By increasing our order fill and reducing back orders, this results in lowering freight costs incurred by our customers.”
“We have had to change shipping companies, and are going through a broker to get better rates,” Bones said. “So far, we haven’t had to bump our prices because of the fuel price problem, but I am assuming that it will affect us sooner than later. We’re driving diesels and looking into other types of fuels up here in Canada. It is costing me almost as much to run my motorcycle these days as it used to cost me to run our tour van.”
“All of our guitars come from Korea, so we’ve certainly felt the increased freight costs,” said Naylor. “We raised prices, and upgraded the guitars to justify the price hike. It costs the same in freight to bring in a $500 guitar as it does a $700 guitar, so the extra revenue helps offset import costs. We had been planning to move up to a higher price bracket anyhow, so to a certain degree it’s good timing. I think the guys importing the under-$300 guitars are going to feel it the most.”
“Musicorp has been proactive in working with its shipping companies to hold down surcharges and their service increases to minimum levels because we recognize that freight costs are impacting margins for all of our retailers,” said Roberts.
“Yes, keep our prices the same!” answered Babicz. “Because we sell directly to musicians, we have the margin flexibility to absorb such fuel increases. In fact we haven’t had a price increase on any of our products in 2 ½ years now and we plan on keeping it that way.”
Said Rose: “Since 1966, Eminence has offered its products solely on an F.O.B. basis. We’ve always tried to assist our customers in obtaining the best possible freight rates, but it is more important today than ever before. To that end, we’ve tried to help whenever possible by consolidating the shipments of multiple customers and always checking for the best possible rates and lowest surcharges. Of equal concern to us has been the rising cost of steel, which we bear as a component cost. The price of steel has nearly doubled in the past year! Up until May ‘08, we had been absorbing the increase in steel costs accumulated since January ‘08. Beginning May 15, we added a surcharge to cover the increased cost of steel on all OEM orders. We are trying to minimize the impact to our customers by doing a surcharge that only covers the additional steel cost, rather than a complete re-pricing. We hope that steel prices will go back down and we can reduce or remove the surcharge completely. However, until something occurs to force a stabilization and/or reduction for the cost of fuel, manufacturers and consumers alike should expect that they will be paying more for everything in the future. The dramatic increase in fuel is directly responsible for the higher prices of everything we buy.
“Yes,” said Janis. “Our Primacoustic brand is particularly sensitive to freight costs. This range includes large boxes of acoustic panels that get charged freight based on both weight and dimension. Two initiatives have been put forth to keep freight pricing down: First; we have developed a range of products that ships flat—such as bass traps—saving the dealer freight costs. This saves money during manufacturing as the consumer can assemble the product at home. Second; we have created a freight matrix that subsidizes freight costs to our dealers. This helps balance the costs especially when shipping from the Northwest all the way to Miami.”
“Hohner continues to offer the same freight incentive policy we have offered to our dealers for the last year and a-half,” Emmerman answered. “We have pressed our shipping partners for better rates and have been fortunate to not have to pass any increases along to our dealers.”
“While fuel does affect our costs, commodity prices are our primary concern,” said D’Addario. “We use lots of copper- and nickel-based metals to manufacture our products and costs have skyrocketed over the last two years. Last year, we held the line on price increases in the hope they would return to more reasonable levels. On Jan. 1, we had to institute the largest price increases we have seen in decades and we [had] to raise some of them again July 1 as the prices have not stabilized.”
“Shipping surcharges and surcharges for some of our raw materials have increased our costs, but we are doing everything possible to absorb these surcharges for as long as possible,” Mangan said.
“This is very true as we were just hit with a 20 percent fuel surcharge on a May container shipment,” said Moran. “We see the price of our groceries skyrocket when we go to the market simply because of fuel costs, so it shouldn’t be a big surprise if musical instruments and audio products experience a bump in pricing as a result of cause/effect. As a new company, Namba Gear has initially priced its products with both competition and fuel surcharges in mind. But we don’t see fuel prices getting better in the short term and $5 a gallon gas in only another year away. Turning political for a moment, the November U.S. election is too important to not mention. The catastrophic damage that has been done by the current administration in the past 7 ½ years is bordering on criminal. It is time for us to vote out the current big business interests (let’s get it through our heads that pro big business is not the same thing as being pro business), get out of the money-going-down-the-drain in Iraq, and give ourselves a chance to do some economic course-correction. Register to vote.”
“We are trying not to do anything at this point………shipping is a part of business!” said Lynn. “We will hold out and see how the economy bounces back. Dealers have a hard enough time during inflation………why should we (manufacturers) add to the problem?”
“Actually, in light of the fact that our customers are experiencing higher costs and we are experiencing higher material costs across the board, we are trying to keep our prices steady without increase, as long as we can,” said Boak.
Concluded Damiano: “Since our industry is not linked directly into fuel and fuel usage, there is little we can do to add fuel surcharges. As I stated [earlier], we will be forced to increase our prices as our costs steadily climb. The bigger concern with the rising gasoline prices is the impact that this has on disposable income. We all know that for the most part, a musical instrument is a ‘want to have,’ not a ‘need to have,’ [item]. As families and individuals spend an increasing share of their income on increased energy costs, less disposable income will be left over to spend on the ‘want to have’ items like musical instruments. When gas gets to $5 and $6 per gallon, dealers are going to have to get pretty creative in ways to increase the foot traffic in their stores. I think that inevitably, dealers with vibrant lesson programs in their stores will fair better as the price of fuel goes up.”
[end]
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