M&SR: What are some other brands with which you are really happy?
Lovell: We just started negotiating with a lot of companies. But I can say this. We did not have one negative meeting. That’s the case for big manufacturers as well as small ones. They are eager to work with us. I think we have some things we can teach them. They have a lot of things they can teach us.
Gillum: We’re seeing some great programs available to all iMSO dealers. The manufacturers we met with have a better understanding than before. It’s an equal playing field.
Lovell: There’s no arm twisting. Korg is one the companies we were very pleased with. Are they ready to do anything we want? No. Are we ready to do anything they want? No. But the conversations were great.
Gillum: Korg had representatives come to our room on three different occasions during the first two days of the show. And everyone who came in provided positive communication with us.
Lovell: We also met with Peavey. We met with Davitt & Hanser. We met with Bob Heil. We met with the Westheimer Group (Cort Guitars). We met with Ultrasound, LOUD Technologies. Washburn. Aquarian. Yorkville. Dean Markley. Crafter.
Wilcher: We also met with Audio-Technica.
Basile: And Major Music Supply.
M&SR: Korg was mentioned, so let’s bring in Ken Fuente. Ken, what are Korg’s programs for independent retailers? How does it benefit them?
Fuente: Starting in the Fall of 2008, our team got together to come up with sensible, realistic programs that would benefit all of our retailers. At a time when some of our competitors were placing unrealistic demands or expectations for retailers, we took all of that into consideration and we wanted to introduce programs that would make it as easy as possible for our customers to do business with us at Korg USA. In January, we introduced a series of what we call Advantage programs. There are different levels of participation for these programs. We want to make it easy for our retailers to buy into Marshall, Vox, and Korg. As one key independent retailer told us back in January: “You are setting a benchmark for the rest of the industry.” I’ve known this particular guy for a long time. Coming from him, it spoke volumes. We’re trying to be retail-friendly because we know everyone is faced with unprecedented challenges right now. We want to make it as easy and seamless as possible to do business with Korg USA.
M&SR: Ken, you mentioned one retailer’s reaction to the program. What has the general feedback been among retailers? Have Advantage programs made a quantifiable difference for Korg USA?
Fuente: Absolutely it has. The number of participating retailers is very impressive. I can’t provide specifics of course, but these programs have continued to be embraced by our accounts. I just want all of the retailers to know that they’re counting on us. We’re counting on them. We are listening. We take notes. Most importantly, we take action. If you’re not successful as a retailer, we’re not going to be successful.
M&SR: Mike, how has developing these relationships improved your business?
Connolly: It’s been wonderful so far. One great deal we offered was an amplifier we normally sell for $139 was offered for $99 including free freight. We did this because we believe in the product. There’s no real profit margin in it for us, but, in the first month we offered that deal, we got 60 new dealers. But where does it go from there? The manufacturers that don’t play fair are hurting everyone else. And they’re the biggest manufacturers. Success is the name of the game. But longevity is the name of the other game. Treating people fairly is how that works. I would encourage any independent dealer who isn’t a member of [iMSO] to get into it. I’m not saying that to get them to buy an amp. Not everyone will buy an amp from us. But this type of group is what it’s going to take for everyone to survive and get bigger. The independent dealers are coming back. The recession has hit the music industry. But what these guys [sitting at the table] are doing isn’t for them. It’s for all independent dealers.
M&SR: So as dealers, how well are you doing? What are you happy about? What are you unhappy about?
Wilcher: How are we doing? Well, it depends on what day it is. My motto is, “It’s a brave new world.” I approach my store almost on a daily basis. I look at what has happened in the last week or two. What are the trends? I try to be lean and mean.
Lovell: You have to be proactive. You have to go after the sales. They are not coming to you.
Wilcher: We’re trying to do a lot of community-based promotions. For instance, we gave away guitars to all five of our local firehouses. I’ve participated as a celebrity chef for fundraisers. I’m getting ready to go on the Fox News Channel as a celebrity chef. You have to be involved in your community. Remind the community that you’ve been serving them for, in my case, 36 years. Keep giving back to that community. Our relationship, in general, has improved with vendors since joining iMSO. I’ve been very happy to talk to so many guys I like. As I walked the NAMM show floor, I was approached by many vendors with whom I had not done business before. They said, “Hey, you’re doing a great thing. We’re behind iMSO. If there’s anything we can do, please let us know.” Things have changed.
Gillum: When I was just thinking about that question, I went back to 2008, which was the banner year in the history of our business. We were also positioning ourselves for 2009 though. We have seen a downturn in 2009. But we prepared ourselves for that. We realized we’d lose some big-ticket stores. We’re a full-line store, including grand pianos. If you look at the industry for the first quarter of this year, acoustic piano sales were down 67 percent. Our business is not down 67 percent because we’re promoting differently. We’re working differently. Dealers have to be in a position to survive in 2009. But we’re not only doing that; we’re building a new store. Is the economy bad? It has slowed down, yes. But what has that done? I’ve taken advantage of inexpensive money. I’ve taken advantage of low real estate values that are worth much more than what I’m paying. I’m going to open a new store in the next [couple of months]. The economy can be to your benefit if you use the tools to your advantage at the time.
Basile: Business for us has been good also. In fact, 2008 was the best year ever for South Jersey Music. So far, in 2009, we’ve been comparing month-to-month, and we’re up 60 percent compared to each month last year. The only exception has been one month this year. In that month, we were up 40 percent. We finished up the construction of a new store and [just] moved in. We used to have a 1,250-sq.-ft. store and now have a 3,600-sq.-ft. store.
M&SR: Chris, how can you be up that much this year?
Basile: Online sales are a big part of it. When I became a partner at South Jersey Music last year, the store was strictly brick and mortar with small-time advertising. I brought in my online business. From June to December last year, online accounted for about 46 percent of our sales. That on top of changing our minds about advertising has helped tremendously. We also increased our lesson program. When I came on in June 2008, we had 54 students taking lessons. We ended the year with 105 students. All of that led to an increase in sales. In January, we made a conscious effort to expand our store. We wanted to add lines. We just had no physical space to add them to the store. We started to look around. Because of the economy, we were able to get great lease rates. We took advantage of free or inexpensive money. We made a move ahead. It’s been a long journey since January to get into the new store, but we’re happy to move into our store.
Connolly: I’d like to add something to that. I think Gordy and Chris really hit the nail on the head. It’s so important to be a part of the community. One of the best things about iMSO is talking to dealers in other states about what worked for you. For a small retailer in a hard-hit area, it’s a great confidence you’re not alone. That dealer has a place where they can go. They have people to lean on and can learn how to make their businesses better. The independents are going to take over again.
Basile: iMSO has helped us tremendously. Just seeing what other people are doing and posting it on our forum (www.musicstoreowners.com) is great. I’ll look at ideas and see which will work and how I can improve upon it. I find a way to improve upon the idea, repost it on the forum, and then other dealers can look at it.
M&SR: Chris Lovell, how is your business doing?
Lovell: MI is down. Sound installation is up. Sound installation is keeping me alive. Churches especially.
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