The accessory product, bag and case segment of the MI market, upon which this issue is themed, is one that, while perhaps not usually getting the most attention, is extremely important. Even when economic times are such that people might not be buying big-ticket items like pianos and high-end electric guitars, people continue to purchase accessories, bags, cases and other products that might be difficult to categorize. And that is not to mention the fact that accessory items can be a great place for retailers to rack up points. The Music & Sound Retailer spoke to four prominent industry figures, each one of whose company connects to the accessory segment, to find out where this portion of the market stands, in light of current economic and business challenges, with respect to manufacturers and retailers.
We draw this month on eminent resources in the industry. Tom Dougherty is Owner of TKL Products Corp. Brock Jabara is CEO of Galaxy Audio, whose sister company, House Band Gear, distributes Cyclone Cases. Crystal Morris is President of Gator Cases. Last but not least, Sharon Hennessey is Vice President of TMP!/The Music People!.
How would you describe the relative strength, or possible weakness, of your segment of the MI market? What factors are at play in causing the current state of affairs?
Sharon Hennessey, Vice President, TMP!/The Music People!, said, "One of the strengths of the accessories segment is the potential profit margin, and another is the drive of consumers to enhance their big-ticket items without spending a lot of money. We saw a big difference at Summer NAMM on that first point. More dealers than ever were communicating the importance of accessories…that they drive profits. Pricing is so competitive on big-ticket items that they only make a few points on the drum kit, but they can make 50, 60 or 70 points on our stands, sticks, drum mats, covers, cases and other products. When dealers see that they are making much higher profit on related accessories than on the drums or guitars or keyboards, they make a big push, and that's good for us.
"Another strength is on the consumer side. It's no secret that, right now, people are reluctant to lay out a thousand dollars for a new instrument or electronic piece of gear. But it's a lot easier for them to spend a few dollars on a cleaning kit, or strap locks, or a case. Accessories let consumers customize and enhance their gear, and they help satisfy the desire to buy something when they are shopping their favorite music retailer. As long as we continue to put out new products that appeal to that desire, the segment will continue to do relatively well, despite the economy."
Tom Dougherty, Owner, TKL Products Corp., noted, "TKL's segment of the MI market spans a broad spectrum, in terms of product group offerings, instruments targeted and accommodated, and domestic and global markets covered. When you consider the wide variety of differentiated levels of TKL's wood cases, molded cases and bags, which we specially design and produce, and the diverse range of musical instruments and accessories, which everyone from students to world-renowned musicians must protect, we are fortunate to see stability, along with some positive, sustained growth. Throughout 2011, for our distributed and retail product sales, we have seen across-the-board strength in the lower- and mid-level price points. Growth in the upper-end of the market has increased decently, too, but at differing rates, among our various product categories.
"Today's economy is not as strong, or as healthy, as any of us would like. The availability of discretionary income has improved, but there remains a lingering feeling of uncertainty, which can affect consumers' confidence and their buying decisions. In spite of that, the good news is that consumers are still buying. Whether for their own use, or as a gift, musical instrument accessories usually fare decently during challenging times. Typically, they enable an affordable opportunity to upgrade or enhance the musicians' existing music-gear assortment.
"No matter what the price-point of an item, today, more than ever, the consumer is keenly aware of the quality and inherent value of everything they purchase. Starting in 2001, to help instill greater consumer buying confidence in TKL's cases and bags, we instituted our 24/7 protection warranty, which retailers and musicians appreciated, as they seek out and select accessories that will provide years of trouble-free service and satisfaction."
According to Brock Jabara, CEO, Galaxy Audio, "Several market channels service our industry: Internet stores, direct catalog, big-box chains (BBC) and small, independent brick-and-mortar (B&M) stores. Galaxy Audio has been gaining market share in all market channels except BBC, as the B&M channel is shrinking. Independent MI dealers are hurting from the poor state of our overall economy. While the other channels continue to do well by selling products at discounted prices, many independents are reacting by reducing their inventory or by going out of business. The net is for a total of fewer products sold by independents and less hands-on experiences by the end user. Once, an end user could go into one of the thousands of B&M stores and see, touch and hear a product; now, he looks on the Internet or in a catalog to choose the product. The product mix presented by the BBC store is limited, as is the availability of product knowledge. The influx of many new suppliers from off shore further confuses both the dealers and the customers as to what something should cost and what quality they will be getting. As the states continue to be in financial trouble, I think we are within two years of seeing, as California has done, all states closing the sales tax door to Internet sales. This will help brick-and-mortar stores, but this alone is not enough to bring them back to past profits."
Crystal Morris, President, Gator Cases, stated, "Everything needs a case, bag or cover, which is why our market segment continues to grow. One of the reasons for the growth is simply because a lot of people are hesitant to make major purchases, such as a new guitar, drum set or high-end workstation. However, they are willing to protect what they currently own until they do feel more comfortable investing in a new instrument or product. For those who are buying new gear, they want to make certain they're protecting their investment. Our quality products are affordable and competitively priced, making the purchasing decision a lot easier.
"The Gator brand is known for offering a wide breadth of products. We provide protection at many different price points for just about each and every category: guitar, keyboard, B&O, percussion, PA, DJ and recording, as well as audio-video/systems integration.
"Our customers know that our growing family of products is backed by premium service after the sale. It might sound like a cliché, but we do take pride in our customer service. We've been around for more than a decade, and are working hard to become even more known as the go-to brand when it comes to protection. Every day, we focus on being best in class in both the products and the service we offer."
In terms of MI product innovation, what are your current big pushes? Have these products already been released or are they soon to be on shelves? What makes these products unique and valuable?
Morris noted, "At Gator, we continue to look for ways to innovate how musicians can store and transport their gear. By visiting dealers, listening to consumers and attending trade shows, we find our customers are the best source for ideas on the latest case needs. We strive to translate these ideas to meet the latest demands in the market. We are always value-minded in being able to offer a product that is priced relative to the instrument or gear that it's going to be used in conjunction with. Our goal is to have a product that can address the needs of the beginner to the pro, allowing our customers to grow with us as their abilities develop.
"In the most recent six months, we have released many exciting products in some of the highest-growth segments. With an increase in demand in the DJ/VJ market, we now have more than 60 DJ bags and cases to match up with the latest controllers and DJ mixers on the market. The band and orchestral market is a mainstay, and Gator has always offered a line of cases for this vital category. Our expanding GL EPS series of cases offers the protection fragile band instruments need in a lightweight, yet reinforced, case. The consumers really like our 'interlocking handle' as well as the exterior color options we offer (i.e., grey, red, blue, purple).
"The PA rental and install business continues to be a stronghold for many retailers. Again, by listening to what our customers have requested, we have a new and improved line of rolling speaker bags and covers that are designed to fit today's most popular enclosures. Our G TOUR SPKR series offers roadworthy protection for loudspeakers.
"Another big push for us is to continue our growth of products that we are making in our facility in the U.S.A. We have brought out several new pedal board solutions in our 'Bone Series,' along with new LCD and rack cases, all made in our facility in Indiana.
"These are only a few of the many new offerings Gator Cases has recently introduced. These products are in stock and shipping."
Hennessey remarked, "One thing that's unique is that we have Jim Hennessey. He's been designing new products and maximizing the value of existing accessories for three decades. Another thing is that Jim's supported by an in-house team of designers and a creative department that develops all our packaging. We always have new products coming up, including some developed to support the way musicians are using iPads, tablets and other technologies on stage and in the studio. But our big push right now is to take products—old, new and upcoming—and make them more accessible and easier to use for customers, and more profitable for our dealers. We have an ability to take tried-and-true products and make them more marketable, so dealers realize increases in velocity. Part of it is the design, part is the pricing and part is the packaging.
"Innovation in any one of those areas can make a product unique. Our DMA4450 Drum Mat is a simple design inspired by a yoga mat, but it's an alternative to bulky rugs that just wasn't on the market. Pro-level cables are nothing new, but we just released our HotWires Pro line that offers braided 98 percent shielding and genuine Neutrik connectors at a very attractive price point. And clever, interactive, dealer/customer-friendly packaging can change the way our dealers arrange their stores and how their customers select our products. Years ago, we put our round-base stand in a box with a hole in it for the threads. It was a tiny innovation, but it changed the way stands were displayed and the way customers tried them out. We see product innovation as more than just rolling out new gadgets; it's a comprehensive approach from the drafting board, to the dealer, to the stage."
According to Dougherty, "Ever since we started, back in 1984, TKL has had an intense focus on product research, design and development, along with continuous product improvement. Our goal has always been to build cases and bags that are highly protective and long lasting, while having attractive aesthetic characteristics. During the last quarter of this year, we will be in the final stage of months of engineering and product development efforts. In 2012, at NAMM, we will introduce several exciting new cases and bags, which will incorporate patented-process technologies. Initial responses, from a cross-section of the market, indicate that we are on track to offer a group of truly unique products, which will be excellent business, sales and profit generators for all of our distributor and retailer partners."
Jabara added, "Galaxy Audio, in the last three years, has introduced dozens of new SKUs, each with an advantageous price-to-performance ratio to our competitor's products. For more than 35 years, Galaxy has been known for monitors. It is in the continuation of this that we have broadened our coverage with both wired and wireless products, in addition to niche products like our sand/water bags for stand stabilization. Galaxy Audio will be introducing more than a dozen SKUs in the next six months. Some of the products are extensions of our existing product lines, whereas others are new endeavors. We see dealers getting behind Galaxy Audio, as we are offering competitive product at great prices for the end user and great margins for the dealer, as well as because of the fact that we aren't giving deep discounts to catalog and Internet companies. Galaxy Audio started from a small retail, sound install and rental company. We know what the little guy needs. We are one of them."
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