Retailers Report On The Successes & Challenges That Last Year Brought
As the music products industry was putting the finishing touches on yet another year, The Music & Sound Retailer reached out to four retailers to get not only their take on 2015, but also their hopes and predictions for the year ahead. The four retailers selected represent stores of varying sizes, product focuses and geographic scope; thankfully, though, all four were able to report an increase in sales, making for a successful 2015.
One trend that remained consistent across all the retailers we interviewed was an upturn in acoustic guitar sales, due, in part, to the prevalence of singer-songwriters and country music on the Billboard charts. “The market follows what’s on the radio,” said Brett Mulzer, Owner of Evansville IN-based Moore Music. “Right now, there are a lot of acoustic artists like Ed Sheeran and Taylor Swift, and that is who customers want to be.”
Nicki Grasso, Manager of Island Music Company in La Plata MD, also noted that the acoustic department was particularly strong for her store, specifically pointing to the Taylor 600 Series, which, she said, “has created quite a buzz in the industry and which has really driven customers into the store.”
Conversely, electric guitars have been on a downward trajectory. Although the lack of interest could be attributable to those same popular music trends that are bolstering acoustic sales, Michael Amkreutz, Executive Vice President of Marketing, Merchandising and E-Commerce for Guitar Center, doesn’t think it’s quite that simple. “We have 50 years of historical data, and it isn’t necessarily a direct relationship where electric sales go down if acoustic sales go up,” he said. “I feel this weakness is related to some difficult product transitions in that category that we saw this year. A lot of those issues have been resolved and, so far, we are seeing favorable results as we look ahead to 2016.”
Lauren Haas-Amanfoh
‘The manufacturers need to see that the retailer is on the front lines. We are the ones answering for their product, regardless of where it was originally purchased.’
The slump in electric guitar sales could also be affected by the perception that they are a larger investment, which requires the purchase of an amp, pedals and so on. And that’s not even to mention the issue of volume. “There are ways to remedy the idea of electric guitars being loud, but customers need to come into the store so we can show them,” Mulzer remarked.
In Grasso’s opinion, electric guitars, as well as drums and amps, might have felt stagnant to customers this year, prompting fewer of them to invest in new instruments. “I don’t think there has been much advancement in these departments lately,” she said candidly. “Not much has come along to excite people and prompt them to pick up these instruments.”
The retailers to whom we spoke reported some softness in drum kit sales. According to Mulzer, “People keep their sets longer, and they invest their money in different snares, cymbals and other hardware to add to their existing kit, rather than making a wholesale change.”
Lauren Haas-Amanfoh, President and COO of Royalton Music Center in North Royalton OH, noted that, although purchases of new drum sets have indeed diminished, interest in drumming in general has not waned.
“We aren’t renting fewer student percussion kits, so we know that kids are still interested in drums,” Haas-Amanfoh noted. “The high school drum lines are still big, and students do drum corps, but they are not making the switch to kits.” She added, “When rock bands are popular, you sell a lot of them. One year, my mom sold 25 drum kits in a month. Now, you’re lucky if you sell that number in a year.”
Even more so than swings in popular taste or changes in technology, what affected retailers the most in 2015 was increased competition, both from online retailers and from manufacturers that are attempting to sell their products directly to end users.
According to Haas-Amanfoh, “I see the place for the online retailer very much. It’s a convenience. But it’s certainly not a nice feeling to buy from a company all year long, and then stand in competition right next to them at a show or online…or to have them sell a product on their Web site before you—the retailer—can even buy it. Apple doesn’t do that.” She continued, “When Fender sells a new model on their site two weeks before we can get it in the store, I have to wonder why we exist. At what point—and to which customers—is the retailer supposed to market?”
Michael Amkreutz
‘Our mission is more than just to move boxes. We want to enrich people’s lives with making music. It’s not just about coming in and buying an instrument.’
“Direct sales have caused us to lose our ‘one and done’ customers,” Grasso added. “These are the people who want to try their hand at music, but who then decide it’s not their thing and drop off the radar. We miss the opportunity to convert these folks to loyal customers.” She continued, “Beyond that, people come to us for their warranty service work for items they bought online. We get the scratches and dents, but not the sale.”
Haas-Amanfoh also recognized that trend, citing it as a further reason for manufacturers to embrace retailers, as opposed to seeing them as a middle man who can be cut out easily. She stressed, “It is still our job to educate the customer, provide after-the-sale service and continue to promote the products. The manufacturers need to see that the retailer is on the front lines. We are the ones answering for their product, regardless of where it was originally purchased.” She added, “As the big guys make decisions about their own business models, it would be nice to feel as if they have the whole picture in mind.”
For Amkreutz, seeing players walk through the door seeking service and repairs for an instrument bought elsewhere is really another opportunity to bring more money (and additional customers) into Guitar Center.
“All 269 of our stores have manufacturer-authorized repair services,” he stated. “So, even if you didn’t buy your instrument here, you can still get your warranty or repair work done with us.” He explained, “Our mission is more than just to move boxes. We want to enrich people’s lives with making music. It’s not just about coming in and buying an instrument.”
In fact, many of the retailers to whom we spoke have decided that the best defense is good service, which is something that neither manufacturers nor online retailers like Amazon.com can provide. Mulzer is moving away from product-centered advertising and, instead, is choosing to sell the store, its history and the level of service it can provide. “We focus more on the policies that make our customers happy in the long run and keep them coming back,” Mulzer said, noting, in particular, a customer loyalty plan “that saves the customer money over the life of a guitar with things like a free first string change, discounted repairs, setups and more.” He added, “Sales are gimmicks that come and go. The main thing is service and the quality of the experience.”
Haas-Amanfoh’s store offers not only repairs but also rentals, lessons and music therapy. As of this past November, Kindermusik has become another way for Royalton Music Center to add value for customers, as well as to reach new, untapped demographics.
“Young children were the only demographic we weren’t hitting, and we wanted to complete the family cycle,” she explained. “Like other early-childhood extracurricular activities, music should start young. It’s part of raising a well rounded child, and this is a way to help young families make music a part of their child’s life and have fun!”
Haas-Amanfoh continued, “My projection is that these children will progress and move into the private lesson program in a few years. The financial benefit comes from their participation in Kindermusik classes now, as well as when they take lessons and start renting instruments and buying sheet music as they grow up.”
Adding services, offering loyalty programs and generous return policies, and reaching out to new markets are just some of the ways that, last year, retailers were able to distinguish themselves from online competition. And part of what has allowed retailers to put the spotlight on their unique in-store experiences is MAP, which, according to our interviewees, has become an ally in the fight against Internet competition.
“MAP is good and bad,” Haas-Amanfoh stated. “When MAP first started, we were scared of it. But, now, we turn it on its head and know that customers aren’t going to find the item cheaper online, so they might as well buy it here.” She continued, “It’s not an advantage for us in terms of margins, but we don’t often lose sales to an online retailer based on price anymore.”
In fact, when prices are consistent across platforms, music makers might well find that a brick-and-mortar retailer’s customer service offers more “bang for their buck,” ultimately leading them to traditional retailers—rather than, say, direct-from-manufacturer Web sites—when making future purchases.
“Manufacturers playing the role of retailer and connecting their products directly with customers is not necessarily in the customers’ best interest,” Amkreutz warned. “Going directly through the manufacturer, you simply don’t get the same level of service that you get when going through Guitar Center. Guitar Center offers a better experience, and customers who buy direct from the manufacturer only once, from what we’ve seen, often won’t want to do it again.”
Nicki Grasso
‘Direct sales have caused us to lose our “one and done” customers. These are the people who want to try their hand at music, but who then decide it’s not their thing and drop off the radar. We miss the
opportunity to convert these folks to loyal customers.’
“There is nothing as fulfilling as picking up a guitar and playing it in the store,” Amkreutz continued. “Musical instruments aren’t like apparel or consumer electronics. For most customers, playability is absolutely relevant. Furthermore, we have a fully immersed sales staff who can share their experience, wisdom and life stories as players.”
Haas-Amanfoh agreed, saying, “Amazon can’t know what is going on in a local school program or what issues a manufacturer is having…but I can. That is my advantage and that is what I can offer the customer that a computer cannot: boots-on-the-ground expertise.”
Looking ahead, all four of the retailers to whom we spoke are feeling confident about this year. They expect the growth exhibited last year to continue, and they hope the lessons learned in the face of last year’s unique challenges will help propel them to success in 2016.
“The stores that do it right, advertise correctly and offer good customer service will thrive,” Mulzer said, before adding, “The others will fall off or downsize.”