Having spent much of my life in the music business, I have been fortunate to help shape several waves of growth and innovation in our industry. From my vantage point, there is one consistent format that continues to survive and even thrive today — the small-format, full-service music store with strong ties to the community. To understand the enduring success of these stores, we can look at history to see how they (we) have reacted and adapted to the changing landscape.
1970s and Before: Independent Community Music Stores Dominate
In the 1970s, successful music businesses, like the one operated by my father and grandfather in Philadelphia, functioned as a hub for music and musicians in the local community. Zapf’s Music wasn’t especially well merchandised, and it certainly didn’t employ any technology to help with stocking requirements or customer relationship management, but we understood the importance of assortment, expertise, services and community engagement.
Assortment
- Assortment doesn’t mean you need to have every permutation of every guitar hanging on the wall. In fact, unless those SKUs turn quickly, the inventory carrying costs can be overwhelming for a small business.
- But assortment does require that the basics are always in stock — sticks, strings, reeds, heads, etc. — and that some element of variety (to keep people coming back) exists. This could be new brands, used gear, limited editions, new colors and shapes, or new technology.
- A strong assortment can also be achieved by going deep and investing heavily in one category, e.g., acoustic guitars, violins, etc.
Expertise
- I have nothing against office supplies, but we aren’t selling paper clips and staplers. We are in the business of selling complex precision instruments and accessories designed to achieve a particular, pleasing sound.
- To be distinctive and authentic, it’s important to have a well-trained team with genuine musical experience on hand for advice and guidance both before and after the sale.
Services
- Lessons help create new musicians in the community, drive foot traffic to your store and build a market for accessory and step-up sales.
- Rentals can make learning more affordable for your customer base, while simultaneously developing a recurring revenue stream.
- Repairs can make or break your reputation in the local market with band directors and pros.
Community Engagement
- Events such as recitals and open-mike nights drive retention in your lesson program.
- Clinicians drive reputation and engagement in the community.
- Outreach such as school services builds relationships, which can be enduring, even in a digital world.
1980s and 1990s: Rise of the Big-Box Stores
Music retailing changed dramatically in the 1980s and 1990s as Guitar Center expanded from west to east, Sam Ash expanded from east to west, and Mars Music briefly entered and then exited the market. These new big-box stores successfully capitalized on assortment and buying power to bring both breadth and depth of musical products into the market at very competitive prices. The consumer benefited, and the industry as a whole expanded, but it is also true that some independent community music stores that were not well grounded in the fundamentals faltered.
However, there are also many success stories, as we all know. From my perspective today — competing with many, and purchasing some, of these community music businesses — there exists among the successful a common set of behaviors; computerized and professionalized operations, streamlined and focused assortment and a doubling down on expertise, services and engagement in their local community. At least that’s what we tried to do at Zapf’s Music during this time, and what we at Music & Arts look for in the companies we acquire today.
Why expertise, service and engagement? Simply put, with limited capital and in a more congested retail economy, it is still possible to be truly distinctive in these areas. And by being distinctive here, it is possible to preserve relationships and relevance in the local community that continue to drive both product and service income.
Please note, however, that professionalizing and computerizing operations and streamlining assortment are still table stakes. Running a loose operation subject to shrink, having aging, slow-moving inventory, being out of stock on the essentials, etc., creates an unstable financial foundation — one that could ultimately undo even the best relationship and expertise-based business.
2000s: Marketplaces, Dot-Coms & Omni-Channel Retail
Change has accelerated rapidly since 2000, the year in which my father sold Zapf’s Music to Music & Arts and my brother Rich and I went digital and started Music123.com. These days we go online to find reviews, comparison shop and order products for next day — even same day — delivery to our door. Retail giants like J.C. Penney, Sears and Macy’s have closed hundreds of stores in wide swaths of the country since the beginning of this year. Once dependable chains like Payless ShoeSource, Radio Shack, The Limited and HHGregg have all recently filed for bankruptcy — and many more companies seem to be poised to follow suit.
New formats in music retail are proving successful, but they still leverage one or more of the core elements — typically assortment and expertise, as services and community engagement are more difficult to duplicate online. Assortment can be nearly limitless online, and the big players all share this attribute. Some, like American Music Supply, Sweetwater and Musician’s Friend, seek to combine a vast assortment with expert advisors available on the phones. Other assortment-based competitors like Amazon, Reverb and eBay leverage the power of the marketplace to drive both selection and competitive pricing.
But there still is an important place for traditional music retailers in the new economy. Those who are successful marry the power of the web with the importance of location and real-life relationships to create an omni-channel experience that extends their reach and improves inventory utilization.
Certainly, those of us at Music & Arts — where we are celebrating the opening of our 150th store and 65th year in business — still believe passionately in the future of the full-service, community-based music store. By focusing on our points of distinction — expertise, services and strong ties with schools and the community — we have learned to compete successfully in this new economy.
As we continue to grow, we know there is still much to learn from other resilient and successful music retailers. We look forward to the next wave of innovation in our industry and welcome partnership, in all forms, with other like-minded purveyors.
Steve Zapf’s history in the music industry began at an early age. He grew up working in the family business, Zapf’s Music, which was established by his great grandfather and grandfather in 1928. When his father retired in 2000, he partnered with CEO, Kenny O’Brien, to sell Zapf’s Music to Music & Arts. From there, he and his brother founded Music123.com, which eventually grew to more than $60 million in direct sales before being sold to Guitar Center. In Nov. 2012, Steve became president of Music & Arts and Woodwind & Brasswind.