July is an especially exciting time for the music products industry. Summer NAMM is at the forefront of the thoughts of most music products retailers and manufacturers, and with such a popular industry-wide event comes the attendant deluge of new product debuts and major announcements that will be the talk of the show, as well as of the weeks to follow. And since school’s out for summer (apologies to Alice Cooper), many retailers will find their stores packed with kids seeking music lessons and the coolest new gear. And, of course, summer tends to stir up in people the latent desire to pick up a new hobby or reacquaint oneself with a favorite pastime. So, customers of all ages will be flocking to their local music stores for a new guitar or amp, a fresh set of strings or a bongo to bang on during those lazy afternoon drum circles in the park.
As if all that wasn’t reason enough to get excited for this month, there’s also The Music & Sound Retailer’s annual in-depth look at the pro audio market. As part of our ongoing effort to keep music retailers informed about the latest trends driving the hottest product categories in the MI industry, each year we ask a who’s who of industry insiders, who specialize in amps and speakers, to offer their impressions of the pro audio market as a whole. This year, The Retailer reached out to Hartley Peavey, Founder and CEO of Peavey Electronics; Gibson Pro Audio Senior Manager of Loudspeaker Systems Engineering Craig Hockenberry and Senior Product Marketing Manager Andrew Beard; and Jeff Long, Vice President of Sales for Long & McQuade, the parent company of Yorkville Sound. Each provided insights into the relative strengths and weaknesses of the pro audio market, and each offered suggestions for how retailers can more effectively sell their stock of amps and speakers.
Across the board, all respondents felt positively about the strength of amp and speaker sales over the past year, and they expressed optimism about the segment moving forward. Much of that optimism had to do with the indispensable nature of amps and speakers in music making. When it comes to sound delivery, the MI industry is not in a rush to reinvent the wheel, so to speak. “We are, with loudspeakers, very much in the same place as we are with the rubber, air-filled automobile tire,” suggested Peavey. “The first car that ever moved back in the 1880s was rolling around on rubber tires filled with air, and that’s still the case for cars today. Likewise, nobody has found a better way to move air than a dynamic loudspeaker, although I’m sure, some day, it will be found.”
Simply put, if you’re playing non-acoustic music, whether in front of a live crowd or while practicing in the privacy of your own home, you need a sound delivery system. And even acoustic musicians need sound delivery in large venues. This universal need for sound-reinforcement products has consistently kept the speaker category among the top sellers in the MI market. Sales of instrument amps rank slightly lower, and they can be impacted more by fluctuations in instrument sales. But, at the end of the day, pro audio products offer a stronger potential return on investment for retailers and manufacturers alike than most other music product categories do, owing to their sheer indispensability.
When asked to identify the hot product trends in the pro audio segment, all respondents pointed to portability and small form factors. According to Long, “Portable and mid-size PA has been moving well for us for the last few years, and there’s nothing to indicate that those sales will be slowing any time soon. There is demand for smaller, lighter and easier-to-use PA systems at all price points.” Hockenberry singled out “high-efficiency active loudspeaker systems that are small, compact and lightweight” as his company’s big movers, whereas Peavey observed, “There are more people than ever recording at home, thus the popularity of these so-called ‘mini-amps’ or ‘cigar-box amps’ that everybody’s been doing lately.”
Powered speakers also seem to be enjoying continued popularity among consumers. “Active speakers have become the biggest sellers for us,” offered Long. “Systems with integrated mixers are also doing well.” According to Beard, “It’s no secret consumers have shifted toward buying powered speakers.” Versatility and value seem to be the key factors driving this shift. “Over the past five years, industry sales numbers of active systems have surpassed passive systems at quite a rapid pace, and for good reason,” said Hockenberry. “Although there are advantages and disadvantages of both, active systems are an all-inclusive solution, which is very attractive to customers for ease of set up, use, transportation, storage and value.”
Outside of smaller, more portable sound-reinforcement products, as well as the continuing popularity of powered amps and speakers, there was a surprising lack of consensus on the hot product trends currently dominating pro audio. Hockenberry and Beard pointed to digital signal processing (DSP) and wireless connectivity as the major features currently being sought by amp and speaker consumers. “DSPs are now finding their way into nearly every product category of the pro audio market,” explained Hockenberry. “The use of DSP enables equipment manufacturers to produce products with a greater number of complex features that are highly configurable and more consistent from product to product.” He continued, “DSP also gives the end user more feature control and flexibility from their equipment during setup and use.” Hockenberry also observed that “green, energy-efficient audio systems” and “non-linear, high-efficiency, switch-mode power amplifiers” appear to be on the rise.
Peavey also singled out a few features and product categories that appear to be gaining steam in the marketplace. “Combos are in,” he declared. “Mini amps and mini heads are in. Almost any amplifier we do now has to have a USB provision. Increasingly, people are looking for more versatility.” He also identified two opposing schools of thought among amplifier manufacturers. “There are two trends going,” he explained. “There are companies that want to emulate all kinds of amplifiers with modeling, and then there are companies that are going back to old tube amps.” When asked for his opinion on the large number of older amp models—particularly tube amps—that have been reissued by manufacturers in recent years, Peavey suggested, “Many manufacturers are still building the old stuff because a lot of guitar players believe the older stuff is better. That may be true with some brands, but it’s certainly not true with brands that have kept up with the technology and the times.”
There was far more consensus on the amp and speaker categories that are struggling. Foremost among those were passive speakers, although passive models are nevertheless still preferred for some applications. “The passive products that continue to sell appeal to customers looking for a specific solution, like a folded-horn or a dual 15-inch speaker,” said Beard. “Passive speakers may not disappear completely, but they will continue to be a minor part of the market.” The trend toward smaller, more portable systems means that some speaker configurations have seen a drop off in popularity. “Stacks are out,” offered Peavey. “A lot of people are recording at home, or playing in their bedrooms. They don’t need 100-watt stacks. And the people playing at the local bar and grill just need a typical combo. So, stacks are not very hot right now.”
Perhaps unsurprisingly, given recent trends in popular culture, another area of agreement between all respondents was the relative strength of pro audio sales into the DJ segment. Peavey, Gibson and Yorkville all identified the DJ segment as their fastest-growing one for speaker and amp sales. According to Beard, “Our sales are strongest with mobile and club DJs who have been using our Stanton DJ equipment with Cerwin-Vega! speakers and amps for years.”
All respondents also seemed optimistic about the strength of pro audio sales among garage bands and hobbyists. “Garage bands and DJs had the largest growth over the last couple of years,” noted Hockenberry. Beard echoed that perception, explaining that Gibson “continues to see growth among guitar players and other musicians who need a robust portable PA.” Only Peavey seemed to suggest that the garage band market is experiencing something of a downturn. “Although sales are still strong for now, I think the stereotypical garage band may be a dwindling segment,” he predicted. “But I know all kinds of people who record by themselves in their bedrooms or garages. The whole home recording thing is gaining ground tremendously.”
As far as technical trends go, all respondents agreed that there is an ever-increasing demand for greater and greater power and performance out of pro audio equipment. However, each respondent was also quick to point out that price point is as important a factor in pro audio sales as technical performance is. “There are always customers looking to fill a need on a budget and others who want the best possible performance,” commented Long. “However, nowadays, it’s easier than ever to find a product that hits both criteria.” According to Beard, “Customers are looking for the greatest value for their money, and performance is part of that. A customer with limited financial resources is still going to aim for the product with the most compelling features.” Hockenberry agreed, pointing out, “As technology evolves and becomes more affordable, the power levels of more cost-effective systems are increasing.”
Peavey also offered some of his own insights into the demand for increasingly powerful audio equipment. “It’s been a horsepower race since I got into the business in 1965,” he explained, suggesting that this trend is not likely to reverse itself any time soon. He also expressed concern about how manufacturers tend to market their products with this demand for increased performance in mind. “Something that’s always been a huge problem—and that’s even more of a problem now—is specifications,” he lamented.
“Some of my friendly competitors that make powered speakers say their speakers are 1,000 watts. But these specs mean nothing if everyone isn’t using the same yardstick. When you see a speaker with a listed power of 200 watts…is that 200 watts for a microsecond? Or half a second? Or two seconds? Or all day? What does that 200 watts mean? The truth is, in many cases, it means nothing. There’s no standard by which you measure these things.” Peavey pointed out that efforts to establish industry-wide technical standards in pro audio, undertaken over the years by NAMM and other industry associations, have been unsuccessful. He did not seem to have high hopes that such standards would be established in the near future, either.
In addition to The Retailer asking their thoughts on the state of the pro audio market, the respondents were also asked for their thoughts about how MI retailers can increase sales of speakers and amps specifically and, more broadly, improve their businesses in general. Each singled out certain vertical markets as being ripe with opportunity for increased pro audio sales, and all seemed to believe that retailers are missing out if they aren’t at least somewhat involved in permanent installations. “The house of worship and corporate installation markets are booming, and we have product offerings that would fit well into those categories,” affirmed Hockenberry. “Having a few powered speakers available to rent for events is also a great service for customers,” Beard added. Peavey echoed the importance of the worship market. “They aren’t building a whole lot of new clubs, but they’re building churches all the time,” he observed. “And what’s great for people who sell pro audio gear is that preachers tend to have healthy egos. If Dr. Simms on one side of town gets a new sound system, then Brother So-and-So on the other side of town will go to his parishioners and tell them they’ve got to buy a bigger sound system than Dr. Simms’.” In addition to the worship market, Long cited “fitness studios, schools and fashion retail” as verticals worth pursuing.
Outside of getting involved in installations, Peavey also had a number of suggestions as to how retailers might shore up their bottom lines. Chief among them was increased product training. “The state of product knowledge on the typical sales floor is the worst it’s ever been,” he observed. “It is the single biggest problem of music retailers today.
With a lot of retailers, sadly, if someone has some tattoos, or purple hair, or piercings, then they assume they know what they’re talking about. And, often, they don’t.” When asked why he thinks product knowledge is in such short supply, he replied, “Manufacturers, in my opinion, have done a lousy job of training the dealers.” But he also pointed out that education is a two-way street. “We’ve had a training program here at Peavey for 35 years, and we have great difficulty in getting dealers to come to be trained. A lot of dealers think they can get by on the strength of their personalities, but they need to be educated, too. And it can be hard to tell people they need to be more educated. I can’t go into a dealer’s store and tell him, ‘Listen, you’re the dumbest bunch I’ve ever seen and we need to get you some education.’ I’d love to…but I can’t.” And, according to Peavey, increased product knowledge has the added benefit of allowing retailers to service the products they sell to their customers. “If someone comes in looking to have a product serviced and you tell him you don’t do it—boom!—he’s out of there. And, by the way, the technical expertise you need to do service also provides the foundation you need to do installations.”
Peavey also pointed out that a lack of product knowledge leads to a lack of specialization, which can create even more problems for retailers. “As a result of that, many dealers have such a profusion of different lines and different products, they really know nothing about them,” he said. “So, they can’t effectively sell any of them.” He views this grab-bag approach to stocking merchandise as inherently flawed. He also cautioned dealers against offering discounts in an attempt to compete with overstocked online outfits. “If someone comes in and asks for something they don’t have,” he began, “they can say, ‘Oh, I don’t have it, but I can order it and give you 30 percent off.’ They’re making the sale…but there’s no profit in it. And because they’re not focused on specializing in the products on their floor and selling only those products, and they’re instead trying to satisfy this, that and anything else anybody might ask for, their profitability is zip.”
Beard agreed that education is key for music retailers, but he also expressed the need for education in areas other than simple knowledge about products. “Training is critical so that retailers are able to effectively communicate to customers the benefits of our products,” he stressed. “But, this training also extends online, where physical stores are realizing they need a presence. Those stores that best utilize their physical and online presence are having success.”
All respondents also zeroed in on some familiar suggestions as to how retailers could better serve their customers. It’s what Peavey referred to as “Retail 101.” He said, “You tune your guitars. You wipe the strings off so they won’t rust. You don’t have dust all over your merchandise. Your speakers are plugged in so they can be demonstrated. You have your amplifiers actually plugged in.” Beard offered some similar suggestions, saying, “Products must be properly displayed and visible so that customers can demo them, preferably with a mic or audio source connected at all times. And retailers must be willing to provide sales support so that a customer is comfortable using what they have purchased.” Long tripled down on the importance of allowing customers to demo products before they buy them, remarking, “In most cases, you need to let the customer hear the product.” He continued, “Rentals have proven to be strong for us, and ‘Try Before You Buy’ lets customers make sure the products do the job before they make the investment.”
At the end of the day, the best bet for retailers looking to improve their pro audio sales is to emulate some of the most successful retailers in the MI market. “If a dealer wants to know what to do to succeed, look at Sweetwater,” suggested Peavey. “They have a huge brick-and-mortar store and a strong online presence. And, it’s the one company out there that has mandatory product training four hours a week, Tuesday and Thursday, from seven to nine. This is why Chuck Surack’s operation is growing by 30 percent a year in a market that, for the most part, is stagnant.”
Peavey also suggested that retailers take some cues from some international MI market leaders, saying, “There’s a guy in Canada who runs an operation called Cosmo Music. It’s the slickest music store I’ve ever seen except for Thomann in Germany. They do installations, they have service, they have lessons, they do sound reinforcement and they’re doing a jam-up job.”
Those retailers looking to jam up their own sales would be wise to follow these tips, and to recognize the myriad opportunities for increased profitability presented by the pro audio market.