Regular readers have noticed my disenchantment with many of our industry’s business models. In the 20-plus years I’ve been writing the Veddatorial, (and more than 30 in our industry), many of our cherished business practices have become inefficient or pointless, in my opinion.
It’s not that I have any particular ax to grind against the models themselves. It’s just that we have seen so much disruption in the economy, in retail and in the music products industry itself. Ignoring the changes and the opportunities these “new normals” present can confine us. We can be locked in a perpetual cycle of damage control as we patch up our models like a car with 200,000 miles on it. At some point, that old jalopy won’t run anymore.
Over the years, we watched changing tastes and new products kill the organ market. The piano segment of our industry struggles to gain traction while it competes against dwindling commitment to a big-ticket “furniture” purchase and the legions of used pianos looking for a new home. Band and orchestra dealers also fight against their own used products, substandard internet instruments, and school budget woes, even as interest in music is high. Print is in the midst of a digital makeover. And the combo segment or our market deals with the cyclical nature of drumsets, a music scene without guitar heroes and relatively minor advances in technology.
That’s not to say that the picture is gloomy. Sales within the industry are trending upward and interest in music-making is widespread, in spite of the battles we fight. Indeed, the surge in interest may mask the fact that we are falling far short of our potential growth. Who knows what the numbers would be if we really captured all of that interest?
We have also seen the roster of retailers become ever more top-heavy, as the best-capitalized dealers lock down the lion’s share of sales. (Insert the “all your eggs in one basket” argument at your leisure.) Also, when we see increases, those figures don’t really illustrate how much of our industry dollars are going to web-skimming ghost retailers, or how much of our industry potential is diverted by counterfeit goods or other missed opportunities.
I think many of the smaller retailers in MI are merely surviving. Given our current distribution models, it’s hard to take advantage of many sales walking right in the door. That brings me to this episode’s rant about brand franchises.
Manufacturers, the whole concept of protected territories and limited dealer networks is not just broken, it’s ludicrous. In general, manufacturers remain disingenuous about it, still pointing to “proper representation” of their product line, customer service and other supposed benefits. Really, folks, y’all can’t possibly be unaware that when you sell on the internet, the concept of “territories” is a fantasy. “Proper representation” isn’t a thing when giant dealers cherry-pick your product line, or when regional B&O dealers use your line to populate a school bid and then get the director to sign off on different, higher-margin products once the bid is won.
Customer service … oh please. That’s a column in itself.
Certainly, there are longstanding dealers doing a spectacular job representing the brands they stock. But it often appears that suppliers look at sales figures without factoring in brand goodwill. Great dealers exist, but by definition as a subset of all dealers. How else to explain it, when not a week goes by that I don’t have consumers come to me and say, “Please, I’d rather buy _____ from you”? When I tell them I don’t have access to the product they want, I usually hear stories of lackluster or downright rude interactions with the franchisee that represents that product, or concerns about buying online. It’s happening constantly, manufacturers. What you will never know is how many of these potential sales went to a different brand (because another dealer they liked convinced them to buy a different product), or went to the used market, or perhaps didn’t even happen. That should keep you awake at night.
What I’d like to see is an “entry tier” for a lot of prominent brands. Perhaps a company offers a selection of the opening half of their line, leaving the premium top end to “stocking” dealers. Require payment upfront, but make the pricing close to what full dealers pay, not 5 percent below the MAP ceiling. Make the buy-in minimal, no more than three to six pieces. Yes, that’s what I said. You need to make this affordable to any store that wants to get onboard. You can still decide who you’ll deal with, but be real. These will be small stores.
There’s a precedent, in a way. Late last century, a major guitar manufacturer marketed an acoustic line via another company. A lot of stores that weren’t dealers of the major guitar manufacturer sold the heck out of them. But then, the guitar manufacturer discontinued the line, and one rep reported to me that full-line dealers of the guitar brand were disgruntled about the amount of traffic “stolen” from them by small dealers in their market.
Seems laughable in this internet century, doesn’t it? If that was happening, that tells me that the non-franchise dealers might have been serving the customers better. I know without a doubt that any line I’ve ever carried sells because customers want to buy it from my store, not because the brand name pulled them in. The fact that any of us can sell against online retail proves it even more thoroughly. Sure, it adds credibility when a shopper finds a known brand on the wall. But that kind of customer will choose a store first.
Think about it, manufacturers: Additional sales to established merchants who will pay upfront. No 120-day (or longer) financing schedules, no counterfeiting and your gear is in the hands of consumers you might not have seen otherwise. Side benefit: You may discover great representatives for your brand, and you may build them into full-line dealers.
I’ll let you ponder that until our next episode. We’ll talk about a few ways you could implement new models of distribution that might actually strengthen your brand. Or maybe the other guys are already moving to that, and you might get to the table too late. (Spoiler alert: It’s happening.)
That, too, should keep you awake at night.
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