 ...for the quarter to $2.4 billion. In general, most reporting dealers stated that gains for the quarter came in the last two weeks of December, largely a result of extended hours, mild weather, and the extra business that came from Christmas Eve falling on a Saturday. Margin pressure in all categories weighed in heavily as a top concern. Highlighting the pressures on margins, one dealer offered a comment with a touch of saracasm, “The business is kind of like being in a mud pie fight. You just have to know when to throw and when to duck.”
The big challenge for most retailers this holiday season was how to attract shoppers without decimating margins. “Ever since the recession, we’ve had to do a lot more to get shoppers to open their wallets,” said a dealer from Texas. “We see that consumers are willing to get up and go out there if they feel like they’re going to get some value for their dollars.” Web sales, largely driven by free freight deals and “MAP-busting” prices drove online sales increases for most music stores. “Our in-store increase was up 3.8% for the quarter compared to a 15.6% increase in our online business,” offered a dealer from New York City. Discussing the pressures on margins, one online only dealer said, “To stay competitive with our popular SKU’s that Best Buy and Amazon also offer, we had to lower our margins about 20% this quarter.”
In this column two years ago, dealers cited a noticeable decline in credit card usage, a trend that contributed to across-the-board sales declines in all categories. Today, credit cards are back in a big way according to dealers. “Increased credit card usage was behind the increase we saw this quarter in guitars and accessories,” reported a dealer in Illinois. For the quarter, sales of Fretted Instruments advanced 4.1% to $471 million. “Sales have rebounded and we’re selling all the ukes and acoustic guitars we can get,” added a dealer from Virginia. Accessory sales chalked up big gains—more than 6%—during the quarter. “The sales continue to grow, but online retailers, especially Amazon, are beginning to impact our margins,” said a dealer from Connecticut. “People like the convenience of buying what they want at the counter, but they are more attuned to pricing today, and I don’t see any end in sight for that.”
The piano market had another stable quarter with sales virtually unchanged in most categories: Grand Pianos -.5%, Vertical Pianos +.5%, Digital Pianos +1.6% and Portable Keyboards +.8%. “On the positive side, the piano market is more active than a year ago, but customers spend more time shopping, and as a result, profit margins are lower,” explained a dealer from Northern New Jersey. “We do, however, expect 2012 to be better.” Another dealer offered, “We had strong Q4 sales of grand pianos and player systems, especially with the very high-end products like Steinway.”
Online sales are a big topic, but dealers report that investments in new stores do pay off. One dealer said, “We relocated our store after 57 years and our business has taken off. Our new location is challenging us to expand our market base and we are doing so. We are very positive about 2012.” Another said, “We moved to a new, larger store and our sales are up over 20%.” Sales results for other categories during the quarter were: Instruments Amps +1.9%, Sound Reinforcement Products +.9%, Computer Music Products -1.8%, Percussion Products +1.6%, Recording Equipment +.2%, Printed Music -.3%, Home Organs -5% and, Church Organs -7%. To order the full report, click here. Subscribe to The Music Trades today! |
