Q1 Retail Report
...large parts of the country, especially the Midwest and East Coast, negatively impacted sales, holding back the industry from reporting even stronger results. “So many of our customers were dealing with excessive snowfall and were not in the mood to head out to see us,” remarked a dealer outside of Boston. “We expect our customers to come out swinging in April.”
Although 3% growth is respectable when compared to the industry’s results during the past seven years, many were expecting much more. “After NAMM, we thought things were going to take off,” said a dealer from Los Angeles. “More people at work, and lower gas prices—what a great combination. But, we’re still waiting.” Fretted Instrument sales posted a 5.2% gain for the period, driven by continued growth with acoustic instruments. Instrument amplifiers also rose 1.7%. Sound reinforcement products were up 2.9%. Dealers nationwide reported strong sales of ukuleles, and boutique effects pedals.
“In our community, it seems that consumers are happy to splurge on some items while keeping their hands in their pockets for others,” said a piano dealer from Albuquerque, New Mexico. “Everyone has an iPhone and a new truck, and the restaurants are all full. We’re just not seeing the numbers we should.” For the quarter, dealers reported that grand piano sales declined a modest 1% ,while vertical piano sales were off just .5%. Results of other keyboard product included: portable keyboards +1.6%; home organs -1.7%; and church organs -.8%.
“Even though we haven’t seen it yet, we do still expect to see a sales acceleration soon,” said a dealer from Indianapolis, Indiana. “From what we see in our local papers, incomes have been rising, and that is definitely going to help out school music programs.” For the quarter, sales of school music products continued upwards, rising 3.3%. Accessories sales continued a near double-digit growth rate, advancing 7.3%. Sales of printed music showed the strongest quarterly gain in over a year, rising 2.4% to $85.2 million.
Sales figures alone do not tell the complete story at retail. The gap between online and brick-and-mortar retailers continues to grow, with online dealers capturing just over 30% of the total volume. “The trend towards online purchasing is not slowing down,” offered a retailer from Sacramento, California. “In fact, our walk-in traffic, which we measure monthly, is 50% of what it was in 2010.”
A major gripe directed at manufacturers is the continued erosion of margin through lower MAP pricing. “We once viewed MAP as critical to our business,” said a store owner from Dallas, Texas. “But now, with so many key products at 25-35% margins, it’s not that important to us anymore. We just have to go find different products to sell.”
With consumers receiving a large cash windfall from the drop in gasoline prices, a figure that experts peg at over $100 billion, discretionary purchases including musical instruments and sound equipment are well positioned for strong sales during the balance of the year.
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