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All-Important Q4 Advanced 3.7%

...was stronger this year, lifting the pace of growth from 2.5% in 2015 to 3.7% for 2016. For the three-month period ending December 31, industry sales totaled $2.678 billion compared to $2.582 billion in the same period one year ago. Whether using a computer, tablet, or mobile device, buyers continued to buy online in growing numbers. Credit card data captured by banks reveal that 21% of all holiday spending this year was done online compared to 15.4% last year. For the music industry, these trends helped drive a 12% sales increase for online music retailers and a corresponding 1.9% decline for brick-and-mortar music stores. Dealers were unanimous in reporting a sizable upward swing in consumer confidence in the wake of the Presidential election that helped the pace of sales in the critical November-December period.

The post-election bounce seemed to have the largest impact on high-dollar discretionary purchases like digital and acoustic pianos. Dealers from every corner of the country reported similar trends, with quiet September and October business followed by brisk results in November and December. “It was as stark as it gets,” said a piano dealer from San Francisco, California. “One month we can’t find any customers. And then, we get a new President and the sales open up.” For the quarter, keyboard products posted the following results: grand pianos +1%, vertical pianos +1.2%, digital pianos +4.8%, portable keyboards +2.2%, home organs -1.8%, and church organs -.6%.

Fretted instrument sales jumped 5.2% in the quarter led by growing demand for electric guitars. “The shift is underway from acoustics to electrics in our store,” offered a dealer from Dallas, Texas. “We’re seeing a big rebound in demand for Fender.” Ukulele sales continue their upward trajectory and will finish the year up over 20% with more than 1 million units sold. Dealers report that acoustic guitar sales have dropped modestly, driven largely by declining demand for low-priced Asian produced instruments. One trend that is top of mind with many reporting to this survey is a growing market for used guitars. Sales are taking off according to several retailers reporting to this survey. “They used to satisfy a price; now they’re very desirable,” observed a dealer from Kansas City, Missouri. “A lot of people seek out our used gear before our new selections.”

School music products chalked up another strong performance for the quarter with retail sales advancing 5.2%. “We’re benefiting from higher enrollments of students in music programs,” stated a dealer from Dayton, Ohio. “The traditional programs are in place and doing well. We’re focusing on guitar programs to open up a new area of growth for our company.”

The pace of growth of accessories edged down from 9.1% last quarter to 8.0% for the current quarter. The latest results bring the category into record territory for the year, with growth advancing faster than any other product group tracked in this survey. Retail sales results compiled in this quarterly survey also included: instrument amplifiers +1.1%, sound reinforcement products +2.4%, electronic music products -.5%, percussion products +.7%, and printed music +3.7%.

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