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Q3 Results Point To Strong Holiday Sales

...to the all-important holiday shopping season, sales at music retailers advanced 4.2%. In the third quarter, music retailers generated sales of $1.722 billion compared to $1.652 billion in the same period one year ago. Results from music dealers point to a growing divide between online retailers and their brick-and-mortar counterparts. For this latest reporting period, online retailers reported sales gains averaging 10.5% compared to 2.2% for traditional retailers. The numbers point to gains in all areas of retail and serve as a reminder that retailers should not only be stocking stores but adding to their online offerings as well this holiday season.

In another good sign for the music industry, the National Retail Federation recently predicted that retail sales will tick up 3.6% overall in November and December. That would be a far better showing than the 2.5% average growth over the ten-year period, or even the 3.4% average for the last seven years as the nation emerged from recession. “All of the fundamentals are in a good place to make me believe that this will be a very positive holiday season,” said a retailer from Dayton, Ohio.

Retailers reporting to this quarterly survey turned in positive results for nearly all categories. Results included: fretted instruments +4.8%; instrument amplifiers +1.4%; sound reinforcement products +4.0%; electronic music products +1.5%; percussion products +2.7%; recording products +3.1%; and printed music +1.8%. “The mix of what we sell continues to evolve, but we’ve been helped by electric guitar and percussion, which were drags on our top line in the past few years,” explained a dealer from Kansas City, Missouri. “We’re also much more aggressive with used gear, which our customer really are seeking out.”

Reflecting continued growth and a strong back-to-school season, sales of school music products jumped 6.4% to a record $206.7 million for the quarter. Accessories sales continued upwards as they have for five years running, advancing 8.1% for the quarter.

Piano retailers always approach Presidential election seasons with a degree of caution. This year proved no different as store owners report less traffic and fewer sales. For the quarter, grand piano sales dropped 1.7% and vertical piano sales fell 1.4%. Digital pianos sales increased 3.0%, and portable keyboard sales rose 3.2%.

The top competitive presence, according to retailers, has moved from Guitar Center to Amazon—and for good reason: Amazon accounted for nearly a quarter of all online holiday sales last season and is expected to come in even higher this year. “Guitar Center used to be the challenge, but now we face a much stronger competitor with Amazon,” observed a dealer from Jacksonville, Florida. “They are changing how people shop, especially our next generation of customers.” One online retailer offered straightforward advice: “Make sure your site is mobile-friendly and that you have simple payment options,” said that dealer from Burbank, California. “Sales on smart phones are now ahead of tablets, and together, the two account for 58% of our online sales.”

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