The lockdowns, quarantines, and disruptions of the COVID pandemic call to mind the old Yiddish prover, “If you want to make God laugh, first make plans.” No doubt, there is considerable celestial mirth at the moment as the events of the past year have made even the best laid business plans look ridiculous. Around this time last year, most in the industry were heading to NAMM, expecting 2020 to be much like the previous year, only a bit better. Weeks later, the pandemic hit and economies were shut down, forcing everyone to rethink assumptions about what is “normal.”
Aside from immeasurable strife, the pandemic has confounded every forecast, underscoring the feebleness of our predictive abilities. By the middle of March 2020, as government lockdowns kicked in, most in the industry were griped with panic, anticipating the worst. Shuttered retailers canceled orders, sending shockwaves throughout the supply chain, manufacturers around the world suspended operations, and cash conservation became the top priority.
Then the completely unexpected happened. In late April, the U.S. government began handing out $600 stimulus checks to the unemployed and overnight thousands decided to buy a musical instrument. With travel, dining, and other entertainment options curtailed, they apparently decided that now was the time to begin making their own music. Surging consumer interest coupled with an idled industry created the biggest mis-match between supply and demand since the Beatles ignited the first guitar boom in 1964. For the first time in decades, retailers reported that their revenues were constrained by supply shortages.
The impact of the pandemic has varied widely among different product categories. Sales of products well suited to home use, including fretted instrument, keyboards, recording gear, and some small DJ rigs has been robust. By contrast, products for public use like p.a. gear and drumkits have not fared well. Sales of the wind and bowed string instruments used in school music programs have also suffered, the victims of school closures, remote learning, and social distancing protocols. On balance though, despite the disruption, we expect industry sales to be down only modestly for the year.
COVID has taxed the ingenuity of every business operator in the industry and it’s a year few would care to repeat. However, we suspect that many of the steps taken will yield more resilient enterprises in the years to come. That’s just one of the reasons we enter 2021 with an optimistic outlook. Other reasons include the resilience of the American economy. Despite one of the biggest contractions in GDP ever recorded, in the first and second quarters of the year, along with higher unemployment, and a lot of personal strife, national retail sales actually edged up somewhere between 2.5% of 3.5%, according to data compiled by the Commerce Department, the National Retail Federation, and VISA and Mastercard. Cash flush consumers: The US savings rate has been running at about 13% for the past ten months, or close to twice the ten-year average. This translates into nearly a trillion dollars currently idled and waiting to be spent. Closer to home, the quarantine and lock down has kindled increased interest in music making. Taken together, economic resilience, cash flush consumers, and interest in music add up to a potent equation for future growth.
Planning for it and navigating the short-term challenges won’t be easy however. Faced with back orders and supply shortages, retailers and manufacturers alike are still trying to pin down the underlying demand level. Audio companies ask the question, when will people feel comfortable attending concerts or public events? There are similar concerns in school music segment—when will band, orchestra, and choral programs resume? Given the disruption of COVID, no one is particularly confident in their forecasting abilities right now.
The Music Trades cache of industry data offers help in these times of uncertainty. Our Quarterly Retail Sales reports provide an accurate picture of retail sell through levels. To get a better handle on product availability, check out our Import Tracker, which tabulates the volumes of instruments and audio gear coming into the country. With the Top 200 Retail Report, we rank the top retailers by sales and productivity, showcasing who’s doing the business and how they’re doing it. The annual Industry Census provides a comprehensive overview, tracking the ten year sales performance of 50 critical product categories. And, our Global Reports provide similar insights into top markets around the world. Taken together, these reports quantify industry activity and provide an unmatched roadmap for navigating uncertain times.