OCT. 23 | RETAIL I TRENDS
for Tough Economy
West Music’s president, Robin Walenta, recently held an executive committee meeting with the theme “Plan, Don’t Panic.” Several other music retailers, though anxious about stomach-churning headlines, share that approach in navigating their businesses through the economy's uncertain shifts.
“Various departments are suffering while others are thriving,” said Bananas at Large General Manager Alan Rosen of his San Rafael, Calif.-based store. “Large-format P.A. sales are down considerably, but our rental business is up. High-end amplifier sales are down, but effect pedals are up. People want new stuff, people need stuff, they are looking for more economical ways to get it.”
“Customer traffic has been lighter, though we are coming off our best B&O rental season ever,” said Peter Sides, owner of Pennsylvania-based Robert M Sides Music Center. “We’ll be watching our delinquency reports carefully and looking at ways to work with our customers to keep them making music.”
Several retailers with lesson programs, including West Music and Robert M Sides Music Center, share a general feeling of security due to the ongoing stream of business and income their programs generate.
Brian Reardon, owner of Monster Music, has noticed foot traffic and sales at his high-end store in Rockville Centre, N.Y., drop off in recent weeks, but sales have remained strong at his Levittown, N.Y., store due to its lesson program.
“This is in more of a blue-collar demographic where we have a huge concentration of our lessons,” Reardon said.
“We have had three or four parents tell us they just can’t continue to pay for lessons if their kids will not practice more,” said Billy Cuthrell, owner of Raleigh, N.C.-based Progressive Music Center. “But we hear that even if the economy is booming.”
Cuthrell also noted he often sees parents manage with less so that their kids can continue with lessons.
The credit crunch remains retailers’ biggest short-term challenge. “Many customers are telling us that the purchases that they had intended to make in the near term are being deferred until they have some confidence that their remaining savings are not going to disappear,” said Craig Gigax, president of Meridian Music in Carmel, Ind. “The tight credit market is making it more challenging for those who are actually staying in the piano market to be able to refinance their homes and to access home equity to spend, or to obtain installment loans from their banks or credit unions.”
“As credit approvals become tougher to obtain for customers, music stores need to look for ways to rent or finance more and more purchases in-house to worthy customers,” Sides said.
However, Ted Eschliman, co-owner of Dietze Music in Southeast Nebraska noted that the current retail climate could result in more responsible spending and use of credit among U.S. shoppers. “I expect to see a more mature pay-as-you-can purchase philosophy supersede a borrow-from-the-future approach to personal credit,” Eschliman said. “This can only benefit our market, people buying things that harbor and hold true long-term value. A 64-inch flat-screen TV won’t be worth much eight years from now, but that Martin guitar will likely not devalue much.”
Cuthrell suggested staying realistic about the economic fallout’s long-term effects. He said he sees a light at the end of the tunnel, but not without a long and rough road to recovery. “No matter whom gets into office, there will likely be a few years of digging out, so I’m not looking for drastic changes in the next 14–18 months in consumer confidence,” Cuthrell said.
In the meantime, retailers are tightening up their business practices, creating strategic plans and staying as liquid as possible.
“Focus more on customer retention/development vs. customer acquisition,” Sides said. “Cash flow needs and continued bad economic news may dictate that the price and effectiveness of traditional advertising are not in your favor. Focus on the things you can control: training, communication, business basics, the customer experience and your attitude so that you provide leadership that your employees can believe in during tough times.”
“Most importantly, stay positive,” Rosen said. “Stay upbeat. Show your customers you plan on being here for a long time. If you don’t believe it yourself, you won’t succeed.” MI