Wednesday, 13 May 2009

Am I the Devil Incarnate?

Today I met a sales rep from one of the main music distribution groups.  He, along with others in the industry, is uncomfortable with internet retailers and clearly thinks that they are doing damage to music shops.

Now, I used to work in Human Resources and so I am used to being portrayed as the spawn of Satan - the HR department is usually the most despised in any company.  But the conversation set me thinking.  Is there any truth in this view?

So why are music shops closing down?  There are a few reasons in my view:
  • rents - in common with other retailers, the massive increase in rent over recent years has impacted on some music shops, often the ones set up more recently
  • over-reliance on selling instruments - the big profit margins on instruments and electronic equipment has led some to stock up on this instead of sheet music, but in a recession people simply don't buy instruments as frequently, leading to cashflow problems
  • poor selection and supply of sheet music (customer service) - people do buy sheet music regularly, especially parents with kids learning instruments, and this repeat business should be the bread and butter of a music shop - too often it is neglected
I don't include the internet as in this list as I don't think it is a direct cause.  I have always felt that a high street music shop with an existing brand and customers had a major advantage over someone like me, trying to build a business into UK wide internet retailer.  Yet I find, time and time again, that I keep more music in stock than most music shops with all the stock space they have.  On top of that, I have access to much more music which I don't keep in stock but order on demand.

This is a key issue in the debate of internet v high street retailers.  In the high street, you have to choose what to stock.  On the internet, you can post everything available - given the thousands of pieces of music out there, this is an advantage for the online retailer.  But it should be said that any music shop can do what I have done - create a website and add to it all the things they can't keep in stock.

There is also the change in shopping habits of the consumer.  Many of my new customers are parents whose child is just starting to learn an instrument.  These people turn naturally to the internet, they don't bother going shopping in the high street.  Others don't have the time or want to spend the money driving to a music shop which might not have the book anyway.  Like it or not, many people these days want to shop from home - I do, and I'm not alone.  When you can spend 15 minutes online and buy what you want, to have it turn up a few days later, why waste half a day at the weekend trying to find it in the high street?

A lot of retailers forget that there are many people in the UK who live in rural areas and who simply do not have access to a music shop.  Where are these people to go?  The internet is a saviour for those who live on Scottish islands, remote areas of Wales or the southwest of England where there are few large centres of population capable of supporting a music shop.

The sales rep said to me today that internet shopping makes it harder to market new music as people cannot see it and so decide whether to buy it.  My answers to that are:
  1. most books are bought by parents as ordered by teachers, so it is teachers who have to be persuaded - there are ways to do this (too long for this post!)
  2. publishers have to make PDF extracts of the music available to retailers for their websites so people can peruse them - this is starting but very slowly
Having said all that, I do think this is a genuine problem.  I have tried a "new" page with little success, and I need to give more thought to how to achieve this.  

So what is the threat to music shops from internet retailers?
  • loss of business due to heavy discounting (this applies mainly to instruments and accessories) as internet retailers have lower overheads
  • loss of business as people change their shopping habits towards more online purchases
While I think that the heavy discounting may reduce a little in the recession, unfortunately the lower overheads issue will remain.  It would be nice to think that landlords may get a little more realistic about rents, but...  As for the trend towards online shopping, nothing is going to change that and music shops have to adapt.

The key in all of this is customer service - every business has to build its customer base by providing what the customer wants and in such a way that the customer is incentivised to come back and spend more money.    Whether you're in the high street or online, this doesn't change.

Any business has to seek to be as efficient as it can be, and music shops are no exception.  The general consensus in the music business seems to be that the weaker players are being shaken out - those that survive will be the better ones.    Many music shops have expanded into areas such as music lessons and other ancillary services - we all have to find our own niche and there are plenty of opportunities to do just that, including using the internet.

I have a few niche areas: the instruments that other retailers cover poorly, e.g. bassoon, baritone, tenor horn, etc.; certain products that most others don't carry; low postage rates due to the fact I recycle packaging; and a pride in fast, high quality customer service.  Does that make me the devil?  Or have I just filled the gaps that I can see in the sheet music business?

Any music shop can create a website and increase their turnover by selling online as well as in the high street.  It does, however, require a different approach: I value the flexibility that trading online gives me, no 9 to 5 for me, but that means that I also write blog posts at 8pm, monitor my site in the evening when most transactions go through, and when prices change, spend my evenings trawling my site to update them.  I can't shut up shop at 5pm every day.

Maybe this is symptomatic of the real threat - moving away from the traditional way of doing things into a new world with a new technology.  I don't know - you decide.

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