Music stores stayin’ alive

Local retailers are fighting against
online and ‘big-box’ stores for profits
Thursday, March 4, 2004 | 12:00 a.m. CST; updated 3:18 p.m. CDT, Saturday, July 19, 2008

It’s a Tuesday afternoon at Streetside Records, and a half-dozen customers are pacing the aisles, browsing the racks and stacks of compact discs. As a song by singer Norah Jones comes on the store’s sound system, two middle-aged women approach Streetside manager Kevin Walsh.

True customer service

“Do you know a song beginning like, ‘there she goes... there she goes again’?” one of the women asks.

Walsh calls out to two clerks in the store and hums the song to them. Three minutes later, the two women leave the store with a CD by a band called Sixpence None the Richer that features the song “There She Goes.”

For Walsh, customer service is what sets the local music store apart from other retail music outlets, such as online stores and file-sharing networks like Kazaa.

“One thing about brick-and-wood stores like us,” Walsh says, “is that people really like the staff and service here and our atmosphere.”

But can customer service turn around the extended slump in the retail music industry?

Downloads vs. sales

Between January 2001 and January 2003, CD sales fell 22.3 percent in the United States, according to the Recording Industry Association of America. Meanwhile, according to Forrester Research, music downloading services such as Apple’s iTunes currently account for less than 1 percent of retail sales, but are expected to have 23 percent of the market by 2008.

“If you look back before online downloading became an issue and steadily track it year by year, sales have definitely decreased,” said Jeremiah Turner, store manager of FYE at Columbia Mall. The initials stand for For Your Entertainment.

The biggest threat to local retailers

But Don Van Cleave, president of the Coalition of Independent Music Stores, says the biggest threat faced by local music retailers are “big-box” merchants such as Wal-Mart or Circuit City.

“These giant stores are offering totally predatory pricing below original cost just to increase their traffic,” Van Cleave says. “And in fact, it is the biggest problem for us these days.”

Indeed, in the first six months of 2003, according to Rolling Stone magazine, 600 local music stores across the country went out of business. Last month, citing debt of more than $400 million, Tower Records, which owns 93 stores and employees 3,100 people nationwide, filed for bankruptcy.

In Columbia, only three stores — FYE, Streetside, 407 S. Providence Road, and Slackers CDs & Games, 1020 E. Broadway — are dedicated to retail music sales. And only one, Slackers, is independently owned and operated. Both FYE and St. Louis-based Streetside are part of TransWorld Entertainment, an Albany, N.Y. music and video retailer with more than 1,000 stores in the U.S.

Survival techniques

Consolidation and competition have forced changes in the way independent music stores do business. The steep drop in sales of new CDs have forced the independents to devote more shelf space to used CDs, Ozzy Osbourne action figures, Simpsons T-shirts and the like, says Steve Wilson, a manager of Kief’s Downtown Music in Lawrence, Kans., and a founding member of Coalition of Independent Music Stores.

“Used CD sales and trading not only benefits us but also is attractive to our customers,” Wilson says. “I’d say these days, no small music stores will survive without used CD trading and sales.”

Joel Hensley, manager of Slackers CDs & Games, says used CDs account for a majority of the store’s sales. Because the store cannot “mark up” new CDs enough to make a profit, he says, Slackers only stocks new releases that have been requested by customers.


James Miller looks at the used DVDs at Slackers CDs and Games in downtown Columbia on Monday. Miller says he visits the store weekly.

Used CDs sell for $1.99 to $8.99 at Slackers, Hensley said, allowing for a profit margin of “anywhere from $1 to $3.” Still, the store is hoping to improve the volume of used CD sales by accumulating as many copies of the same title as possible and lowering the price of individual discs.

“A lot of CD stores stop taking used CDs once they have one or two copies of the same title, but we just keep taking them as long as we want them,” he says. “The luxury of being able to take multiple copies of the same title means we can afford to sell the CDs in cheaper prices.”

That may help Slackers compete with Circuit City and other “big-box” stores that rely on heavy sales volume to keep prices low. Turner, the FYE manager, says legal action taken by the Recording Industry Association of America last year has chilled interest in the sharing of computer music files.

“Once the RIAA started issuing lawsuits for illegal downloading and became serious about it, we saw more customers coming back in, especially in the high school and college ages,” he says.

But, while they are, in many ways, less convenient, music stores will always be the first choice for some music lovers.

Janice Dampir, a teacher, says that while downloading music off the Internet is cheaper, she still prefers buying actual CDs with liner notes and cover art.

“I just like to own my little CDs and shuffling through them,” said Dampir.

Jean Gillespie, a medical technician, has been a regular at Streetside Records for more than 20 years. She says she’s come to rely on knowledgeable sales people to help her find music she likes.

“Although we have all the lovely digital advantages online, I like one-on-one contact better than shopping on the computer,” Gillespie says. “Here, if I can’t remember the name of something, all I have to do is to turn around and ask, and they’ll just know.”

Ultimately, that may be the only advantage the local music stores have, Wilson says, and it may be what keeps them in business.

“In order to survive, what we can do is to create a knowledgeable and music-friendly environment,” Wilson said. “The future is a bit dismal, but all we can do now is take care of our customers everyday like we’ve been doing for last couple of decades.”

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