Music Stores

Music Stores

Brief Excerpt from Industry Overview Chapter:

Companies in this industry operate physical retail locations that sell new prerecorded CDs, DVDs, and vinyl records. Major companies include Trans World Entertainment Corporation (operator of FYE and other branded stores), Hastings Entertainment, and CD Warehouse.

The US music store industry includes about 3,000 stores with combined annual revenue of about $2 billion. Low growth is forecast over the next two years. Key challenges for the industry include competition from digital downloads and mass merchandisers.

COMPETITIVE LANDSCAPE

Consumer spending and entertainment trends drive demand. The profitability of individual companies depends on effective merchandising and competitive pricing. Large companies have advantages in purchasing, distribution, finance, and marketing. Small companies can compete effectively by stocking specialty products, providing superior customer service, or serving a local market. The industry is concentrated: the top 50 companies account for more than 70 percent of industry revenue.

Traditional competition for music stores includes consumer electronics stores, mass merchandisers, warehouse clubs, Internet retailers, Internet Radio, and mail order clubs. Internet sites facilitating or selling direct downloads of music are changing the dynamics of the industry by replacing CD sales.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major sources of revenue include CDs and records (40 percent of revenue) and DVDs and Blu-ray discs (35 percent). The vast majority of music products are CDs. Other products and services include books, toys, video games, and DVD rentals. Some stores sell used CDs or DVDs. Companies may offer digital music downloads through websites or...