The Music & Sound Retailer has a number of stories it publishes on an annual basis, but perhaps none of them is as popular, and as eagerly anticipated, as is the annual Independent Retailer Roundtable, now in its sixth year. All too often, it becomes tempting to sit in the proverbial ivory tower and analyze the industry from afar, rather than learning from those who are in the trenches every single day, experiencing and shaping the market firsthand. This article is a shot across the bow against that temptation, inviting some of the most influential—not to mention successful—independent retailers in the MI business to share their insights with us, present some advice and deliver our industry's "state of the union" address.
This year, in the midst of a very busy Summer NAMM show, we gathered an enviable panel: Chris Basile, Owner, South Jersey Music; Lisa Kirkwood, Owner, Discount Music of Jacksonville; Maureen Johnson, Director, Johnson Music; Donovan Bankhead, Vice President, Springfield Music; Jim DeStafney, Owner, Blues Angel Music.
A continuing dialogue should be cultivated between Editor/editorial package and the readers. So, please, as you read this article, share your responses with me (dferrisi@testa.com). All of us, I believe, have important contributions to make.

The Music & Sound Retailer: What can you say about 2011 so far? Do you feel reasons to be optimistic and positive about the current state of business? Or, has the shaky economy taken its toll so far this year?
Jim DeStafney: With regard to the state of the industry, speaking of my town—Pensacola FL—for us, this year, business is up. It's up double digits. At the end of the first six months, we were up in excess of 25 percent from last year. And last year happened to be a very good year for us. But what I'm finding is that we are having to work harder, to add on additional services and goods that we provide to our customers. And although my gross sales are up, my profits are probably fairly close to what they were last year. They might be up very slightly. So, we're working a lot harder. We're doing more repairs. We're trying to do more lessons and more rentals. We're trying to have a greater Internet presence. So, we're working really, really hard, and the net result is that we're seeing improvement.
Chris Basile: For us, the first half of the year has been up and down. There's no consistency to our market…on the retail end of it. There are days that are up for us, but aren't meeting our goals, and we have some days that aren't meeting our minimums. And then we have days that we are doing well. On average, we're holding our own. Bills are being paid. And, from a service end of it, our repairs and services are up for this year. We are amazed at that, based upon the lack of retail sales; we're thinking the economy is still affecting retail in our area quite a bit. Our lessons were doing decently at the beginning of the year, and then April and May came along and we dropped off about 30 percent. We lost 43 students out of our 155 or 160 students for the summer months. We usually gain them back during the summer—with school out, we pick up new students. But we haven't seen that yet this year. So, it's been an up and down year; there's been no consistency. There's no way to tell how to order for the fourth quarter. So, we take it one week at a time. We keep stocking inventory levels up…keep our inventory in check…and no real major new purchases.

The Retailer: What's the state of affairs as far as floor traffic? Since the NAMM show in January, has floor traffic been strong, moderate or weak?
Donovan Bankhead: We've noticed 2011 floor traffic being down significantly. That might be partially our market, because of the sheer number of outlets that someone can go to. We're in a town of 165,000 people, and there are 12 different places they can go to for musical instruments or lessons. So, we're a little oversaturated, and that's part of it. But, for the traffic we do see, a lot of it is service-related. So, it's lessons and repairs. And I think, for me, one of my take-homes from this show is that we have to do a better job of getting out of the store and into the community to help get those people to want to come to Springfield Music versus one of the other 11 places they could go to for gear. But, so far for 2011, I'd say traffic is measurably down. And we use a door counter, so, when I say it's down, it's not a guess. It's an empirical fact.

The Retailer: In terms of products being sold in your stores, are there particular categories of gear—or perhaps emerging technologies—that are selling better or worse than others are?
Maureen Johnson: Most of our sales at this point have been small-priced items: guitar strings, picks, reeds and band accessories, and drum sticks. Band instruments and intermediate-level to advanced guitar sales have been off. Our repair business has just about doubled. Our customers are getting their instruments from an aunt or uncle or online or at yard sales. Many of these need repairs; that has been a big help for us.
DeStafney: For us this year, we've definitely seen a shift away from new electric guitars and amplifiers. It's been dramatic. On the other side of the coin, we've seen an increase, although a slight one, in new acoustic guitar traffic. However, the products that have done best for us this year have been our used products, right across the board. And we sell anything and everything we can get our hands on used. And, so, my best margins in my store tend to be on used products. Used electric guitars and used amplifiers are doing very well. And, for some reason, the new products—even the lower-priced new products—just don't seem to be selling as well as they have in years past. We're doing very well with small items. For instance, we're doing very well with effects pedals.
Bankhead: Used gear has always sold well. I don't know that it has increased, but, for us, it's always sold well. What we're finding, though, in order to continue selling greater amounts of new gear, or to maintain sales of new gear, is we have to be more generous on trade-ins than we might have been in the past. So maybe, in the past, if we would have offered a certain percentage of what we think a trade would sell for, we now have to get much, much higher. And, in certain cases, it can almost be a 90 percent value just to get a deal done and get the product out. So, I think that's probably the biggest trend: You can get people to buy new, but you have to give them absolute top dollar for the used stuff to make it worth their while.
Basile: I'm reiterating what some of the other dealers have said here. Our leading category in the store is acoustic guitars, and it has been that way for all of this year. Our new electric guitar market is pretty much next to nil, to where some weeks I can count sales on single digits on electric guitars. And, like I said, acoustic guitars are way up. We're stocking more and more acoustics. We're even upping the number of brands, just to draw more people into that market and just keep the retail side of that going. Our accessories are right behind it. So, anything accessory-wise…when it comes to $100 and under accessories, we're doing very, very well. Whatever foot traffic we have coming in, we're just pushing them in those directions. We want to keep selling electric guitars and electric amplifiers, but, if somebody looks like he's heading for acoustic, we're not going to slant him away from it. We're just going to continue to push, push, push that. And, when it eventually turns around, we'll push in the other direction.
Lisa Kirkwood: We've also found that acoustic sales are doing much better for us and, to add to that trend, we're selling more to grade-school students as well as men who are close to retirement age. Those are the people who are buying our acoustics. And they're also wrapping those sales up with lessons. So, we're not just selling the acoustics, but also able to sell the lesson packages, as well. Like Jim, we're also doing well with the used and consigned instruments. In this economy, people like to save money. A nice used piece, at a fair price, is a much easier sale.

The Retailer: Recreational Music Making continues to be an area of substantial interest. Have you tried to incorporate RMM into your stores?
Basile: Well, the advocacy is not working in my area. When I first read the articles on Recreational Music Making and got on board with it when it started surfacing a few years ago—when a lot of ideas started coming out—I thought it was great. I said, "This is a way for me to develop some new business." You know, get some of that senior clientele or the young, young kids who might not be ready to do the private lessons. This would get them in so they could try to do it as more of a group-type lesson. And, with the senior class, try to get them in and get them to where they're playing for enjoyment, and for no other reason. So, we ran a bunch of expensive advertising to try to put together group classes; I had zero reply to our advertising. And we've had customers come in and we'll say, "Hey, if you're interested in learning piano or guitar, do you think you'd want to do it in a group-type setting with other people around you, or would you rather do it in a private setting?" Probably every answer we received from people who came in whom we asked that question to was continuing to learn in a private setting. So, we still teach, and we teach the recreational music type of course. However, we teach it to them in a private setting. Everything I read and all the articles I tried to follow up on indicated that a group setting was what everybody was doing, but that doesn't seem to work in our area. So, I would love to have groups of recreational music makers as part of our lesson program, and have a Saturday or Sunday morning where a bunch of piano or guitar players get together and just do it for the fun. I just can't seem to get it off the ground. But I don't know whether it's my marketing or whether it just, in general, does not interest people.
Bankhead: My experience is kind of similar to yours. I think there are some dealers that are doing something with it, and maybe doing it well, but I think, first, you have to have a passion or calling for it. But the thing that's held me back is I don't quite know how to monetize it. My understanding is it's trying to get young kids who are below our average music age and seniors who are above our average customer age, and get them introduced to music and get them involved with it. How do we make money with it? You know, I don't want to do it just for traffic or to feel good or for media. I do this stuff for money. It's nice if I can feel good while I'm doing it, as well. And it's nice if I can get some traffic. And it's nice if I can get some media. But I'm in this business to make money. So, I don't understand yet how we monetize recreational music making. And, if someone's done it, I think there should be sessions on it in the Idea Center, saying, "Here's how to make money with recreational music. Here's a good plan to do it."
Johnson: As far as recreational music, I want to ditto what the previous respondents have said. Today, children just seem to be so overbooked with everything happening in their lives that it becomes just another thing in their schedule that they cannot fit in. At this point, we are lucky to be able to have a student squeeze in a weekly lesson, let alone a daily one. And, to add another activity…it's just very, very difficult to do that. So, I think it's a wonderful idea. But I think they have to start with music lessons before they get out there and do recreational music. A lot of our students go out on their own—and we encourage them—and hook up with little groups and play on their own recreationally.

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