IT’S IN THE BAG


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| November 14, 2012 | 0 Comments

Accessories, Bags And Cases Are  More Critical Than Ever

By Dan Ferrisi

In an industry as large, dynamic and varied as the music products industry is, it sometimes can be difficult to find unanimity about anything…let alone something as capricious as retail store sales trends. After all, there is no obvious reason why trends manifesting in a small, mom-and-pop music store located in Seattle WA would necessarily also be observed in Dallas TX or New York City. However, over and over again this year, I have been hearing retailers talk about the ascendance of accessories, bags and cases as prime moneymakers for their stores. As the economy carries on its struggle to recover, it may continue to be difficult to sell high-dollar items like the latest and greatest electric guitar or a super-cool new mixer. (Of course, this isn’t to say that some companies aren’t moving electrics and mixers extremely well, economic tumultuousness be damned.) But, the market seems never to have been stronger for accessories and other items that perhaps comprise many music stores’ bread-and-butter business.

The Retailer sought the expert opinion of three manufacturers in the accessories, bags and cases market, asking them to characterize the year that’s about to end, elaborate on the trend of accessories’ increasing importance and, finally, look ahead to 2013 at what the new year might hold. We spoke to Dave Dunwoodie, President, Graph Tech Guitar Labs; Crystal Morris, President, Gator Cases; and Jeremy Payne, On-Stage Sales & Marketing Director with The Music People! Inc.

The Music & Sound Retailer: Economically speaking and with regard to the music products industry in particular, 2012 has been a year of slow, difficult recovery. As we near 2013’s arrival, how would you characterize the past year for your company? Describe the company’s relative strength in the market at present.

Crystal Morris: At Gator, we work hard to offer the very best value statement for our customer, which is what I believe has given us strength within the market and allowed for growth in 2012. We are dedicated to having the right solution for all the latest gear in the market and to continuous improvement of the products we have already developed. As funny as this might sound, we truly live and breathe cases and are passionate about them!

Another key strength of Gator is that we span a broad spectrum of price points, from beginner gig bags to lightweight plastics to heavy-duty touring cases. We can truly be a dealer’s one source for cases and bags across all the store departments. We pride ourselves in offering an excellent customer experience and in providing great tools, such as our “Find Your Case” to make it easy for both the retailer and consumer to find the perfect case solution.

Jeremy Payne: We continued our growth in 2012. We have been able to support our dealers with the right products at the right prices to keep sales moving. We know that music customers are passionate about their craft, whether that craft is a hobby or a profession. Although they may not be willing to spend money on big-ticket items, they still seek out smaller items that enhance the gear they already have. Our accessories are developed with that in mind. So, whether it’s our new imount tablet mounting system, or our newest task lighting options, or our long-running guitar stands, customers want to invest in their passion. The market, therefore, remains vibrant at our price points.

We feel strong right now. We are nimble enough to stay on top of trends in the industry. Whether it be tablet computers or the sudden popularity of ukuleles, we feel good about our ability to bring relevant products to market.

We also see growth in our accessories outside the music industry, the u-mount being a prime example. This ability to cross-market products is unique to accessories, and we are excited to explore it further. We see it as an opportunity for MI dealers, as well, since such accessories can drive new kinds of traffic into their stores.

Dave Dunwoodie: Well, we’ve been pretty fortunate. Our business is divided equally between supplying more than 100 OEMs and almost 50 distributors in 35 countries for the upgrade and repair aftermarket. It seems that, when OEM sales go down, the aftermarket goes up and vice versa. We’ve added more OEM customers and distributors around the world with the addition of our new products: TUSQ Picks, Chops PrePlay hand care for musicians and ResoMax electric guitar bridges. Last year was our best year ever, and 2012 is set to beat it by a considerable margin.

The Retailer: When I speak to music products retailers, in particular the smaller indie operations, they often state that accessories, bags and cases have become their bread and butter, as bigger-ticket item sales have waned temporarily. Elaborate on this trend and what it means for your business.

Dunwoodie: Our product line for the retail market has always been geared to smaller-priced items that significantly improve guitar tone and the musician’s playing experience. PrePlay hand care and Picks are our first product entries into the consumables side of this market, and we have a number of other innovative ideas cooking in our R&D pot. For Graph Tech, it’s great to see the growth of this segment, as most of our products are less than $50. Plus, a lot of our products are an excellent lead-in for the repair shop, an important revenue part of many indie stores. Sell a TUSQ saddle and bridge pins, and the store may likely get the installation charge, a set up and new set of strings on top of the TUSQ product sale: all at retail margins. On the OEM side, we are, of course, concerned about declining instrument sales, as we supply most of the world’s OEMs with our branded nuts and saddles. However, we have seen significant growth in ukulele OEM sales. Web purchasing for low-ticket items continues to grow in popularity, as people don’t generally devote a lot of time to shopping around. Retailers can compete by having the product for immediate purchase, no extra shipping charge, installation service and, overall, a superior, personalized purchasing experience.

Morris: In this economy, consumers are just more pragmatic. Unless there has been a major leap in technology, they seem less willing to buy new gear and are more willing to purchase accessories that will ensure longevity for what they already have. In addition, the music store is often a destination, and smaller-ticket purchases on accessories are much easier for the consumer. For Gator, we continue to bring out new products that have updated looks and feature sets, ensuring that the product on the dealer’s floor is always fresh. We are also providing our dealers with all the data they need to know which cases match up with the various products, so that the dealer can offer this as a service to their customers.

Payne: Well, accessories have always been our bread and butter, and our meat and potatoes for that matter. It’s what we’ve done for 33 years. We were founded on accessories, and we’re known as an accessories house.

The importance of accessories has been on the rise for a long time and, even when big-ticket sales rebound, which they will, we know the real high profit returns will still be found in accessories. The thing about accessories is that, no matter what direction the market goes in—big-ticket, small-ticket, high tech, vintage, electronic, acoustic—accessories are always going to be there to play their supporting role.

Compared to big-ticket items, accessories are low-cost, high-profit and they produce a high turn-over. So, they are easy for dealers to carry. And, for consumers, accessories are an affordable way to upgrade their existing high-ticket instrument.

Cases have particularly been a large area of growth for us. We have expanded our selection for 2012 and will continue to do so in 2013. Our success with cases and gig bags has been due in large part to the shift towards consolidated distribution. More and more our customers cannot afford to maintain a significant number of vendors despite their demand for a wide variety of products. So, they need a few key vendors with depth in their line to fill the needs of all accessory product categories and we are one such vendor. We have also noticed a trend in dealers bundling our products with big-ticket items. It is an effective way for savvy dealers to manage pricing while sweetening the deal for consumers.

Our products have taken on a prominent role. Accessories dominate the front of department stores these days; the same is true for music stores. Sharp packaging is an important part of this increased presence, so virtually all our products feature catchy color packaging. This is the norm now, but it wasn’t that long ago that accessories came in brown boxes and stayed stacked up in the back of the store. That evolution’s another part of this trend.

The Retailer: As we stand ready to soon welcome a new year, what do you foresee with respect to the music products industry in general and, in particular, with regard to the accessories, bags and cases segment? What is your relative optimism with regard to the next 12 months?

Payne: We are optimistic for all the reasons we pointed out earlier. As bad as things are, generally speaking, the U.S. accessories market is doing better than most. Also, our sales in Asia and worldwide have actually increased. There is a demand for American-branded products overseas, so we have additional reasons for optimism.

Always moving forward, we have a lot of new products coming out over the next year. We are also reorganizing the way some of our products are presented. For example, when we roll out our newest guitar cases in the coming months, our various series will be organized in a clear good/better/best hierarchy. This will make it easier for dealers to display them and for customers to compare them. It also gives dealers a great way to up-sell, along with real depth in the category.

So, we are tackling 2013 from all fronts: catchy and useful products, strong marketing, robust MAP pricing practices and increased efficiency. We’ve invested in an expanded warehouse in Cheshire CT, which, when combined with our California and Kentucky facilities, means shorter shipping times and lower costs for our dealers. Bringing on additional talent has also been a priority, so we’ve reached out to the industry to bring in the best people available. This all adds up to being well positioned in 2013. If the economy accelerates, then we are ready with the products and flexibility to meet the demand. But even if the recovery remains sluggish, our roots and foundation are stronger than ever, so we still expect growth.

Dunwoodie: We are really optimistic for 2013. We’ll have more new products, and OEM domestic sales are way up. Overseas distributors’ sales are up more than 40 percent. I think China guitar manufacturing is going through some tough times, but I see that picking up in 2014, which will be excellent timing for us. We have a good team, all working hard at what we’re doing and thoroughly enjoying it. So, I have to say we are pretty optimistic about the next few years here at Graph Tech.

Music is an important aspect of everyone’s lives, and there will continue to be a demand for the instruments and gear that make music, along with the accessories that protect them. I am optimistic that, by continuing to be creative in the solutions we offer, identifying the latest trends in product and offering the best value statement, we can continue to grow in this difficult economy.