March 31, 2008

clear the dang pipeline!

We ended March down, thanks to bad weather, early Easter, and especially tough supply issues. Right now, I’m sitting on about $7K in sales—with deposits in place—on various items our suppliers don’t have: flutes, drumsets, cellos, heck, even metronomes and other small goods. That would have made a difference, to be sure. Yes, the merchandise will eventually show up, and most of the customers will come and get their stuff. But the cashflow crunch it causes isn’t any fun. And suppliers wonder why checks are delayed! Dudes. The problem we have isn’t a slow economy, lack of interest, or even price issues thanks to the Euro and fuel increases. We just need some frickin’ Drano to clear the dang pipeline! It cost us a lot at Christmas, and this first quarter was certainly hampered by it as well. It’s galling to know that we won the sale, got the customer, and did the job, only to find out it’s jeopardized by issues behind us in the process. Sure we have demand, but the demand isn’t the sort of “must have/will do anything for” frenzy that accompanies Hannah Montana tickets. It’s much more fragile, and may even be momentary, unless we get the goods to complete the sale and get these people playing.

March 16, 2008

In-Stores In Store

We’re in the middle of a three-event week: We held a piano teacher workshop for Kjos Music on the 12th, yesterday we hosted a NAMM-sponsored visit from Camp Jam with Billy Joel’s drummer Liberty DeVitto, and on the 19th we’re bringing in a violinist for school visits, concerts, and workshops and master classes all day. It’s exhausting in some ways, because each event has its own batch of publicity, setup, web coverage, and execution. One thing it has convinced me of, though, is that we’re the best people to run our own promotions.

Publisher workshops are often a by-the-numbers affair: the publishers do a lot of these and the format is very similar across the industry. There’s always a materials buy in, invitations to our combined mailing lists, and a clinic with refreshments to run. However, based on the stories we hear from our clinicians (and we do about four of these each year), few stores “do it up” in a more than basic way. I hear of stores that don’t even merchandise the clinician’s materials, only make a half-hearted attempt at publicizing the workshop, and offer refreshments reminiscent of snack time at a daycare. We try to introduce a “wow” factor for everyone. The teachers are tremendously appreciative, the clinicians impressed, so the goodwill flows in all directions. As a result, we’ve been offered some of the biggest clinicians in publishing circles—which increases our draw, which builds the events more. Circle of life, and all that.

In contrast, a “canned” event like the Camp Jam/NAMM visit doesn’t work as well for us. Leaving the details up to the visitors, we usually see a more perfunctory approach: “Hello…uh, CLEVELAND, it’s nice to be at…uh, SKYLIME, uh SKYLINE MUSIC…” Half the time, there are so many layers it’s tough to get materials in a timely fashion, particularly artwork and other collateral we’d use for the web and ads. We spent a lot of time mining the websites for pictures to use because it was so hard to get things fast. In the end, we simply opened our doors and hoped for the best. It was decent, but for a homegrown event, we’d have done twice as much. We’ll see what happens in a few days: our String Fling event is 100% our input. The clinician is a personal friend; all the publicity and content are our own. There are so many elements (two school coaching sessions, a school concert, a fiddle workshop, and a master class) and so many locations, it’s going to be a military operation by comparison.

February 25, 2008

Smart Shoppers

The month has been a whirlwind for us, primarily because we’re doing and planning so much outreach. One of our goals this year is to be so present in our community that people interested in music can’t help but think of us. The good news/bad news of this is that there’s less competition, making it easier for us to rise above the noise floor. The bad news? The market hasn’t been exactly hopping, so the payoff isn’t instantaneous. If anything this year, I hope that we’ll see growing activity; I don’t expect any promotion we do to translate into instant sales. It would be nice, wouldn’t it? But what we’re seeing is interest—but carefully considered interest, a weighing of the pros and cons before a buying decision is made.

The interesting thing about this is that the customers—so far—aren’t price sensitive as much as they were even a couple of years ago. I sense (at least among our customers) that they’re assessing the whole sale: product, price, store impression, interest on the part of the player, whether it’s a personal purchase or for a family member. You can see by their questions that they’re carefully considering the purchase. “Do I need this? Is it the right product? Can I justify this much money? Is this store going to help me after I pay?

Now, to my mind, this is the ideal customer. I may not win every sale, but those I do capture will provide me with a long-term customer rather than a commodity buyer who will shove the instrument in the closet in six months. I’m willing to do the work for that.

January 15, 2008

Pre-NAMM

I'm down to the last weekend before NAMM, and for once (and thanks in large measure to my trusty sidekick, Jill) I'm ready to storm the floor. We're coming to the show off a year with a modest sales increase, and more importantly, with our house in better order than at any time in the last three years.

We'll also be armed with a folder of collateral material for our major and new suppliers. One thing we do a lot of is outreach-it's served us better than traditional advertising, and as of mid-January, we already have over 40 events on the calendar. From recitals to instrument petting zoos to concerts, from coffeehouse performances and signature events like our Mardi Gras to charitable functions like our Play On Drive for The Mr. Holland's Opus Foundation, we're packed with activities, and we're just getting started.

We're looking to leverage the profile we've created and show suppliers what we can do to raise the awareness of their products if they choose to join in. I think that they see enough aggression, long faces, and inertia within the industry that they're ready to sit up and take notice when someone is bucking that trend.

At least, that's my hope. It's also possible we'll be met with aggression, long faces and inertia from the supply side as well. No harm in trying, though.

Jill, a key employee just a couple of years out of college, will be working the show with me for the first time. She's excited as anyone is for their first "hands on" show experience, and her energy combined with mine should give us plenty of fuel. I'll be blogging daily from the show, and I hope to have positive-or at least interesting-items to report.

If you're heading out to the show, I wish you a successful run, whether you're on the retail or supply end of the spectrum.

December 15, 2007

All the Right Moves

With a week left to go-give or take a day-in the Christmas season, it feels like I called the right moves for our store. I've been saying that this is an accessory Christmas, and for us it is. Oh, we're selling some bigger-ticket items, and instruments are going out the door. But we're running an increase over last year's numbers, and I can attribute every bit of that to strong accessory sales, including print.

For the first time in perhaps a decade, we're stocked with the things people want to buy, and we hit close (so far) to the quantities they're coming in for. We're seeing new shoppers, a lot of them, and our advertising this year has been almost nil. I've been playing it close to the vest all year, but for the first time in 20 years, we didn't publish our Gift Guide. Printing and mailing costs (to say nothing of the cost of my time spent producing it) would have been high enough that the sales generated would have been about the same as the expense of production, based on the results we've seen over the years. I just couldn't justify killing myself to produce a great publication for my ego alone. If the store doesn't benefit, bag it.

That's a filter that everything passes through right now. Of course, "benefit" can be goodwill rather than financial in my book. I know we don't make money on our Front Porch Concerts, for example. But putting live music in front of the community grows us a market, and that's a benefit for the store because A) a lot of people like the events; and B) They identify us as the source of their enjoyment.

At the same time, we've dropped a couple of promotions because they were poorly attended or didn't capture the enthusiasm of our customers. No sense doing that much work for our own amusement: if I want to do that, I'll just throw a party for the staff.

AS we head into 2008, we're keeping that filter in place. It seems to be working: we didn't buy heavy on stuff we didn't need (but suppliers were pushing). As a result, we're selling well and not stuck with a lot of excess inventory as we end the year, which means we also don't owe people a lot of money for stuff we didn't sell. Wow. Seems simple when you really think about it.

November 15, 2007

Immersion Research

It's easy to dive into the industry gossip mill and speculate about the rumors, gripes, and events that are part of day-to-day life in MI. (Actually, it's not unlike high school, but trust me, Disney would never do a musical about us.although "The NAMM Show on Ice" does sound intriguing). The bulletins about who's sold, who's dead in the water, who is but won't admit it, and the endless (and not necessarily unjustified) carping about who has done us wrong always hangs in the air. At the shows and adjacent watering holes, in countless e-mails and phone calls, it colors our life in this industry. Unfortunately, I think we often forget the real reasons we're here-or at least, the reasons we should be here.

Yeah, we're here to make a profit, or so we'd like to think. But if making a buck is the prime directive, y'all know there are plenty of easier ways to produce income. We've often talked about the passion most of what we now call "independent dealers" have for sharing their love of music and music making with others. For some dealers, that passion is the only thing keeping the doors open. Now, though, I think that passion for sharing is poised to be the sharpest tool in our toolbox.

I won't exclude those of you who work for stockholders and venture capitalists from this discussion. While for you it is just about making a profit-at least in your boss' eyes, the way to do it is changing, and you'd better rethink some of your strategy.

That was my take-away point from an interview I read in the September issue of Fortune. Geoff Colvin got some face-time with Jim Stengel, the global marketing officer of the $76 billion (as in, more than seven times the size of MI) consumer goods behemoth Procter & Gamble. Yeah, the Tide, Crest, and Pampers guys. In a wide-ranging discussion about consumer power, brand identity, and the decline of mass media, Stengel made point after point that can be applied directly to our businesses, our products, and our future.

November 26, 2007

A Better Black Friday

Thanksgiving isn’t on our list of big retail events the way it is for the national mass merchants. My wife still works at Sears, and I get a feel for the traffic patterns each year through her. This season’s “Black Friday” rewarded them with a respectable increase. Numbing to contemplate, they did more business in her store on that one day than I will do this year!

I hope that trend is replicated around the marketplace, if for no other reason than I’m sick of all the sensational gloom in the media. The Foxification of news is doing little to help anyone and creating a nation of (even more) misinformed, timid consumers.

But pontificating aside, I will say this Thanksgiving weekend, despite our separation from the surging hordes that line up outside of stores at 4am each year, was better than last year. Interestingly, it was because of bread-and-butter purchases like strings, music books, reeds, and other consumables. Frankly, though, who cares?  We make more money on those items, and to me it says a lot about the interest level of the music maker in our market. It has been a tough year for us in terms of moving big ticket product, I’ll readily admit, but the turns on accessories have made up for the dollars—and since these sales are more profitable, I know in my heart that we’re better off. But you don’t get the same rush from $1000 in incremental accessory sales that you do when $1000 guitars are going out, even when the margin is smaller and you’ve sat on the guitar for 9 months rather than the 30-60 days it takes to sell the same dollars in accessories. That, however, is a mental adjustment: I have to look past the sexiness of big ticket and embrace the stability of small goods.

With Christmas ahead, that means I’m pulling out all the stops on stocking stuffers. I saw the start of this last year as people bought their guitar at GC or one of the marts—but returned to our store for the interesting strap, quality cable, lesson book, or other trinket. In many cases, we made more money selling them  the extras than we would had we sold the guitar to them. I don’t have to sell the guitars all the time if I can make money on the extras. I’ll take it, and gladly.

November 5, 2007

Holiday Observances

I got a chance to shop the mall and walk through a bunch of national chain stores with my wife over the weekend. After 30 years in retailing, it’s become a “busman’s holiday” for me to check out the state of retail each Christmas season. I noticed some things that surprised and (sometimes) amused me in my walkthrough:

1) I didn’t see a single music product out in stores like Bed, Bath & Beyond, JoAnn, and other “fringe”retailers that embraced them as a hot ticket last year. I reported piles of product sitting on endcaps Christmas Eve. Perhaps they’ve learned their lesson and fewer chains will carry our wares.

2) For the first week of November, Christmas (or Holiday, if you will) trim, signage, and ads are remarkably low key. I don’t think I’ve ever seen a less festive week after Halloween. Not that that’s all bad—but Thanksgiving comes early this year. It’s a quick run-up, and when I was at Sears, that would have been a cause for alarm.

3) The stores are stretching inventory. Macy’s was using multiple facings of single items to fill whole walls and make them look “abundant”. Others didn’t even try—I saw many feet of empty tandem, minimally merchandised shelves, and none of the frenzied stocking that usually hits during these weeks.

Why is that? I can think of several possibilities: There could be financial troubles, making it necessary to cut to the bone. But you’d think they’d throw the dice at Christmas, if any time. They could be short-staffed (I know I’ve been!) and it’s taking longer to get departments turned over for the season. They could be suffering through the supply chain bottleneck that is the customs dilemma right now. One supplier has told me that anything with paint on it has to be re-certified for lead, and what a nightmare that will be. I can imagine them frantically trying to turn the wheels so that merchandise hits the store in time for people to buy it.

It may even be that online sales have begun to kill the chains. I don’t think they’ll harm boutiques any more than they have, but without a unique product—a digital camera is a digital camera to many—it’s easy to shop at, say, Best Buy’s website and use the store only as a return point or last minute fill.
Too early to tell what the season will hold—but frankly, I think someone’s in trouble.

October 31, 2007

Give Me a Break!

Here’s my grouse—echoed by some of you, I suspect—about customer service in our industry at the retail level.

We try to be as responsive to our customers as can be: I’m answering e-mails at 2 a.m. sometimes, because it’s then or risk losing it in the shuffle of daily activity. We’re open Monday through Friday till 9 p.m. to serve the needs and offer lessons. We explain stuff, and have a good bit of expertise—or we have a place to point them to about stuff that’s out of our purview. We jump for repairs, lavish time on the kids, and try to anticipate the requests of our customers.

We try to give people options, and we’ll gladly tell them they don’t need major repairs on a violin or wind instrument or guitar if we don’t think it’s warranted. It’s the way I’ve always run my business, and that isn’t going to change.

That said, it really ticks me off when I hear about stores—be they chains, band directors’ favorite golfing buddies, or just some lowball operator—that take the money and run and offer service only when arm-twisted into it. They crow about their “service orientation”, “price leadership”, or “incredible selection”—or all three—despite the fact that it’s all lip service, and smirk at me for working hard instead of working the system.

Guys, wipe that smile off. I’ve just spent the last quarter talking to your former customers, who are fed up with your smarmy used-car-salesman tactics and your lack of empathy for their problems. In the last 20 years, I’ve never seen such a groundswell of complaints about competitors’ sales pressure, store personality (or lack thereof) and lack of competence in the over-the-counter personnel.

Nowhere in these conversations is price an issue. Indeed, people are willingly paying higher prices just to get away from your store, despite the band director’s endorsement or tons of national advertising or “we’ll beat any price” posturing. I don’t know if you’re even aware of it, because I think there’s a lot of business out there…but you’re leaving a chunk of money on the table.

Despite offering a better alternative to your former customers, I’m still cheesed off at you. The people who find me are just the tip of the iceberg: how many people just leave and don’t come back? You’re fouling the nest, and you’re making it harder for those of us who do the work and really take care of the customers. When things go south for you, you’ll find a way to cash out and sit back and complain about “how much the industry changed” and all that crap.
Give me a break.

October 18, 2007

Where there's a will, is there a way?

I'm mighty steamed right now. Again, a simple sale--one that we won because we were personable, helpful and knowledgeable--has been deep-sixed by multiple supplier incompetence.

All we wanted was a particular triple guitar stand for a customer who was giving it to her husband for his birthday. the other guys in the market blew her off, and she didn't feel confident ordering online. So we won.

Except...the item was backordered at the first two suppliers we tried. The third had it in stock, but we were down to the wire by the time it came in. We opened the shipping box and right on the end panel of the stand box was a piece of masking tape that said, "DAMAGED PART". They were right--it was useless.

Now, I've lost the sale, damaged goodwill with this customer, and honestly, I think the industry has taken a hit, because EVERY store she tried failed her in some way. I'm pissed because we did the job and still got nailed.

Is it any wonder our industry has problems? When such a large chunk of it is dysfunctional, I'm actually hoping to see a lot of stores and suppliers fold in the next year. Perhaps then there will be fewer people to foul the nest.

July 28, 2007

Is it the Chicken or the Egg?

I'm done with everything i can do at the show--and it's only Saturday at 3pm. Actually, I've been killing time since noon...I found a piano on the ballrom level at the Hilton and got a chance to play for an hour, took some pictures of architecture...dudes, I'll be reading the new Harry Potter later, the way it's going.

But that doesn't mean I didn't appreciate the show. Far from it--I got as much or more accomplished as I do at Anaheim, frankly. Yet I didn't have to wade through 4500 imported schoolkids, 1600 Goth makeovers, and the salesfolk I talked to were genuinely happy to see me. I've got no complaints--and the takeaway for me is relationships, info and in some cases, deals. This is on top of face time with friends in the industry, a great concert from Shubb & Saga with John Jorgenson on Friday night, and actual time to talk to my wife before losing consciousness for the night.
I'm OK with it.

That said, if I could get a few more suppliers in these booths, I'd have gotten more done--and I'd have plenty of time left to do it.

OK Suppliers, I know this is a chicken-and-egg argument, but I really think there are good dealers out there for you, but they'll never be confident enough to do business unless they meet you--and a summer show gives them that comfort zone where Anahein often doesn't--see paragraph 2. Go to the show, and start thinking about this as SEEDing the dealer base rather than just harvesting. Yo, if WE have to man up and change, so might you.

July 27, 2007

The Passionate Were in Austin

As I entered the show, the smallness was almost startling--but I was coming off the NAMM state of the Industry breakfast, and frankly, I'm a Joe Lamond fan. I don't think there's anyone who more keenly feels the pain of the industry and takes seriously his responsiibility to try to provide solutions. So I was ready to take the show on an "it is what it is" basis.

The question I'm asking everyone, though, is "Why are you here?" Everyone knew this show would be small. No one came here for a couple of free beers at the pre-show party. These are the committed, passionate dealers, in my opinion. I'll be asking if they were able to complete their goals--more on that in my column in the magazine--but I've already notched a "yes" vote for me.

I've acccomplished plenty in the first day. I'll report more tomorrow, but for me so far, I'm thumbs up. Not necessarily on Austin, but on summer NAMM, the relationship show.

July 16, 2007

So, it’s official: MAP pricing seems to be legal
or so says the Supreme Court.
OK, suppliers, NOW WHAT?

Most dealers would like to see more margin in their MAP, and while that’s fine with me, what I’d REALLY like to see is enforcement at all levels. Many catalogs, chain ads, and websites play fast and loose with the system, and I’d like to see some loopholes closed.

When many companies discontinue an item (making it exempt from MAP in the process) I often find out because I observe a blowout deal on it in a catalog or chain long before the supplier tells me. This “headstart” technique leaves small dealers holding the bag as they dutifully adhere to MAP guidelines while the guys with inside info make the sales and rid themselves of  dead inventory.

While we’re on the topic, I hear suppliers complain how hard it is to police MAP. It’s certainly a big job, but just as in the days of transshipping (sounds quaint today, doesn’t it?) there is a legion of dealers ready to help forward documentation. It’s as easy as emailing a scan or a link to a website, and we’d be happy to forward the evidence as it’s discovered. No, we’ll never detect everyone, and there’s always a new perp somewhere, but when the evidence comes to light, frickin’ DO something about it. Of course, it would help if you didn’t sell product to every yahoo (no pun intended) with a checkbook and a URL, too.

One thing the brands don’t have to worry about is small dealers undercutting MAP. With margins as thin as they are, who among us wants to fall on the sword? Y’all know where the problem is. Now that it’s “legal”, solve it.

Dan Vedda
Owner, Skyline Music
Contact Dan Vedda at veddatorial@aol.com