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Too Little, Too Late?

30 Jan, 2003 By: Thomas K. Arnold

The woes of the record industry are rearing their ugly heads at retail. Long after the record companies began yammering about how downloading is cutting into their trade, retailers are feeling the brunt of the slowdown in CD sales.

And while a year ago many were struggling to keep afloat, now some of the key music dealers are sinking — fast — as evidenced by Wherehouse Music's Chapter 11 filing and Best Buy's closure of a formidable chunk of its mall-based Sam Goody music store fleet.

DVD, ballyhooed as the savior of music stores at last year's National Association of Recording Merchandisers (NARM) convention, isn't going very far in plugging the leaks.

Smaller record dealers still have problems in getting product, while the big chains are victims of the mass merchants aggressive push into this sexy new business — a push accompanied by their trademark deep-discounting and in-your-face merchandising.

Why should a consumer spend $20 for a DVD at Wherehouse when the same disc is $15 at Wal-Mart — along with Doritos, contact lens solution, shaving cream and diapers (there — I've just shared a portion of my own weekly shopping list)?

Unfortunately, I see no way out for the dilemma the music stores are in. Back when DVD first happened, many made a strong commitment to the category, although CDs were never relegated to the background.

Perhaps they should have been. If the music stores had jumped on DVD and made that their primary focus, then maybe the mass merchants never would have taken over the business because consumers early on would have been trained to get their DVDs at the record store.

But far be it from me to do any Monday (or Friday, as the case may be) morning quarterbacking. There are a lot of “what ifs” out there that could have changed the course of the home entertainment business and it's a fair bet that, had some come to fruition, we'd be even worse off than we are.

Then again, I don't see how things could be any worse for the record stores. Wherehouse is counting on DVD to help it weather its latest bankruptcy filing, but it's a little late, isn't it?

About the best the Wherehouse could hope to do would be to go tit for tat with Wal-Mart and the other mass merchants — but even then, the chain is at a marked disadvantage.

DVDs have become a commodity item, and Wherehouse is simply not in the commodity business.

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