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Musicland Embraces Trading

20 Jan, 2005 By: Holly J. Wagner

Suncoast is among Musicland's stores trading DVDs.

Another entertainment chain has plunged into the used-disc trade, announcing that more than 300 stores nationwide will offer cash or store credit for used DVDs.

Musicland Stores — Sam Goody, Suncoast, MediaPlay and On Cue — began testing used-disc trade last April in stores and via a Web site called Hitmenow.com. The site promotes “deeply discounted entertainment products and electronics.”

“It's [in] slightly over 300 stores now, and we will continue to expand. We're extremely pleased in what we see and will continue to evaluate,” said Musicland president Mike Madden. “We look at it as a traffic driver and as an enhancement for our consumer and as a point of difference.”

He acknowledged the growth in used trade at video specialists, but said offering CDs gives Musicland stores an edge: “I'll give you the choice for music, movies and games.”

Unlike Blockbuster, Trans World stores, game chains and others that trade in used discs, 1,300-store Music-land lets consumers trade in scratched discs, which will be repaired and sold with a lifetime guarantee.

Stores primarily offer credit for trades, but the Musicland.com store locator results indicate some also pay cash. Used discs — games, DVDs and CDs — are merchandised in a separate section from new product.

“We've asked our customers and kept it in a separate section at this point,” Madden said. “Rather than us make the decision, we will let the customer decide.”

An employee at one Southern California store did a sample scan that revealed the chain would pay $2.99 in cash or $3.50 in store credit for Spider-Man 2, but the value of any title shifts based on inventory.

“In the used business, inventory is the key,” Madden said. “We are in real-time valuation, online and in stores all tied into the same database.”

For example, “you might bring a disc into the store in the morning, and it would be worth $5,” he said. “But you could come back at 3 p.m. and if during the course of the day our inventory went up, by the end of the day you might only get $3 for it.”

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