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Musicland Opts for Third-Party Fulfillment

11 Feb, 2004 By: Erik Gruenwedel

Citing the need to better control fulfillment obligations to almost 1,000 Sam Goody, Suncoast and Media Play outlets, Musicland Group has entered into an agreement with Deluxe Media Services, a Pleasant Prairie, Wis.-based warehouse and fulfillment service.

Under terms of the deal, Deluxe will handle of all of Musicland's direct-to-store orders, including compliance issues related to retail shipments, according to Musicland vice chairman Danny Yarbrough.

“There are cost-savings and efficiencies as we go forward,” he said. “It gives us much more control in the distribution of our product as from a shared facility before.”

Musicland currently shares a fulfillment facility with former parent Best Buy in Franklin, Ind. The move, expected to be completed by late June, will involve an un-determined number of layoffs at the Franklin warehouse, according to Yarbrough.

“There are certainly some economies [of scale] from a cost standpoint and more control of the product flow directly to the stores [in addition to] the ability to expand into other product categories that we are looking at,” Yarbrough said.

While he would not comment on what some of those categories might be, Yarbrough said, “There are a lot of initiatives that we are looking at for Musicland, and our brand is going forward.

Last summer, Sun Capital Partners, a Boca Raton, Fla.-based investment firm, acquired controlling interest in Musicland from Best Buy for an undisclosed amount.

In August, it secured a $200 million line of credit for Musicland, and in September, Musicland named former Trans World Entertainment president and COO Michael Madden president.

The company plans to open 50 Suncoast locations in 2004, according to Musicland spokesperson, Laurie Bauer.

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