Survival of the Fittest – and Most Informed –
in the Music Business

Every business struggles with how to target consumers most effectively – and the music industry is no exception. Emerging legal digital models, such as Apple’s iTunes; illegal file sharing; diversions such as DVDs, video games, Web surfing and instant messaging – are all vying for the music consumer’s attention.

These significant challenges and changes make for stiff competition for traditional retailers. A new NPD study (see chart below for some results) commissioned by the National Association of Recording Merchandisers (NARM) uncovered the ways traditional music retailers can survive and thrive, even while CDs experience declining sales. And these lessons aren’t just for the music industry – they can be applied across many of the industry sectors NPD monitors.

Know your customer
Who is your customer may be a very fundamental question, but it’s surprising how often companies don’t have a basic understanding of their core consumers. A ‘typical’ music buyer is often portrayed as a college-aged male, when in fact, 42% of CD buyers are over age 36 (the mean age of a CD buyer is 34), and 53% of buyers are women! While younger consumers are both heavier buyers and trendsetters when it comes to music, you can’t afford to ignore older consumers.

The study revealed several shopping types:

Back to basics
How can entertainment retailers thrive in this extreme competition? Is it all about new and exciting retailing models that offer coffee bars, in-store burning kiosks, and listening stations where customers can hear anything in the store? Maybe. But it’s more likely about good, old-fashioned retailing. The NPD-NARM study showed both the heaviest CD buyers and occasional CD purchasers want the same things: a broad selection; in-stock, well-organized merchandise and fast check-out.
It’s a lesson for all retailers: unique and compelling positioning can get you noticed, but basic retailing values will keep your customers satisfied.

Be nimble, be quick
The music retail landscape is changing quickly. Consumers are choosing to shop in many more places, and their loyalty to particular retailers and channels is no longer guaranteed. This pressures the pure-play entertainment retailers, as the big box format lets consumers economize on shopping time. Find ways to help them sort through myriad product, channel and retailer options – and steer them to your brand or store. Consider this approach: determine which shoppers you should prize, and then strategize to build loyalty and increase register rings.

Give them what they want
It doesn’t matter what you sell – it’s how you sell it. The NPD-NARM study reinforces the importance of three key retailing tenets that can make all the difference to your bottom line:

• Know your customers
• Identify what’s important to them when they shop – and give it to them
• Examine the different kinds of shoppers to determine which ones you want to target, and then maximize their value

Surviving and thriving in today’s complex and changing music marketplace is possible – if you focus on what consumers want. And that goes for the other industry sectors NPD monitors, too.