New NARM Study Gives Music Retailers Hope

A new NPD Group study for NARM (National Assoc. Of Record Merchandisers – aka record stores) surprisingly found "opportunities in the near-term to increase sales among an active group of consumers who still purchase physical music products."

"…there’s more competition than ever…" said NARM President Jim Donio, "but consumers report they still enjoy and value physical music products, which accounted for 94 percent of total music sales in 2005."  The study says that among teens, sales of CDs were actually up five percent in 2005. Even with teen gains, the data indicates that the industry is losing older consumers at an alarming rate. "Older adults have the interest and the disposable income, so the industry can’t afford to take them for granted…To spur greater sales among this audience, it’s important to make them aware of available music that might interest them, so they shop for music more often."

How much more in per customer sales record stores can be expected to squeeze out seems dubious since the study showed that heavy buyers already spend nearly $250 last year on CDs. These core consumers, who represent 41 percent of CD purchases, remain passionate about collecting physical music. Not surprisingly, they’re also learning about music from sources other than traditional radio, including video games, TV shows and movies.

A majority (54 percent) in the survey said they still felt music was an excellent or very good value, which compares favorably to DVDs (58 percent). A growing number of music buyers of all ages now patronize mass merchants and stores where they can also buy DVDs, consumer goods, and other products. This trend represents another challenge for traditional music retailers.

"It’s obvious that there is a core group of current consumers who are still predisposed to buying CDs in retail stores, so record labels and retailers should capitalize on this group now by creating demand…" added Donio. "…they want great selection and merchandise that is well organized and easy to search."  Then why is almost every retailer we know slashing inventory?