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Record store business model?

meggy

meggy

AK Subscriber
Subscriber
Anyone have an idea of what a typical (by today's standards) new & used record store business model might be? Or where to find some examples? Not so much the marketing concepts but more the basic financial information / projected P&L's, costs of goods sold, markup's, etc.
 
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Step 1- Disregard everything people tell you.
Step 2- Open said venture.
Step 3- Close said venture.
Step 4- Reconcile yourself to Hamburger Helper (sans hamburger) and Kool-Ade (no sugar) for the rest of your life.
 
Pretty much what tentoze said.

I'm guessing most of the shops around here, mainly pay their bills from the sales of CDs, DVDs, posters, t-shirts, other audio related stuff. The sales of new and used records probably don't amount to a whole lot.
 
I have a friend who has run a record store for the last 25 years. All I here him do is complain about how bad it is today. He sells anything related that can bring in more money, he's expanded to ebay and online websites. Basically its a hard business model to be a success these days.
 
Lnerell said:
I have a friend who has run a record store for the last 25 years. All I here him do is complain about how bad it is today. He sells anything related that can bring in more money, he's expanded to ebay and online websites. Basically its a hard business model to be a success these days.
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Ditto. The shop in my town that's not a chain is run by one guy- no extra help. He's the first one in line at any yard sale that advertises albums in the newspaper. Most of his income is through ebay sales. Everytime I come in he's on the web conducting his main business. He's just scraping by, obviously.
 
I had a friend who opened a CD store about 10 years ago or so, and eventually closed it. He was well-educated, well-funded, and had pretty good business experience in the corporate world. He said that with all of the free music downloads and amazon his business just went down.

I think the whole record industry is in bad shape, going from local stores all the way to the big record labels. I heard an interesting interview with Gene Simmons (of Kiss) who said that the current state of the record industry makes it impossible to have 'supergroups' anymore, like there were in the 70's. He said that many people don't pay for music these days, and this lack of funding has changed the industry. I have noticed that bands come and go now, and there really isn't a Boston/Queen/Led Zepplin type group anymore.

I think this all ties together. Think about how many local record stores there used to be, and how many of them closed (including bigger players like Tower Records). These guys closed for a reason - you don't want to reinvent the wheel.
 
The two record stores within a mile or so of me make thier living off used media and internet sales as well as being specialty stores.
Mod Lang even moved from a block from UC Berkeley campus to be next door to the El Cerrito post office. Down Home Music has a label and so does Mod Lang does too on a smaller scale.
http://www.downhomemusic.com/
http://www.modlang.com/



Carl
 
I don't think it's just the record industry that is struggling.. As the internet has grown, many brick and morters have seen their business slide on that side. Many have seen a lot of sales change over to the internet as opposed to walk ins in the stores.

Many people order off the net any more. I know I do. It's easier to sit at home in a robe with coffee in hand, and shop at your leasure, and not have to pay sales tax on most items. I know I've gotten to where I would rather shop from home, and maybe even spind a little more for shipping, than to have to get out and deal with traffic, and rude store employees...

Seems I see a lot of record shops on the net now, without any brick and morter stores.. I'm wondering if the model of internet based only is working. Yes, you are paying for hosting and such if need be, but I would like to imagine that is a lot cheaper than rent and utilities..
 
I can only imaging how many Herb Alpert and Barbara Streisand records those guys had to turn down to build their initial stock....
 
I hear everyone and that's what I'm wondering. How many units with how much gross profit each can you possibly sell to cover the overhead plus make some net?

So in relation with all the hype about the resurgence of vinyl, what's the general concensus about what people are doing what? Buying $25-$45 new pressings on line or ressurecting old analog equipment and playing their existing albums, or playing albums on USB equipment? Yikes. I'd like to understand what that demographic really is.
 
meggy said:
I hear everyone and that's what I'm wondering. How many units with how much gross profit each can you possibly sell to cover the overhead plus make some net?

So in relation with all the hype about the resurgence of vinyl, what's the general concensus about what people are doing what? Buying $25-$45 new pressings on line or ressurecting old analog equipment and playing their existing albums, or playing albums on USB equipment? Yikes. I'd like to understand what that demographic really is.
Click to expand...

And I'd love to cite some hard statistics, but alas, it seems like too much trouble to go digging. Bottom line is, it has to be a finicky and minuscule niche market- like trying to open a Krispy Kreme with no source for sugar.
 
In my town there is a store called Kiss the Sky. They sell used records and cds. There is no $1.00 bin. If you want a piece of vinyl they price it for you right at the counter out of a book (probably Goldmine). They also sell lava lamps, album frames, posters, t-shirts and the like. All at real prices. For instance album frames you can get at Michaels for $4.99 retail here for $15-17. Now granted, they have been in business for at least as long as I've lived here (20 years), but they are surviving. Recently they have started to sell TTs as well. Stanton IIRC. I think they may have built up their business with better pricing but as the years have gone by they have become very rigid in how they price.
Now, I've kicked this very same idea around a lot and it seems to me you can not make it if you don't A. own the property you will have the store in and B. have some other source on income coming in at the same time. I would imagine the same would hold true for a store that sold vintage gear or a combination of the two as well. I think it would/might work if you had for instance a coffee shop where music/gear was played and offered for sale. Or something of that matter.
I know I've danced around your OP, but I'm not a business guy just a good dancer.
 
Did any of you catch the story on one of the national news programs about vinyl making a comeback, especially with the younger crowd?
 
I take it what you really want to know is if someone has open books and will reveal sources? Not likely unless you were to work for such a business, a school of hard knocks, me thinks.


Carl
 
Meggy, just start digging for information. You should be able to write something up on your own IMO.



Evan
 
it would be interesting, meggy, to see how our buddies down at the awesome Revolver Records store are doing. every time i go in there, it seems like they've really got it going on. but who knows?
 
I am friends with Mike Smyth, owner of Phonoluxe Records here in Nashville. While the trends are down, Phonoluxe continues with very strong sales...all medias included. I don't pretend to know his numbers, but if you were seriously contemplating opening a store I'd ask him to spend some time with you and fly to Nashville. His operation is a big murky, since things are not computerized. I cannot cajole him into trying internet sales (although you can email the store and get just about anything). Mike will tell you that one key is to have everything a customer might want. It involves a huge amount of inventory building. My son works part time for him buffing CDs. To me a record store is a dream job. The staff at Phonoluxe is well paid and very knowledgeable. They love what they do. I belive attitude is another key element in operating a successful store, and that is something you ave to experience in person.
 
Back Alley Music in Charlottetown is slowly getting more new vinyl. When it was Back Alley Discs in the 1990s you had to line up to get to the bins.D\L killed that. BAM does ok but not as good as Chas. did when it was BAD.

Nobody trades anymore,Pat at BAM says I am about the only customer that recycles.

To open a store right now you would need a hook,maybe deal in only one genre of music.offer 2 for 1.At BAM they have free shows in the the "studio" with local artists.
 
I don`t pretend to know how much initial capital outlay you would need. However I`m sure most up and running stores are not willing to share their books and or sources in this economy. Did you ever go into CDGB`s on Bell & 32ndSt back when they were open? Standard daily inventory was about 150k and he had quite a large selection. I
forget what he told me his weekly was but I know he didn`t make a lot and he had a lot of inventory and a very knowledgeable staff of 3-4 guys.He moved back to OHIO and when he closed you could buy at almost 1/4 of the original price.
 
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