- Walt Disney

How do you compete with “free? That has been the challenge facing the retail music store model since the year 2000. When most of the recorded music we listen to has been obtained digitally - legally or illegaly – how do you motivate customers to visit your shop to puchase Audio CDs?

There is no one easy answer. However, if you want to discover 8 possible answers then I suggest you read John Tozzi’s excellent article in Business Week Magazine – “From Bricks and Mortar to Digital Music Master.” 

This article details the eight steps that one New York City retailer – Other Music – is taking to respond to the challenge. 

Click here to read the article and also take time to view the slide show that accompanies it. Here are a few of the tips the owners and staff of Other Music are using to stay competitive and to lure customers to shop with them – online and in-store:

• Sell MP3 Downloadson your own site. Apple’s iTunes Store does not carry every piece of music! Other music specializes in selling – and promoting – the music produced by Independent Record labels and individual groups.
• Sell vintage LP Albums and other collectibles on auction sites such as eBay and Amazon. You may reach new customers and the prices that these collectibles fetch will almost always be higher than what you would have priced them at. The power of a free market!
• Don’t print and mail a catalog! Put your catalog on-line and automate the mail order process.
• Electronic Newsletters – allow you to stay visible to your customers. The more visible you are, the more value your customers will see in doing business with you.
• Handwritten Reviews of Music by your staff. Showcase the great knowledge that you staff has about the music that your customers want to find. This is one of the greatest competitive edges that a small, independent music store has – exploint it! And… leverage it – use these reviews in your catalogs and newsletters.

Think that you can’t compete? You can, but it does require you to try some new things. Take your first step – read the Business Week article and make a plan to implement one of these eight tips this month. Not only will you see a difference … so will your staff… and so will your customers – new and old!

Click here to read The New York Times’ article, “Record Stores Fight to Be Long-Playing,” by Ben Sisario. Here is a brief excerpt:

“The hole-in-the-wall specialty shops that have long made Lower Manhattan a destination for a particular kind of shopper have never made a great deal of money. But in recent years they have been hit hard by the usual music-industry woes — piracy, downloading — as well as rising real estate prices, leading to the sad but familiar scene of the emptied store with a note taped to the door.”

So, if you thought that it was difficult to compete against “Free!” – as in illegal downloading and file sharing – try to compete against 300% rent increases:

“Rent is up, and sales are down,” Malcolm Allen of Jammyland said as he sold a few Jamaican-made 45s to a customer last weekend. “Not a good combination.”

One strategy for survival is to diversify the range of merchandise that you offer for sale. Another is to sponsor more in-store community events – concerts, meet-the-artists, lessons, clinics, etc.

One such (nation-wide) event took place yesterday – April 19, 2008 was proclaimed “Record Store Day.” And an impressive roster of artists, record labels and community organizers joined forces to create fun events to give visibility to the value of the neighborhood record store.

I enjoyed reading some of the quotes on the site. Some are from artists like Peter Gabriel:

“I was introduced to lots of great music through my local record store. It was a place where people knew music and they knew me, and could make great suggestions and discoveries. Whether it is in the physical world or on-line, the value of a great and knowledgeable record store has not gone away”

Others are from the owners of independent record stores like Mike Manly From “Hot Dog Music” in Sacramento, CA:

“I just opened my store a couple weeks ago because I believe indie record stores are important – now more than ever. Music is personal to people and (given the option) most people prefer to buy it from a store that has a personality. Indie record stores care about the music and people are learning to appreciate that again. Buying music at the same place you get your dog food is a totally empty experience. Indie record stores fill you up.”

But the quotes that I love the best come from the actual record store customers like Mike Fortunato, a DJ in Boston, MA.

“As a long-time disc jockey in the Boston market, the independent record store was (and continues to be) a vital part of my existence since 1970. I have found very few retail experiences where the owner and/or staff (and usually the owner – almost by definition, these are hands-on entities) have such intimate and passionate knowledge of their product and of their customer’s needs.

A case in point:

In the 80’s, a local record distribution outlet named “Peter’s Records One Stop” (PROS) used to open up early on Saturday mornings for local Disc Jockeys. It was totally unadvertised, but the owner developed a solid loyal following in the mobile, nightclub, and FM communities that way. In 1987, I moved out of the area, and returned home in 1992. On a whim, I met a friend at PROS on a Saturday morning…and as soon as I walked in the door, the owner flagged me down and started waxing enthusiastically about a brand new CD which would be “perfect” for me – as if five years hadn’t elapsed since my last visit! And as it turns out, he was dead-on with his recommendation.

As the Internet has turned music buying into a singles-driven experience, independent record stores serve an important function in their ability to not only stock and sell albums, but to also be staffed by knowledgeable people who help keep the spirit of the music industry alive. That unique combination of entrepreneurial spirit fueled by genuine enthusiasm is a rarity in today’s world, and for all to whom the music speaks, should be valued as the treasure that it continues to be.”

Amen!

I firmly believe that the strongest asset in any business is the quality of their “people” – the staff members who are passionate about the products that they sell and equally as passionate abut the people that they serve – their customers.

Locations may change – they may have to when the rent becomes untenable. But don’t let your passion for what you do dim and die. That’s when your customers desert you.

An event like “Record Store Day” is helpful – it helps to build awareness of the value of independent, neighborhood record stores. But it is just that – an “event.” Cultivating and building the relationship between music lovers and music store operators is a process. And an understanding about what you both want.

Take a lesson from Joni Mitchell’s song, “Big Yellow Taxi:”

“Don’t it always seem to go
That you don’t know what you’ve got
Till it’s gone
They paved paradise
And put up a parking lot”

The worst of times? “Retailing Chains Caught in a Wave of Bankruptcies” – a story in the NY Times.

“The consumer spending slump and tightening credit markets are unleashing a widening wave of bankruptcies in American retailing, prompting thousands of store closings that are expected to remake suburban malls and downtown shopping districts across the country.”

The best of times? “It’s All About Experience,” an article in Business Week Magazine.

“There is still one frontier that remains wide open: experience innovation. This is the only type of business innovation that is not imitable, nor can it be commoditized, because it is born from the specific needs and desires of your customers and is a unique expression of your company’s DNA. Yet the design of an experience is often overlooked in the rush to market.”

The key phrase – “… because it is born from the specific needs and desires of your customers and is a unique expression of your company’s DNA.”

How do you address your customers? Do you meet both their needs AND their desires? Are you sure? How do you know?

What do your customers experience when they visit your store? When they contact you by phone? When they visit your website?

What are you doing to create a memorable experience for your customers? What are you doing to differentiate yourself from your competitors?

There are three areas for a business to compete; three areas to differentiate your business - people, products and price. Trying to compete on products or price puts you into a vulnerable position. Look at a few stores that are caught in the wave of bankruptcies:

• The Sharper Image - Once, it was a pioneer in both product selection and direct mail marketing. Its “sharper image” dimmed over the years due to a combination of competition (Brookstone, etc.), and products (Oreck Air Purifier, etc.) Their product offerings were now commodities. They made numerous operational mistakes.
• Linens ‘n Things-  Drowning in debt. Ubiquitous – its stores are everywhere; but not where people want to go – today. I could never tell the difference between the multitude of home furnishings stores. Obviously, I am not alone in this assessment.

What about the other side of the coin? What about the “Companies that try to create holistic experiences by emotionally engaging their consumers are flourishing?” How do they do it? And what is a holistic approach?

“Companies intending to be relevant today must learn the art of creating experiences that genuinely engage their customers. Choice-fatigued consumers are not looking for another product that hasn’t taken their true needs and desires into consideration. They are looking for companies in which to believe and give their allegiance. They are looking for experiences that cater to their deep-seated desires. This type of engagement requires much more than the latest technological breakthrough: It requires emotional engagement.”

Emotional engagement – this brings us back to competing on the basis of people. How do you, and your people, differentiate your product or service? How do you meet your customers’ needs while “creating experiences that cater to their deep-seated desires?”

You can compete on people, price or product. It’s your choice. Increasingly, your customers are looking for “experiences” when they shop. That can only come from people. You can start to create a unique experience for your customers by addressing them by name. By remembering them. By making them feel welcome. Just that one small step will start to differentiate you from the sea of mediocrity that marks the world of retail.

“Borders Tries About-Face on Shelves” – by Jeffrey A. Trachtenberg

I am always on the look-out for stories on In-store merchandising, book publishing and bookstores. But I missed this one.

However, I stumbled across it via a series of hyper-links:

1. A post on Seth Godin’s Blog – “Do you have” vs. “Do you want” which referenced…
2. A post on the Brand Autopsy Blog – “Borders Reducing Its Borders” which was commentary on the original WSJ story about Borders Bookstores’ decision to:
   1. Place more of their books “face-out” on their shelves vs. the traditional “spine-out” style (common in libraries)
   2. This means cutting back on the number of individual titles stocked in each store by @ 10% (9,350 titles)
   3. Because when this new merchandising strategy was tested in a prototype Borders Bookstores, sales of the individual titles placed “face-out” increased by 9%

For anyone who has a life outside of book publishing, book selling and libraries this may seem like a “no-brain-er.”

“Some think the move is overdue. Unlike modern supermarkets, booksellers haven’t done enough to make books look attractive on the shelves, says John Deighton, editor of the Journal of Consumer Research.

“Breakfast cereals are not stocked end-of-box out,” he says. “You want to your product to be as enticing as possible. It’s a little bizarre that it’s taken booksellers this long to realize that the point of self-service is to make the product as tempting as possible.”

“To be as enticing as possible…” As in to pick up the book, look inside and decide to purchase it!

I was browsing in a Barnes & Noble Bookstore the other day. I was not there specifically to make a purchase. Just browsing. Perhaps something would catch my eye. Something usually does.

Yes, I saw a “face-out” display of Patrick Lencioni’s popular business books (The Five Dysfunctions of a Team, etc.) This reminded me that he had just released a new book in the series. I couldn’t remember the name of the book and I was disappointed that it wasn’t on display.

“It’s probably sold out,” I thought. Undaunted, I went on a search for it in the business books section. More frustration – all of the books were placed “spine-out” on the shelves. And I was starting to get a headache from reading the titles while hunched over at a 90 degree angle! Madness! This is insane.

Of course, there was not a clerk in sight on the floor to offer me assistance. Actually, a Chiropractor could do a brisk business attending to bookstore customers!

Still determined to find the book, I finally realized the system that the store used to “display” their books – Alphabetical by Author’s last name. Great! I at least knew the author (What if I didn’t?) and located the book (“The Three Signs of a Miserable Job“) – Prophetic, perhaps, if you work in a bookstore!

At home, I file my books by category and “spine out” to save space. Fine. I am familiar with the books that I already own. But this just does not work in a bookstore where I am looking to purchase something that I do not yet own!

Entice me! Seduce me! Surprise me! Make it impossible for me to resist making a purchase!

I came into your store with the intention of making a purchase – despite my statement that I was “just browsing.”

If I want to read, I can go to a library. Or stay at home and read one of my many un-read (as of now) books!

You are in business to sell books. Make it easier for me to purchase what you have to offer!

Don’t try to compete with Amazon.com by stocking every book ever published. I am happy to place a special order for a specific book – provided that you make it easy for me to do so.

As Seth Godin’s (short) article points out, this answers the question, “Do you have?”

Creative in-store merchandising – which requires continuous re-merchandising – will ask the question, “Do you want?”

If your in-store merchandising creates enough interest and desire my answer will be, “yes!”

And that’s what you want to hear – don’t you?