|Title:||United States top 10 music retailers ranked by sales per location in dollars and percent change for 2010|
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TOP SALES PER LOCATION
Locations Sales Per Location % Change
X. Sweetwater X $XXX,XXX,XXX XX.XX%
X. American Musical X $XXX,XXX,XXX X.XX% Supply
X. Full Compass X $XXX,XXX,XXX XX.XX% Systems, Ltd.
X. Washington Music X $XX,XXX,XXX X.XX% Center
X. B & H Photo & Video X $XX,XXX,XXX X.XX%
X. Unique Squared X $XX,XXX,XXX n/a
X. Pro Music Group X $XX,XXX,XXX XX.XX%
X. Cascio Interstate X $XX,XXX,XXX -X.XX% Music
X. Sheet Music Plus X $XX,XXX,XXX X.XX%
XX. Pro Audio Star X $XX,XXX,XXX XX.XX%
The educational program from the 1992 NAMM show listed a dozen seminars that dealt with how to improve gross margins. (Defined as selling price minus cost of goods sold.) "Maximize Your Margins," "Better Gross Margins Mean Bigger Profits," and "Train Salespeople To Get Better Margins," were the titles of a few of the seminars. The term "gross profit" was noticeably absent from this year's "NAMM U." program. Why? We suspect it has to do with the fact that gross margins are increasingly seen as out of a retailer's control. On the top line, selling prices are set globally by internet sellers and MAP policies, and retailers generally have to match the prevailing rate or risk losing a sale. At the other end, cost of goods sold are set by manufacturers. With margin enhancement opportunities limited, retailers are increasingly turning to more efficient use of people and facilities as the key to improving profitability.
In the following tables, we rank retailer productivity on two metrics: sales-per-employee, and sales-per-location. With industry sales improving from the dismal performance of 2009, The Top XXX managed to achieve gains on both fronts this year. Sales-per-employee notched up xx% to a record $XXX,XXX in 2010. Sales per location increased xx% to $X,XXX,XXX, but still lagged the record of $X,XXX,XXX set in 2007.
The gains in productivity reflect a somewhat better sales climate. However, anecdotal evidence and survey responses suggest that they are also the result of some tough management decisions. Retailers report that the recession forced them to find efficiencies by asking administrative personnel to take on sales responsibilities and vice versa. This trend continued in 2010, as the headcount trended down for the fifth successive year. As one retailer commented, "In tough times, you get into a survival mode where everyone has to do everything. We are still operating in that mode."
The gains in sales per employee and sales per location were also driven by the increasing presence of online sellers, which tend score higher on the charts. To cite just one example, Sweetwater Sound, which services the entire country from a single facility, racked up sales per location of $XXX million. No brick-and mortar-facility could hope to post similar numbers.
The Top XXX added XX storefronts in 2010, increasing to a record X,XXX outlets. It should be pointed out that XXX of those locations, or XX%, consist of Best Buy's music store-within-a-store concept. Absent Best Buy, the number of new store openings was so nominal in 2010 that it reflects the unique competitive situation of individual retailers rather than a larger trend. Between 2005 and 2008, the Top XXX reduced the store count every year. The retrenchment has definitely stopped, but there seems to be little enthusiasm for a broad-based rollout of new locations. "We need to invest in making our existing locations the best possible," said one retailer. "We don't need more stores."
Despite the general improvement on two productivity fronts, commentary and survey responses indicate that the profitability of the Top XXX is still well below the pre-recession levels set in 2006 and 2007. The culprits are higher costs in the form of employee health benefits and energy along with lower sales volumes and shorter gross margins. As one respondent remarked, "Things are better, but we still have a long way to go to get back to where we were."
X. Guitar Center, Inc. X,XXX
X. Sam Ash Music Corp. X,XXX
X. Sweetwater XXX
X. J.W. Pepper XXX
X. Schmitt Music Company XXX
X. Full Compass Systems, Ltd. XXX
X. West Music Co. XXX
X. Daddy's Junky Music XXX
X. Full Compass Systems, Ltd. XXX
XX. American Musical Supply XXX
X. Guitar Center, Inc. XXX
X. Best Buy XXX
X. Sam Ash Music Corp. XX
X. Music Go Round XX
X. Fletcher Music Centers XX
X. Daddy's Junky Music XX
X. Piano & Organ Distributors XX
X. J.W. Pepper XX
X. George's Music XX
XX. Mills Music, Inc. X
TOP SALES PER EMPLOYEE
Sales Per Employees Employee % Change
X. American Musical Supply XXX $X,XXX,XXX -X.XX%
X. Rondo Music X $X,XXX,XXX XX.XX%
X. Pro Audio Star XX $XXX,XXX X.XX%