Sunday, June 29, 2008

(Twenty Years) Part 16: Still In The Game

20080316 - Looking Down The Pop/Rock Aisle
In 2001, the fortunes of the newly formed Walrus Music briefly mirrored those of the industry at large, though for very different reasons. Overall, our sales were doing fine, but the enforced removal of our most profitable area of business wound up derailing the year. Luckily, we managed to make up all of our lost momentum the following year and have been trucking ahead at varying speeds ever since. The music industry as a whole, however, was now starting to feel the first real pangs from widespread P2P downloading as yearly sales began to tumble from the stratospheric heights they had reached in 2000.

While there was a lot of worrying going on at the distribution level, the overall tone of discussion back then was still more hypothetical/"what if" than bleak or despairing. Since the real bad times had yet to arrive, a lot of people initially refused to believe that the sky was truly falling, instead maintaining that this drop in sales was some kind of brief contraction or correction, and everything would be dandy again as soon as people stopped sharing mp3s and were somehow forced to buy them instead. It would take the realities of the next three years to kill that line of thinking dead once and for all.

Somehow, while the music business declined over the ensuing years, Record Den's sales not only grew, but flourished. Even now, I'm not sure I can fully explain why this was the case, but I can offer up a few ideas that might solve the equation when added together ...

1. Adults

The fact that we are still open certainly doesn't mean that downloading had no impact on our business: of course it did, but we were, I think, able to trade off clientèles before the damage got out of control. Over the years, kids had noticeably vanished from our customer mix while we started seeing more and more new customers over the age of 30 instead, many of them driving in from the other side of Cleveland or points south to patronize our store. To reflect this shift, we started to alter the store's selection slightly away from an indie-rock intensive mix into something far more classic/progressive leaning in nature, while still seeking to retain the loyalties of the few teenagers who still believed in buying music as an actual physical product rather than simply hoovering it down by the gigabyte from a file sharing service.

20080316 - Midline Bin
2. Catalog

Meanwhile, after years of successfully attempting to smother competition by maintaining a massive inventory of music, the big boxes were beginning to scale back on CD floorspace in favor of DVDs, which were still a red-hot commodity. The once-impressive rows of CDs Best Buy used to boast suddenly started looking rather thin as they were now prioritizing guaranteed hit music over "marginal" catalog or independent releases/reissues. Sure, you could walk down an aisle there and see a truly massive U2 section sporting about 150 CDs, but upon closer inspection you'd realize that 130 of those CDs were copies of How To Dismantle An Atomic Bomb with a couple copies each of 4 or 5 other titles sprinkled about for appearances sake.

This restructuring of priorities at the big boxes created an opening for us, and we charged straight into it. The Den started attracting people who had grown up with rock music and weren't quite ready to let go just yet. If we were going to keep them coming back, we were going to have to retain far more deep catalog than we ever had before, and we started adjusting our buying accordingly. Luckily, the major labels had started offering substantial discounts on their catalog in order to keep it moving outside of the big boxes, and Greg jumped feet-first into these buying programs, snapping up thousands of older CDs at reduced rates and passing the savings along to stimulate sales. We had always done a pretty good job with keeping some special, hard-to-find titles of local interest handy for whoever asked, but now we were actively cultivating a reputation as the place to get anything you hadn't heard in a quarter century or more.

Once we had the ability to buy direct from two of the biggest music companies in the world, it seemed like this end of the business really started to get rolling for us. I cannot stress enough how being able to buy directly from two of the biggest music distributors has greatly increased our ability to compete with big boxes since the catalog discount programs offered at the distributor level were far better than any one-stop could offer. For a year or so, our sale bins at the front of the store could have been called "The WMG Bins" as product from that distributor overwhelmed all else. When we got Universal opened up a year or so past that, the buying balance shifted again, and we now have what looks like a mini warehouse in the back room jammed solid with CDs from WEA and Universal. These programs, coupled with an explosion in cheaper old import titles, began to transmogrify our store into a kind of classic rock heaven on Earth.

20080316 - Vinyl & VHS
3. Vinyl

Another factor in our longevity has been the completely unexpected re-emergence of vinyl (whether used or new) as a collectible format. Aside from dance and hip-hop 12" singles and the odd Pearl Jam LP, we had been pretty much out of the vinyl market from 1990 through the end of our days in the Great Lakes Mall. We hadn't had any plans to re-enter that market in our new location until a few months after re-opening, when a customer asked us one afternoon if we carried any vinyl records. Greg and I both shook our heads no, and when the customer then asked us why, neither of us could come up with a good answer.

With space to burn (and no better ideas to try out), we started buying and selling used LPs again for the first time in a decade. Initially, almost everything we set out to sell was priced at a dollar, with a few premium pieces going as high as five. Sales were steady, but slow, and as more people got wind of the fact that we'd take their old boxed-up records off their hands, our stock began to outgrow the bins we'd set aside to contain it. For some time, this became a concern, especially as we began stockpiling everyone's grandmother's record collections in boxes piled six feet high in the back room while the vinyl bins overflowed and spilled onto the floor. There were times when it was getting so crowded in the back that we were seriously considering shutting off all vinyl buying in an attempt to keep our stock under control, and that is when we started running into the E-bay people: the guys who earn a living buying crates of stuff at rock-bottom prices from anybody who would sell it to them and then finding people online who would pay them for whatever goodies they might come across.

At first, we were amused (and relieved) when the E-bay people would show up and cart off boxes of moldering records at a time, but it became apparent over time that LPs could become a valuable part of our profit margin, and we started becoming a bit more hands-on in the pricing and buying of used vinyl instead of simply buying everything in at a flat rate and blowing it out the door ASAP. While we still occasionally buy "by the pound" if a customer doesn't feel like going store-to-store looking for a better deal, we now have a pretty decent idea which records are worth paying more for (almost any band or act we've never heard of before) and, more importantly, which ones aren't (pretty much every album released on Columbia between 1973-1987).

These days, used vinyl sits in every open nook and cranny in the store, with the premium titles arranged semi-alphabetically in specially made bins in the back while everything else is boxed up or lined up wherever we can find room. Quite frankly, we need a better way to display our vinyl stock: sales have picked up in intensity to the extent that used LPs now regularly out-sell used CDs on a piece-count and dollar basis,and our used CDs are far easier to browse than our vinyl. Also, the profit we are able to realize from selling used vinyl has been instrumental in keeping us afloat and amending for the relatively thin margin afforded by contemporary CDs, thus we definitely owe it to ourselves to come up with some kind of new solution to displaying the hottest selling items in the store.

Now comes the weirdest part: over the last two years, used vinyl has started to bring back a good chunk of the younger customers we figured had been lost for good to downloading. Somehow, a lot of younger people have glommed onto vinyl being a more immersive, meaningful, and (let's not kid ourselves) hip listening experience than an mp3, and they have embraced the format to a mind-boggling extent, whether used or new. Where we once spent most of our time with visiting sales reps screaming about CD prices and crappy marketing ideas, now we're always pleading with them to get as much classic rock vinyl into the marketplace as quickly as possible, because we sell it faster than we can keep up with it.

20080315 - Overstock Wall 2
For the first time since opening up at our current location, I think we've achieved the kind of store we'd always imagined we could run back in the old days when a slow afternoon could be spent blue-skying a Deak-free existence in the now-museum like expanse of Great Lakes Mall. We are all very proud of what Record Den has become and also hoping we can keep it going at full steam even as the U.S. economy goes to Hell in a hand basket all around us.

While the plan is to keep going as long as we can, the near future remains a bit hazy as I write this: our lease comes up next year, and preliminary negotiations between Greg and our corporate landlords have deadlocked over rent (they want to raise it over time, he wants a constant rate in exchange for a longer lease). For the time being, we're letting the landlords stew for a while as time is presently on our side: the longer we wait, the better idea we'll get of where we're going in a financial sense. Already lagging behind the pace of a flat 2007, we are now facing what could be a brutal summer, what with gas prices at 4 dollars a gallon (and the price of oil continuing to climb, dragging behind it the cost of just about everything else in existence) and the entertainment dollar being stretched tighter than perhaps at any point in the last thirty years. We're working just to keep ourselves respectably close to our target figures, but this has not been a banner year thus far.

What happens this summer (not to mention over the following Christmas) will impact any long range plans Greg comes up with between now and then. It's hard to guess what to expect, but I would be very surprised if Greg opts to stick in a fork in this operation next year, largely because we have an awful lot of inventory to sell, and barring the launch of a full-time internet operation, I can't imagine what the hell we'd do with all of this stuff should our day of reckoning come earlier than expected.

My feeling is that we'll end up renewing our lease on a year-to-year basis and keeping our options open. As long as people remain willing to buy music on a physical format in a retail environment, Greg will want to be open to provide that service. He has said many times in the past that he was playing to be the last man standing at local indie music retail, and you can certainly argue that he got his wish. I hope this doesn't sound like we're gloating, because we both miss the days of friendly competition and being able to visit places like Record Revolution, My Generation, Platterpuss, or Repeat The Beat: discovering cool imports and underground releases we'd never seen or heard before. This was part of the fun of working in this business, and most of it is now long gone. Sure, we're very happy to still have our doors open, but it's kind of a drag on a personal level when the nearest store that even remotely resembles our own is nearly 50 miles away.

While the business side is pretty much up to Greg, there is also a possible decision to be made on my end as well. While being a Den lifer thus far has brought a measure of reassuring stability to my life, I'd be lying if I didn't admit that I have stretches of dealing with John Q. Public that make me wonder how much longer I want to keep on doing this, (especially if we do wind up getting a multi-year lease offer to stick). After years of always taking the money instead of some time off, a vacation at last looks like a reality for me, and that might be enough to "reset" and refresh myself for a bit and simply get away from the grind. If it sounds waspish and antisocial to say that I need a break from being around people, then so be it. The status of Sarah's education and job will also weigh in on my decision, particularly if she feels that better opportunities are lying in wait outside of Ohio.

Certainly, there will be much dwelling, discussion and consideration as the end of this year draws close, but the one implacable constant lying at the bottom of all of this is the simple fact that I still love my job and the idea of dropping it on my own accord in lieu of an occupation that I don't love is a rather daunting prospect, to say the least.

20080316 - Back Room

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