lastdecember said:

I think FYE is the worst I've seen. Sam Goody was bad too but FYE was crazy. Tower and Virgin had decent sales from time to time and at least a better selection.

JackieBlue said:

Tower was the best for selection and imports so i never cared about their price. Virgin now is the new Tower, however they dont have the selection and the good imports, and they have lost both leases on their stores so they will be gone soon. Fye i never liked, because i was part of Sam Goody, which was expensive, but before Best Buy bought Sam goody in 2000 (and then pileaged the companys customer base) they had the selection, we used to have more Jazz cds than 50 best buys put together, that ALL ended when they purchased Goody, they changed them over to a "big box" type of shit store, selling video games and that crap and Goody lost the loyal base, the people that wanted catalog cds now had nothing to look for. To best Buy, Jazz is YANNI, to best buy, Reggae is Sean Paul and thats it, theres no selection within, and the ones they have now are all from the Goody stores that closed. But like i said this was all over back in 2001, its just hitting the press now, but the death happend long ago.

lastdecember said:

I agree about Tower and Virgin. I worked for Sam Goody over a long ago and we never had customers. Just straggler tourists who didn't mind paying a million dollars for a top 10 CD or simply didn't know any better. Our profits were hella low. Could never understand how we stayed in business in such a high rent area for as long as we did.

JackieBlue said:

Yeah thats really the only reason the Virgin in Midtown is still open, they operate at a huge loss, the one on 14th doesnt lose as much, but they are losing that property come 2009. They benefit from the toruism in midtown areas. The amazing thing was when i was part of Goody we were near the top in the company in terms of volume, about 5-6 million, but when you took out the cost of merchandise,RENT (70,000 a month!) and things electricity, and oh what everyone tends to forget EMPLOYEES, u got to pay them. The thing is that customers always thought, "why cant you lower your prices?" like it was a choice

lastdecember said:

I always wondered how the Virgin on 14th did. They never seemed quite as busy or as stocked as the one in TQ. I also found it just a little too dark for my tastes. So they're out in 09? Any idea what's taking it's place? Will Virgin TQ be the only major music retailer left in NYC? I'm not counting Best Buy on 23rd.

lastdecember said:

TRUTH^

JackieBlue said:

It could be as soon as the end of this year or early next year, the thing is that i have heard that both will be gone, really leaving Best Buy on 23rd and the one on 5th avenue and 44th as the lone "retailers"

This article appeared in Billboard magazine:

WAL-MART: LEADER OF THE PACK

August 16, 2008

by ED CHRISTMAN

Here's how negotiations with Wal-Mart usually go: It says what it wants. And then it gets it. But in meetings with all the major record labels in late July, Wal-Mart showed a new side: A willingness to listen to suggestions and modify its plans as warranted. By all accounts, this flexibility is a change in demeanor for the giant retailer, and it may be a response to the broader changes in the marketplace. As the industry evolves into a digital model, how can a giant brick-and-mortar retailer adapt to maintain profit margins and relevance to the consumer? Wal-Mart's strategy is twofold: find a way to strike a deal for lower wholesale pricing to placate the shareholders and rework its offerings to the consumer via a combination of digital initiatives and revamped in-store schemes.

WHOLESALE PRICING

Wal-Mart will easily reign as top brick-and-mortar merchant for years to come, as it earned $12.7 billion in net income on $374.5 billion in sales for its fiscal year ending Jan. 31 and tallied an 11.6% increase in sales—from $85.4 billion in first-quarter 2007 to $95.3 billion for first-quarter 2008. At the end of its fiscal Q1 this year, Wal-Mart had 3,602 discount stores in the United States and 593 Sam's Club outlets, a total of 4,195 stores. It also had 3,148 international stores. The company said in a 10-K filing with the Securities and Exchange Commission that it expects to open 170 Super Centers, 25 neighborhood markets and 25 Sam's Clubs for an increase of 220 stores in the United States this year and another 400 internationally.

With that sphere of influence, it's no surprise that usually what Wal-Mart says, goes. In those July meetings with the majors, the retailer outlined a plan for wholesale pricing. By October, Wal-Mart hopes to merchandise its music department so customers can shop it by price: $13.88, $11.88, $9, $7 and $5, a strategy it uses in its video department (although with different price points). In order to support those prices for music, Wal-Mart wants wholesale costs for its rackjobber, Anderson Merchandisers, to be, respectively: $9.50, $8.50, $6.50, $4.25 and $3, sources say.

In return for the lower pricing, Wal-Mart is telling the majors that it is willing to forgo cooperative advertising and other discounts, including buy-ins, catalog merchandising programs and early-payment discounts.

While Wal-Mart expects the majors to support its new pricing scheme, it isn't drawing a line in the sand, much to the relief of the labels. Instead, it is inviting the majors to try to work within the pricing parameters it has created.

"We are very encouraged about these conversations and the collaboration that is happening in the industry toward giving our customers a better value in music," says Jeff Maas, Wal-Mart division merchandise manager for movies and music.

Practically all label and distribution executives interviewed for this article say they are willing to try, but they also expressed reservations.

"If we think there is an opportunity to place our titles into one of these price buckets, we will," the head of sales at one major label says. "But don't count on us to accept the entire Wal-Mart blanket pricing initiative."

So far, the main sticking point for the overall initiative seems to be Wal-Mart's desire to have all catalog titles priced at $9 retail/$6.50 wholesale. Executives are wrestling with how to handle that, but some of major-label officials think that Wal-Mart will allow each label the leeway to propose which of their catalog titles should sell at which price points.

After an initial rollout, those executives suggest, each title will be measured for performance, and if Wal-Mart doesn't realize its profit and margin goals, it is likely that labels will be offered the choice to reprice a title or delete the album from the chain's stores.

Nor is everyone happy about the $11.88/$13.88 proposal for superstar and star titles. "If their message is, 'Low prices every day,' why not have one price point at $12.88?" one distribution executive asks.

With all that's been done so far, "Wal-Mart has modified its stance and is not hammering their price points home to the labels. But the big unknown is what happens if you don't fit into their pricing categories," one label head of sales says. "Say I try to work with them and place most of my titles into their various categories, but I have a big title coming and I don't want to sell it to them for $9.50. What happens then?"

Another executive agrees. "Some titles are just worth more than others," he says. "Not every title out there can fit into a convenient box."

Meanwhile, not everyone is sure they can completely support the Wal-Mart plan. "We are still sharpening our pencils to see if we can make a go of what they are asking for," the head of distribution at one of the majors says. "We are encouraged that beyond the pricing discussion that they are also engaged in other ways to improve the music department and make the space more productive."

The closest analogy to Wal-Mart's wholesale pricing proposal is Universal Music Group's JumpStart program, but Wal-Mart's strategy includes slightly lower price points. JumpStart prices superstar releases at a $10.35 wholesale cost, with the rest of the front line carrying $9.49 titles and full-line best-selling catalog, $6.06 for mid-line catalog and developing-artist pricing, and $4.69 for budget. Currently, the other three majors' front-line product typically wholesales anywhere from $11.86 to $12.07.

Label executives say—to the chagrin of some—that Wal-Mart seems to be moving away from the $9.72 promotion in an attempt to establish its new pricing schemes. That price point goes for titles placed in a corrugated stand outside the music department, and it raises sales by as much as 50% on a unit basis, a label executive says. To get the $9.72 price point, labels have to supply product at $7.50.

Most of the product labels pitched for that promotion was either superstar catalog titles or newer superstar releases that didn't meet initial sales expectations. Occasionally, a new release like Coldplay's "Viva La Vida or Death and All His Friends" would also be featured in that promotion.

"Whatever Wal-Mart's new pricing strategy is, the labels need to wake up and listen to them," Hastings Entertainment director of music purchasing Bryan Everitt says, and then it should give those pricing concessions to all accounts. "I am in total agreement with the Wal-Mart pricing initiative, if they give it to everybody. If they don't, I would hate to lose 40% of our business."

DIGITAL DILEMMA

The other half of Wal-Mart's strategy is more defensive than offensive in nature. To date, its digital effort has been lackluster, capturing about 1.2% of the overall digital download marketplace, or 0.2% of the overall U.S. music market. Since the turn of the century, Wal-Mart has been the largest music account in the States, but in the same first quarter of 2008 when Wal-Mart's sales increased despite a faltering economy, iTunes was the No. 1 U.S. music account with nearly an 18% market share, by Billboard estimates, while Wal-Mart's share stood at 16.7%.

"Everyone thought [Wal-Mart] could be a competitor to iTunes, but nobody knows where they are with their digital effort," a senior label executive says.

While iTunes' dominance is expected to grow as digital sales further eat into physical sales, Wal-Mart is planning to relaunch its download store as well as its online music store that sells CDs, with Anderson Merchandisers' Liquid Audio division supplying the back end to the Wal-Mart online initiatives.

Initially, Wal-Mart, like everyone else, used a digital rights management model for selling downloads. But when Amazon managed to sign up all the majors for the unprotected MP3 format, Wal-Mart gave an ultimatum, telling the majors it would pull their titles from the download site unless it was supplied music in that format too. While Wal-Mart drew a line in the sand in December and then had to redraw it in January, eventually three majors agreed to supply the site with music in the MP3 format.

(Sony BMG Music Entertainment agreed to supply music in the MP3 format under the condition that Wal-Mart agree to its controversial "agency model," in which the music company picks the price the music is sold at and the retailers who sell the music then get to pocket a commission. Wal-Mart initially resisted the agency model strategy, and although no deal has been signed, sources say the issue has been resolved. It's unclear which side gave in.)

"Wal-Mart is doing more business now that they are in the MP3 world, but shopping their download store is still not the greatest experience," one digital sales executive says. "I don't know how much of that [was] due to the lack of Sony, but Amazon churns out four times as many downloads a week as Wal-Mart. Wal-Mart ought to be doing better, considering they have a year-and-a-half head start on Amazon."

CUSTOMER CARE

While Wal-Mart says entertainment, electronics and toys comprise 12% of its business, it doesn't specifically disclose music sales. Distribution executives place Wal-Mart's music business at $1.5 billion-$1.8 billion, so while music comes out to about 0.5% of its total $374.5 billion in sales, the category is important in driving traffic. "A customer basket with music in it produces $40 more in revenue than baskets without it, so music will likely remain a part of the Wal-Mart inventory mix," a senior distribution executive says.

Moreover, even though the giant discounter may reduce SKU count by about 15%, the chain expects to offset those sales through a remerchandised music department that will receive more customer visits from stepped-up in-store marketing efforts and a redesigned in-store traffic flow, label executives say.

An exec says he was willing to experiment because Wal-Mart is talking about making the space devoted to music more productive, "which is why we don't mind a SKU scaleback, if we can do more business with less returns." Currently, the chain's bigger stores carry 5,000-6,000 titles (down from 6,500), with smaller stores carrying about 3,000. One distribution executive estimates that Wal-Mart will pull 800 titles this time around. (Clearly, it is not following a Target model. That Minneapolis-based chain carries about 775-1,500 titles per store.)

Moreover, Wal-Mart also appears to be cutting back on another highly successful tactic: the "two-fer" versions of albums it offers on big releases, which comes with exclusive DVD video content culled from MTV, CMT and BET. (The two-fers are expensive to make, a former Handleman executive says.)

But the majors don't seem worried by this kind of SKU reduction. "The titles we will lose only represent 6% of our business with the chain," one distribution executive says. "By pulling titles, they will be able to focus better on fewer SKUs."

Some executives in niche genres worry that the SKU reduction could hurt them—but not all genres need to worry. Wal-Mart remains the largest seller of Latin music and it does very well in the Christian/gospel marketplace, distribution and label executives says. And of course, Wal-Mart dominates country music, often accounting for as much as 60% of sales.

In the meantime, independents, which already aren't that well-represented in Wal-Mart, don't know what to make of its impending SKU reduction. "We know Wal-Mart is a hit-driven account, so we try to be realistic about what it will carry of ours," Alligator Records president Bruce Iglauer says.

If Wal-Mart has one weakness, it's in marketing—an area where Best Buy and Target are superior. On the other hand, worldwide Wal-Mart has 176 million shoppers walking through its doors each year, according to the company's annual report. Instead of using circulars and TV spots like the other two big-box contenders, Wal-Mart likely will continue to focus its marketing efforts on store traffic—but in a more intense manner.

One way Wal-Mart expects to redirect customer traffic flow through the music department is with signage, which will make it simpler to find and shop the area. Wal-Mart also is talking about creating exciting endcaps that will merchandise other things from an artist beyond the CD (see story, right).

And the primary way Wal-Mart distinguishes itself to consumers is through exclusives, a practice begun by—and until the last few years —dominated by Best Buy. A few years back, Wal-Mart became aggressive in the area, and subsequently the discount department store chain has landed the biggest exclusives out there, including the Eagles, Garth Brooks and Journey, and it will soon have AC/DC.

LOOKING AHEAD

With its new aggressive stance on pricing and customer relations—and the expectation that consolidation will continue in the retail level—Wal-Mart wants to possess 50% of the music marketplace within three years or when the dust clears, the head of distribution at one major says.

"I don't doubt they will get there," the head of another major distribution company says. "In 1995 when Wal-Mart had 11% or 12% market share, they said they wanted to get 20% market share, something they achieved about three or four years later."

"With all due respect, they have succeeded in their plan as to what their role is in our industry," says John Grady, a partner at Red Light Management. "Their goal was to be everyone's overwhelmingly No. 1 account. Considering their size, volume and store count, I don't see how they wouldn't become 50% of our overall business."

With everything else Wal-Mart has going for it, the chain is "in the sweet spot in the economy now, with more people buying into them," Value Music president Rob Perkins says. "Sometimes it's better to be lucky than smart, and Wal-Mart is both lucky and smart."

If new music didn't suck so hard, people would still buy it. If there wasn't such a big chance of an album being a waste of money, people would still be willing to fork out the cash for the whole package instead of just downloading one or two tracks.

The Wal-Mart in my old town only ever carried Top 40 acts, so I never went there, and I've yet to figure out where Wal-Mart here is.

I try do all my music shopping at actual music stores. HMV and A&B Sound are handy for easier to find material, and there's a local independently owned place called Charlie's that's good for rarer and older finds.

meow85 said:

Our A&B Sounds have closed. If you still have yours, stock up maybe? I really liked that store.

vainandy said:

The Virgin Megastore in New Orleans was way better. But Hurricane Katrina pull that store out of action for good. And it's a damn shame, because all music genres were available.

Cinnie said:

I heard ours might be closing soon too, so I'm planning on it.

lastdecember said:

This is true. Huge liquidation sales are expected for both locations [Source]