Musical Instrument Stores
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Industry Overview
The musical instrument store industry includes about 4,500 stores, or dealers, with combined annual revenue of $5 billion. Major companies include Guitar Center, Sam Ash Music, and online dealers American Musical Supply and Sweetwater Sound. The industry is fragmented: the 50 largest companies account for about 45 percent of revenue.
Competitive Landscape
Consumer income and changes in musical tastes drive demand for musical instruments. The profitability of individual companies depends on effective merchandising. Small companies can compete effectively by specializing in personalized service or high-end instruments. Average annual revenue per employee is $150,000.
Products, Operations & Technology
Major products include guitars, pianos, sound equipment, parts and accessories, and school music products. Guitar sales account for about 25 percent of sales, traditional pianos for 20 percent, audio equipment for 15 percent, and electronic keyboards 10 percent. Other products include repairs, equipment leasing, and sheet music.
Musical instrument stores include full-line stores and specialty stores such as keyboard, school band music, and pro audio stores. Full-line stores offer a complete range of musical instruments and accessories. Keyboard stores specialize in traditional upright, grand, self-playing, and electronic pianos. School music stores sell band instruments to universities, high schools, and amateur players. Pro audio stores specialize in selling sound system equipment.
Full-line musical stores include national chains and independent dealers, as well as big-box retailers with a musical instrument department. National full-line chains operate in stand-alone buildings and strip malls, with stand-alone stores ranging from 12,000 to 30,000 square feet. Chains may also operate midsized stores within indoor shopping malls, and often own specialty stores under a different brand name. Specialty stores typically operate within 2,000 to 4,000 square feet of retail space, either as small stand-alone buildings or within strip malls. Many specialty stores supplement retail sales with an online store or through auction sites like eBay.
Full-line stores, school music stores, and sound stores all generate an average of approximately $1 million annually and average $210 in revenue per square foot. Keyboard stores generate more revenue: an average of $1.5 million annually and $225 per square foot.
Small specialty retailers are often family-owned businesses with a staff as few as two people. Chain stores typically employ 20 to 40, including an hourly commissioned sales staff, a salaried management team, and a warehouse manager.
Inventory assortment varies widely depending on the sales channel, store size, and product mix. Large full-line stores carry between 5,000 and 8,000 stock-keeping units (SKUs) in a physical store, but can offer up to 40,000 SKUs in an online catalog. Smaller specialty stores, particularly keyboard stores, may carry only 250 to 500 SKUs.
Full-line stores operate centralized distribution centers to support retail store operations. Products flow through the distribution facility and are drop-shipped to individual dealers. Large chains rely on automated merchandise replenishment systems to analyze and forecast sales for each product. Corporate buyers are assigned to manage sales for entire product categories such as guitars, accessories, and electronic instruments.
Small dealers juggle multiple ordering systems operated by distributors and manufacturers. Product orders can be placed online through a wholesaler or manufacturer’s website, or via a print catalog.
