What it takes to build a successful music department

While some predict that the CD is only five years from extinction, strangely, music is more popular than ever. As such, the category can still be a vital part of a Christian store.

After all, despite the fact that sales are tending downward, about 80% of Christian music is still sold in the physical format. Retailer Randy Ross, among others, also points out that while digital music sales and music theft have cut into the all-time high retail profits seen during the early half of this decade, abandoning music makes no more sense than abandoning children’s books or any other category that makes up a similar percentage of store sales.

“At our (stores), we’re still averaging more (revenue) in music than children’s books; in most of our stores, music and Bibles are neck and neck,” said Ross, a music inventory specialist for Parable, a chain of nearly 200 Christian stores. “With that same logic, we need to stop selling cards, children’s books and take a hard look at our Bibles.”

Though overall music sales have never been higher, thanks to digital, traditional Christian retail music sales declined about 1 million units, from approximately 12.4 million units in 2007 to 11.4 million units in 2008.

Christian album sales overall—physical and digital combined—were also down 9.7%, from 35.9 million in 2007 to 32.4 million in 2008.

While cautioning retailers, music leaders like Word Distribution President Mark Funderburg remain optimistic.

“We finally found the enemy, and it’s us. If we’re not careful we’re going to kill an industry that consumers still want,” he said. “I can’t tell you the number of times I talk to customers and they say, ‘We want to buy this, but we can’t find it.’ ”

Ross of Parable added: “The amount of space you dedicate needs to be in accordance with your sales, but people have had a knee-jerk reaction to music. It becomes a self-fulfilling prophecy. You’re not paying attention to music and your sales are declining? Surprise.”

So if music is an important part of a store’s product mix, how should stores go about merchandising, promoting and selling it in a rapidly shifting music landscape?

Inventory

First of all, experts say, look at the albums ordered and their quantities, as best-practice inventory strategies have shifted. Funderburg, along with other experts, advocates stocking a broad selection of albums, but with fewer quantities, especially of backlist.

“You can re-order every other day if you need to,” Funderburg said. “But as for breadth, there are few stores left anymore that carry a good selection of anything, and I think that’s really hurt retailers who have slimmed their inventories to get it down to the top 20. A lot of customers want selection like on Amazon. Offer the breadth and then make sure to let customers know that that’s a strength of yours.”

Jim Ellis, who has overseen the music section at Lighthouse Christian Books in Green Bay, Wis., for nearly two decades, agrees. Lighthouse is renowned for its music selection, which includes rare and used albums. “We buy appropriately,” Ellis said. “Whereas I used to buy a case of 30 CDs of a particular album, it’s now usually down to two, three or six.”

Of course, there are exceptions to that rule—a Casting Crowns or Michael W. Smith album, for instance—and this is where industry and product knowledge are important. Funderburg suggests stores stay in close contact with music sales reps and listen to their advice, while others note the importance of keeping up with print or online publications that cover Christian music.

Mike Hockett, CBA training and consulting manager, recommends turning to CROSS:SCAN, a CBA reporting system that tracks sales of more than 800 Christian stores and works in concert with Above the Treeline, a digital inventory management system for retailers.

“CROSS:SCAN probably has the top 1,000-plus music titles on there, and you can see how they rank when you use it with Above the Treeline,” he said. “You can see how it compares with your store’s inventory. You also get to see what’s selling across the country. There might be stuff selling elsewhere that you don’t know about.”

Chains such as Family Christian Stores and LifeWay and some independent stores—including Pee Dee Christian Book & Supply in Florence, S.C.—are maximizing inventory with digital availability. For example, the Pee Dee store, which makes use of CD-burning capabilities, has more than 11,000 CD titles available, including older selections and some out-of-print albums.

Some stores sell music online as well.LifeWay’s PassAlong is a system that allows customers to save up to 10% each time music is purchased with points. Points are earned when the customer passes on a recommendation and a friend or family member buys the item.

Cross-promotion

Some retailers are combining CDs with closely related products, such as DVDs, into a “family entertainment” section. Taking a cue from stores like Best Buy, the DVDs are helping offset the smaller margins and decreasing sales of music CDs.

“Many parents and families are looking for wholesome entertainment, both audio and video, and many times need help,” noted Curtis Riskey, CBA’s strategic solutions executive. “It would make sense to cross-merchandise music in areas that customers would be prompted to purchase as a gift or to complement a larger gift.”

Citing a 2007 industry-wide report on music buying patterns, Sound Decisions, Riskey noted that more than half of Christian customers—58%—bought music as a gift.

Ellis noted that successful independent music stores sell ancillary products like artist apparel, and his store has started to sell music posters and found some success doing so. Yet some caution that stores can go overboard with DVDs and ancillary music products despite their promise.

“Stores are scaling back on the amount of music in the retail space, but it can’t get to the point where you’re burying it,” Ross of Parable said. “If you’re expanding your video department, look at your sales … the amount of space you dedicate needs to be in accordance with your sales.”

In-store marketing

Once a store has the right music product mix, how does that store promote music both inside—and outside—of the store? Many stores not only give music its own section, but also cross-promote it on endcaps, in the book section where appropriate and at the cash wrap. Ellis, for one, has found success selling some lower-priced CDs at the cash wrap as an add-on or impulse buy, though he noted that grouping lower-priced albums together in a kiosk in the music section rarely seems to work well.

Some experts say that another effective in-store promotion, and a way to emphasize a store’s commitment to music, is to have a digital kiosk that burns CDs—with two major companies providing systems to the Christian retail market: Integra Interactive and Just In Time Digital. Though most people aren’t using the systems to burn new albums, some retailers are doing a brisk business on the kiosks by selling accompaniment tracks to churches and soloists.

Paul LaRue, president of Just In Time Digital, said his company’s Quest isMOD kiosk is seeing “a significant increase in accompaniment track sales. The key is availability. … 50% of what we sell through the Quest isMOD would otherwise be completely ‘out of print.’

“One of the big reasons for the increase is when an individual purchases an accompaniment track, they continue to browse through and inevitably find other titles that they’d like to add to their order.”

Overall, Integra Interactive, which places the myMEDIA BurnBar in stores, has found that the long-held idea that 20% of the titles create 80% of music sales needs to be reconsidered.

“Integra’s sales analysis of the nearly 13,000 full albums and nearly 36,000 a la carte songs sold through myMEDIA BurnBar turns the 80/20 rule on its head,” said David Amster, Integra president. “The top 10% of all the titles sold represents only 37% of the total dollar volume. The bottom 90% represents 67% of the total sales. The vast majority of the album titles in this ‘long tail’ are not stocked by the stores and are sales they would not have made.”

In the case of Lighthouse Christian Books, which has a digital kiosk, Ellis said: “We’re not burning a whole lot of music on it other than accompaniment CDs, though the other thing it’s being used for is for people who are putting together their own greatest hits CDs.”

External marketing

Hockett, who consults with more than a dozen stores per year, said not enough retailers are forming partnerships with Christian radio stations—something he believes can drive traffic and move CDs.

“Over half of our Christian music buyers, 57%, listen to Christian radio every day, and 83% listen every week, so if you can match that audience up with your core customer, it’s going to help you,” Hockett said.

He also added that too infrequently stores fail to alert customers of channel-specific product—something with which Christian radio can help.

“We have channel-specific products that are different than what would be released to the general market,” Hockett said. “A good example of that is the Fireproof DVD. The one that’s for the Christian market has ministry tools with it, a song from Casting Crowns and a free Fireproof (greeting) card offer with it. … I think that we need to do a better job of getting that information to stores and to our customers.”

One way to get information to customers is not only through radio, but also by creating “an e-mail list of people who enjoy Christian music and then regularly sending those people updates on new music,” said Riskey of CBA.

Other marketing ideas he suggests include starting a section in the store for “grass roots”—or local—artists and then hosting occasional concerts for them in the store’s parking lot or in the store itself if there is space. “This would begin to build traffic from groups that may never have considered their local Christian bookstore,” he said.

Another idea is to take all the local worship pastors to lunch. “Find out what they’re doing and what God is doing in their church,” Riskey said. “These relationships would be helpful to foster to help make a stronger connection to the churches in your community. Find out what music those pastors are using for worship and maybe those CDs could be made available at a book table after the services.”

Training

A well-trained staff sells more products, and CBA has a Web-based initiative supported by major music labels and distributors to help retailers do just that. Hockett said the program is still in the testing phases but will eventually make training employees easier for stores. Retailers can currently sign up for the program at www.cbaonline.org.

The new effort, CBA Connect, is “a social learning system,” Hockett said. “We’re loading it with different training information, and for the first time, the training is tracked. We know who took it, we know what they did, so this is something that was produced so it could be used by the industry.

“Even Family Christian Stores or Parable Group can have their own place on there that’s separate from what CBA has, and they can still do proprietary-type training. The whole idea is that you don’t do training unless you can measure it.”

Retail insiders are quick to note that product information, while important, isn’t everything. Half the battle is engaging and listening to the customer, something that too many stores aren’t doing, Ross believes.

“The reason that some retailers are selling lots of music is that they are engaging the customer,” Ross said. “(Too often it seems) you hire someone who’s a good Christian and can’t sell the product, or you hire someone who’s a fan of the product and can’t sell the product. We’ve gotten into this mentality that we’re not going to (bother) our customer. You have to be proactive about that. … We can’t automatically jump to a conclusion about what a person will or won’t buy.”

Music still viable

While stand-alone music stores are increasingly rare, it’s clear that for now Christian music is still a viable category within a diversified Christian bookstore. However, the glory days of five years ago are gone.

Today, a successful music department requires plenty of promotion, know-how, a well-trained staff and constant attention to maintaining appropriate inventory levels. CBA has created a list of best practices—available at cbablog.typepad.com—which retailers might consider to boost the performance of their music department.

“I don’t think this is a dead category by any shape,” CBA’s Hockett said. “Part of it is the way people are looking at it. How robust it was doesn’t diminish its importance now. The real Christian retail core customer, they buy music a lot, and they shop the store not just for themselves, but also for their friends. … In retail, it’s like anything else: When you focus on something and you really have a strategy with it, it works.”

Other experts talk not only about strategy, but also about attitude. In a down economy and in an already struggling industry, it’s easy to get discouraged, but retailers must remember why they got into Christian retail in the first place.

“My own personal belief is that it’s really important for music executives and retailers to remember why we got into this business; we wanted to honor Christ with a different message,” Funderburg said. “And with the economy and being around negative thinkers, well, it’s a lot easier to become like who you hang out with.”

Ross of Parable said people are still buying CDs, and it’s not just older people.

“Lil Wayne isn’t appealing to my mom, and he’s selling millions of (physical) records,” Ross said. “(Christian rock band) RED’s Innocence & Instinct was our number two-selling album last week, and that’s not going to appeal to my grandma either. … People are still buying CDs. It’s a different world, but it’s full of sound.”

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