The Case for Record Retail Shelf Space Takes Another Hit, But Online... Another Story

Barnes & Noble reported weaker than expected fourth-quarter projections based on weak CD sales at the chain.  There have already been numerous rumblings about further decreases in shelf space for CDs at major chains like Wal-Mart and Best Buy.  Virgin Megastores is closing some locations.

This, on the heels of a 15% decrease in demand for album sales at record retail as a whole in 2007 - it doesn't paint a pretty picture... although sales of physical CDs via e-commerce sites experienced a 2.4% increase.  To me, that points to: A) how decreased selection at physical retail is forcing consumers to look online for titles which, until recently, could be found at major chains, and B) how the online record retail experience has just become more consumer-firendly than the physical record retail experience.  If you are starved for time - and who isn't - then going online first makes a ton of sense.  This development also illustrates "long tail" economics to a tee.

Comments

[gavin]

Did you say online sales of physical CDs online increased? Did you mean digital albums?

[Peter Kohan]

No Gavin - Please check the link in the post. It clearly states that there is a 2.4% increase in the sale of physical albums via e-commerce sites. The increase in overall digital sales is much higher. I guess the point I was trying to make is best illustrated in today's post.

[gavin]

My bad, I misread:

"B) how the online record retail experience has just become more consumer-firendly than the physical record retail experience"

to say

"more consumer-firendly than the physical record experience." (I didn't see the word "retail" there, pointing out that you weren't talking about digital vs. physical, but retail vs. online).

Sampling an album before buying it is a major plus in the online sales category. Retail stores like Walmart sometimes have a CD player with headphones on the wall with one or two CD's in it, but there is no way to sample any album you want, without letting the customers handle (and potentially scratch) the discs. Actually, what a retail store could do is have a computer set up with 30 second clips of all music in the store, where a customer can search for an album and preview it before buying.

This could help the retail side as far as sampling goes, but yes, people would still have to get dressed and go out.

[Peter Kohan]

Gavin - There are retailers like Barnes & Noble and Borders which allow you to listen to 30-second samples of any CD in their database on headphones. And some retailers are actually customer-friendly.

But the online CD (or DVD) buying experience allows the customer to peruse a much wider product selection, view both critical and peer reviews of a product, check a few top sites for price competitiveness, and do it at their own pace.