Retailers everywhere - those who merchandise music and those who don't - take note - if you want to include among the ranks of your customers fans of The Eagles, AC/DC, Journey, Genesis, and Bryan Adams - kiss that thought goodbye. Because Wal-Mart, long rumored to be reducing their footprint in physical CD sales, has wrapped up all of these artists to sell their current or future CD releases exclusively at Wal-Mart.
First up, and the biggest coup for Wal-Mart was The Eagles, one of the best-selling groups of all-time, a group who had not released an album in close to 30 years. Wal-Mart secured an exclusive on their new album and has sold (according to reports) over 3 million copies of Long Road Out of Eden.
This week Wal-Mart partners with Genesis for an exclusive release of a 3-DVD set. I love this quote from genesis keyboardist Tony Banks:
"Wal-Mart puts 100,000 of this DVD out there and feels like it can sell that many, which I think will be an awful lot better than the last few things we've done," Banks said. "You have to look at it that way."
So, while record retail is tanking, and Wal-Mart itself, as well as retailing giants Best Buy and Target shrink music floor space... while Borders closes stores and puts itself up for sale... while Transworld continues to shrink shelf space devoted to music... while Handleman gets out of the music merchandising and fulfillment game altogether... Wal-Mart is still cleaning everyone's clock by locking up the TALENT people spend money on in the CD category. I know Target has done a few exclusives too, but their profile is much smaller. Best Buy - with their previous Rolling Stones and Elton John DVD exclusives - has also stepped up to the plate before. Starbucks Coffee Company's Starbucks entertainment division signed record deals with Paul McCartney, Joni Mitchell, James Taylor, and others, but those releases were also released through normal record retail channels. But Wal-Mart is very savvily locking up the acts that will make customers drool with anticipation over - will a Guns 'N' Roses deal for Chinese Democracy be next... if Axl ever delivers the record?
So my blunt question to all the retail chains out there, whether you be a mass merchant, supermarket chain, specialty retail chain, or regional or national department store is this: WHEN ARE YOU GOING TO STEP UP AND LEARN THE LESSON WAL-MART IS TEACHING? That lesson is simply this: you need not reinvent the wheel by offering up an innovative product to help drive people into your stores. You do not need to invest in the "next big thing" when there are major known quantities with brand equity and customer/fan loyalty you can tap into - who have specific relevance for your retail brand. But you do have to be bold and act! You have to get in the game. You have to realize physical music product - CDs - can still boost traffic and get new customers into your stores.
How many Eagles and AC/DC fans do you think there are? MILLIONS! How many times have people walked into other stores merchandising music and asked for the Eagles CD, only to be told that it is available exclusively at Wal-Mart? How many people who don't frequent Wal-Mart often - or EVER! - were compelled to purchase that Eagles CD at a Wal-Mart location or from Walmart.com? How many Wal-Mart shoppers who frequent the store often feel that much more loyal to the Wal-Mart brand?
Now ask this question: when is YOUR RETAIL BRAND going to use the power of music to elicit that kind of a reaction in consumers? Being daring doesn't mean being stupid. Even Wal-Mart didn't commit to more than 100,000 copies on the Genesis DVD. Decisions about merchandising an exclusive album of new material from an artist require a solid grounding in the landscape of the music business, but, more importantly, a clear picture of one's own retail business, specifically:
What is a reasonable minimum "guarantee" of units your chain would commit to on a one-way, non-returnable basis to get an album exclusive?
But these questions, and their answers, are brand-specific. Do your brand a favor and start asking some of them. Or just sit back and watch Wal-Mart continue to eat your lunch. There is no reason for a retail brand of 100+ stores to think "doing a music exclusive is out of our company's reach or scope." Latch on to the incredible passion found in your consumers. Discover what they are passionate about and deliver that. It doesn't matter if you're a specialty fashion retailer or a quick serve restaurant - the right music can drive traffic and profits and get your brand closer to "top of mind" in the consumer's brain and emotions.