One-stop shopping is here

<p>Aislinn McCormick</p><p> Music stores are in an intensely competitive market, with supermarkets driving prices down on the one hand and digital music sales and piracy on the other. Survival depends in part on introducing a broader range of product, including books, DVDs and games, and thereby creating a one-stop shop for entertainments, and driving up footfall in the process.</p><p>Figures from a recent survey of music buyers conducted by the music trade association, the British Phonographic Industry (BPI), show that specialist retailers still take the lion's share of album sales, accounting for 44.9% of sales in all genres for July to October 2004. Supermarkets' share rose to 22.8% in the same period.</p><p>But a government-backed report, Are Traditional Music Retailers in the UK All Washed Up?, published last year from Music Tank, suggests that music retailers' survival depends on creating a single entertainment destination in order to cross-sell new product lines to their existing customers. "Selling music is not enough; if music retailers don't adjust to the pressure they are in danger of becoming irrelevant," says Jennifer O'Kane, author of the report and talent spotter for Universal Records. The recent closures of such high-profile independent music stores as Andy's Records and Tower Records also underline the need for music retailers to diversify their range.</p><p>Entertainment hubs</p><p>Books complement music as a further entertainment product, and play a crucial role in the transformation from music store to entertainment hub. HMV UK, Virgin Retail and Fopp are the main music retailers to stock books, while Borders UK offers a mixed-media range with books as its core category and W H Smith has a mixed, though limited, entertainment range.</p><p>HMV has always stocked books and believes that the rise in the concept of an entertainment store, and the subsequent blurring of boundaries between CDs, DVDs, books and other markets, reflects public demand. Gennaro Castaldo, HMV head of press, says stores have adapted to the growing volume of crossover merchandise from properties such as The Lord of the Rings, rather than reacting to the threat posed by supermarkets or downloading. "Books are at the core of the entertainment range on offer and not just an add-on for sales. The book offer at HMV ultimately reflects the public expectation and passion for a range of product," he says.</p><p>Although its book offer is resolutely different and separate from Waterstone's, HMV strives to provide backlist titles in both music and books and avoids heavy reliance on chart-driven selections. "Our policy in acquiring large stores means that we are able to follow our ethos for presenting a broad range of books," Castaldo says.</p><p>At the entertainment chain Fopp, books are considered a complementary product alongside CDs and DVDs, but do not necessarily reflect the music range. "Books are all about impulse buys. The book range at Fopp is a bolt-on to sales, and it is bought with that in mind," Gordon Montgomery, Fopp founder and chairman, says. "The consumer will go to Waterstone's or Borders for a specific title."</p><p>Books generate 40% gross profit for Fopp, compared to CDs' yield of 30%. DVD is the least profitable of the three categories. </p><p>Fopp's success lies in buying titles in bulk from clearance houses and selling cheap. Instore marketing targets the impulse buyer, with perennial sellers including student classics from the beat generation; Freud; Orwell; reference books such as The Cannabis Companion (Running Press); and photographic coffee table titles like September 11: A Testimony (Reuters) and Full Moon (Cape).</p><p>Borders devotes two-thirds of its space to books and derives two-thirds of its sales from them. It aims to provide a unique environment, with books, music and DVDs under one roof. Philip Downer, Borders Books&amp;Music UK m.d., says: "Books are at the core of what Borders does and always have been. What we don't want to do is hide music away in a separate part of the store. It is integral to the overall experience." </p><p>No guilt trips</p><p>Virgin Retail's aim is to present books as a leisure option alongside CDs, DVDs and computer games. "We have to place books and the reading pursuit as entertainment rather than playing the guilt card," Andrew McClellan, Virgin category manager of books and printed media says. "We position the pursuit of reading as something that will provide as much fun as playing a computer game, listening to a CD or watching a DVD."</p><p>McClellan says the "cool factor" is an important element in attracting consumers to the Virgin Retail books offer. He explains that the company hopes to keep customers loyal while adding product lines such as books to the entertainments on offer.</p><p>Fopp has learned the limitations of its brand: after a failed attempt to pursue a dedicated bookstore in Cardiff, it was forced by poor sales to add its usual mix of CDs, DVDs and vinyl to the newly opened store. (Before it opened, word of mouth had already reached Cardiff that Fopp was the place to pick up entertainment products in a one-stop shop.) </p><p>But Fopp has been hugely successful at making books work across its stores, and has a high stock turn in books. Its strategy of dedicating prime space to tables displaying &#163;5 or &#163;6 titles has been copied by other book retailers to break from formulaic promotions and multibuy offers.</p><p>Consumer spend on books, newspapers and magazines rose 4% to &#163;7.6bn in 2004, according to the forthcoming yearbook of the British Association of Record Dealers. The figure comes from leisure industries research conducted by Sheffield Hallam University. The sector outperforms music, video and games at &#163;6bn, and &#163;2.6bn for personal computers.</p><p>Fopp has indentified its target consumer as the "50-quid Bloke"--a male who impulse buys books, CDs and DVDs to a value of &#163;50 a go. "The average age of the Fopp customer is late '30s-plus, with a lot of disposable cash and leisure time to fill," Montgomery says. Castaldo of HMV agrees that the emergence of 50-quid Bloke reflects a market of baby-boomers from the 1950s and '60s whose passion is music. HMV defines its customer more generally as having a passion for music that transcends generations.</p><p>Educating customers as to the value of books is a challenge for music retailers: people can find it hard to evaluate the relative value of a bestselling game such as Grand Theft Auto as compared to a bestselling hardback book at an equivalent &#163;30 or &#163;40. To attract book-buyers, most retailers rely on discounting or other price incentives.</p><p>Generating excitement about launch dates for books could be another effective way of marketing them. The strategy has worked at Virgin Retail with computer games, and McClellan plans to build a similar sense of anticipation with book launch dates in the future. He will also extend Virgin recommendations from CDs and DVDs to books, with reviews of books generated by head office and eventually from shop floor retailers. "Virgin Retail isn't going to be the place where people are going to find the new literary giant, but for a new book on entertainment we can create a buzz of anticipation, as we did with the Katie Price and Pamela Anderson book launches."</p><p>Music retailers are not the only traders to branch out into other products in order to broaden their appeal. Borders' introduction of Paperchase, trading in all UK stores, and Virgin Megastores' offer of the musical instrument dealer Sound Control in the basement level of its Oxford Street branch, create special destinations. Coffee chain Starbucks, in partnership with the US music labels Concord Records and Hear Music, has contributed to more than 1.2 million sales of Ray Charles' "Genius Loves Company" album, of which 135,000 were sold in the UK to date.</p><p>By diversifying range into related products, retailers are able to attract new customers while reinforcing and improving their offer to existing shoppers. Shelves of books stacked up beside the latest CD or DVD release is a sight that looks like it is here to stay.</p>