Report: Wal-Mart To Cherry-Pick CD Retail?
August 25, 2008 at 11:48 AM (PT)
WAL-MART has been in the news of late as the exclusive retailer for heritage acts such as THE EAGLES, GARTH BROOKS, JOURNEY and now AC/DC. However, according to SILICON VALLEY INSIDER, the high-profile releases are partially obscuring a troubling fact -- that WAL-MART is significantly cutting back the size of its CD inventory.
Seconding a WALL STREET JOURNAL STORY that reported on WAL-MART's desire to cut back on its CD offerings, the SVI story noted that "WAL-MART executives, frustrated by perennially declining CD sales, have been quietly exploring changes in their approach to selling music. The company has described different versions of its potential new strategy to different players in the music industry.
"A retail cutback could be much more damaging than any single year revenue decline," the story continued. "In a worst-case scenario, and one we think is quite likely, a cutback sets off a self-fulfilling prophecy: Retailers stock less music, so consumers have less to choose from, and then buy even less, causing retailers to stock even less. Repeat."
In fact, all of the major retailers -- BEST BUY, TARGET and WAL-MART -- have been cutting CD retail space for a while now. While some may presume that the retail traffic will revert to the dwindling number of independent retailers or, more likely, to iTUNES and other digital retail platforms. SVI discounts both notions because WAL-MART in particular caters to a different audience than those who frequent indie and online retailers
"They're generally not selling it to people who are looking to buy music. They're at the store to buy a refrigerator, or socks, or whatever. Reduce the amount of floor space you dedicate to music, and those sales go away. And they're not coming back, period."
Read the entire story here.