Tips on Starting a Record Store

The mass-market for vinyl has long since gone, along with the market for pre-recorded tapes and practically every other recordable format we’ve bought or collected over the last fifty years. Even the ubiquitous CD looks like it may be eclipsed by DVDs and MP3s soon.

Yet, despite the changes in format the one thing that doesn’t change is the people’s insatiable appetite for music.

Qualifications

Becoming a record retailer is a matter of dedication and knowing your subject rather than of having qualifications. The typical entry point for a retail owner is to have gained experience in record retailing, either as a worker in a record shop or more often as a buyer at a shop.

Most begin small and build up – starting with just a box of rare or cheap records and a market stall is not uncommon. Starting small is good but the downside is you build up slowly. I suppose you have less to lose that way by starting according to your resources. The qualities required are pretty much what you would expect for any other small business. “Aside from common sense, you need the patience of a saint, stamina and a very understanding partner.

If you’re looking for advice on starting out there’s no substitute for talking to people already in the business. It’s also very important to listen to your customers. Basically whatever the customers asked for was my market research. When a customer asked, ‘Can you get me this indie single’, look into that area.

The location of your premises is going to be one of the biggest considerations for you. Obviously for a mail-order or internet site, location is pretty much irrelevant, although somewhere in easy reach of a good post office and not too out of the way is best.

If you’re setting up shop then the high street is going to be your prime spot. The downside is that it’s expensive, and to compete with the big chains you’ll need to spend a fortune on shop fittings.

Another aspect is how you should display your stock. It’s displayed either dead (just the empty cases) or live (the whole package). Obviously if it’s dead then you’re going to need a second set of shelves behind the counter to house the CDs; if it’s live then you’ll have to invest in a fairly expensive security system.

Setup Cost

Setup costs are expensive for a record retailer and can be the biggest barrier to entry, which is why so many begin small. You need a lot of money to sell new release records and do it properly from the start. You’ll need a back catalogue and the mark up is very low.

So for small folks starting off, small is really the only option. Now with computers, internet sites and office equipment it can be quite costly, but if you get things as you need them and grow naturally it’s much less stressful.

The typical cost to start up is around Php 500,000 plus, and that includes shop fittings (a cash register, record racks and a good, loud, sound system), stock and a website (you’ll need one regardless of your likes and dislikes of the internet, see the internet section). Stock unfortunately all has to be paid for up front but there’s occasionally the offer of sale or return.

Recognising the next big trend is where you can get an advantage over the chains. The secret is knowing your market: read the media, watch the TV and read the obituaries – dead artists sell well. If Bob Dylan died it would be bigger than Christmas.

But be warned, you have to get in early. Worst mistake was not buying enough or not buying early enough and missing sales. Once you’ve missed it in the first four weeks, that’s it. Plus if an artist fails then it’s normally the third album where it goes wrong.

When you buy records you’ll either buy them directly from the record labels or through a distributor. Some distributors provide something known as operating networks. The network system is a nationwide ‘chain’ of retail outfits that shops are invited to or elect to become a member of. These networks cost shops nothing to join but commit them to buying a specified amount of stock every week or month.

The benefit to retailers affiliated with these networks is that they get special deals on product, have exclusive access to limited edition releases and formats and are allowed to take a certain percentage of releases on a sale or return basis.

Many distributors are orientated towards certain styles and genres of music, but there are numerous distributors that each occupies a particular niche in their respective market.

Another area in which you can do sale or return is selling tickets for local music events. Tickets for club nights and gigs mean you get publicity on any fliers, plus a steady stream of potential customers through your door, and you get to take a commission on any sales.

Putting on your own events is also a way of gaining extra revenue. But it’s not unheard of for no-one but the band to turn up, in which case you make a huge loss. Music ephemera is also worth looking into, music books, posters, t-shirts, and turntable slip-mats are all lucrative extras, with much higher markups than the CDs of the artist.

Return of Investment

Return on investment can be immediate depending on how small you are when you set up, or it can take a few years. For a small market stall you should be breaking even pretty much immediately, whereas with a larger store it will take much longer. But getting established in the market is another matter.

Getting a regular clientele can take years of work but there are advantages to getting that clientele, particularly when it comes to advertising yourself. Other ways of attracting attention to your self are in-shop record signings, DJ promotions, readings by authors, newsletters, rare record searches and if you’re more adventurous, local radio slots and club nights. And of course, Word of mouth by offering an efficient service

The main advantages to a live system is that you can have multiple checkouts around the store.

Hours

As with all retailers you can set your own hours, although if you’re sensible you’ll set those hours to reflect your customers choice rather than your own. This means opening Saturday and Monday (new records are nearly always released on a Monday to give the maximum sales period through the week and ensure a good top 10 position). In addition to the weekly highs and lows there are seasonal changes.

The average record retailer can get by with probably one full timer. If you choose to run the business as a one-person operation then it is possible – although the hours will probably be very long – but inevitably you’ll need some staff to help you.

The average record retailer can get by with probably one full timer, and one or two part-time staff. Wages are traditionally poor in this sector and perks non-existent. Working in a record shop is seen as a perk in itself, reduced price CDs and the ability to listen – and tape – any record they want are also added bonuses.

After all that work, what can you expect to earn? A typical outlet will on average take between Php 100-150,000 a month, from which you have to pay for stocks, wages, rent, rates and utilities. Leaving you a profit of between Php 50-70,000 a month depending on how much of the work you do yourself.

The Internet

The Internet has been both a curse and a blessing to high street and mail-order shops. The internet has certainly increased the demand for music, and enabled a lot of people to get access to music they wouldn’t normally come across.

Web marketplaces like www.gemm.com, www.netsounds.com, www.musicstack.com combine the databases of many different dealers, shops, mail order companies and collectors to form a single giant database enabling customers to search in one place for that hard to find or deleted music item.

So they get that lost CD and you get access to a worldwide audience, plus there’s the ability to get your company customer service scored by anyone who buys from you.

The more quick, polite responses you give, gets you more stars in the gallery of retailers, plus most of the markets are free regardless of whether you are a part-time seller with only a handful of items for sale or a large retailer with thousands of items.

Note: This text is an edited version. You can read the full article at startups.co.uk. The amount given above are rough estimates cost only and do not reflect the actual cost on the market. Picture from www.star-jobs.com.