Written by: Robert Heiblim, Partner, bluesalve Partners
Now that we've discussed background and foreground on what next-gen audio retailing might look like, let's cut to the chase - where's the money? Beyond the bread and butter products in your mix, we see new revenue streams in goods and services that didn't necessarily exist during the last audio boom. Intelligently deployed, they can amplify the bottom line and build ongoing buzz around the business:
Everything Old Is New Again
Yep. Vintage. The vinyl (and even cassette and open reel) resurgence has fueled explosive new interest in used equipment – particularly the components Dad used to own, or wished he had. Canny folks are scouring Goodwill, Craigslist and eBay, not just for the joy of the product, but also as a profitmaking buy-resell proposition. Triple digit markup, anyone? The Reverb.com site – acquired by Etsy for $275m – has remade the musical instrument/ pro audio market with just this model. Now they're into home audio too, like Audiogon and others, but you'll have an advantage against the internet, because…
Local = Good
Buying used gear over the web, especially via eBay – still the champion seller – is always a vaguely dicey experience. The buyer has to believe the seller's descriptions and pictures. They have to research the seller ratings to establish trust. They have to fight other auction participants and stress out over whether the bidding is worth it. If they don't like what they won, they have to re-list it, box it and hassle with shipping. By contrast, immediacy sells a lot of products. A brick and mortar location with a nice selection of used gear will never be lacking for enthusiast customers. Don't have time to "source" these products yourself? How about offering commissions to people that do? The gig economy has many faces.
Better Than New?
In case you didn't already know, there's now a booming cottage industry in the repair, refurbishing and modification of classic (and less-classic) equipment. Virtually every metropolitan region has local experts that are re-foaming speakers, replacing old capacitors, modding LED lamps and finding tubes for old and new gear (like Chi-Fi). While it'd be a great addition, you don't need such an expert in-house; a referral and commission situation could be highly beneficial for both parties, and a major convenience for customers that pay your store to midwife the process. Ever wonder what happened to audio chains like Pacific Stereo and Tech HiFi? Follow their links and see.
Perpetual Hardware & Frequent Buyers
Aspiring audiophiles are rarely content with what they own; those who are into the hobby are always looking for a better high (end). What about a trade-in/trade-up program that only ends when the customer says game over? Granted, audio components aren't smartphones and there's rarely a forced need to upgrade equipment. But good sound isn't a need, it's a passion. What young enthusiast wouldn't love to work toward their nirvana one component at a time, mixing and matching along with way, perhaps for years? An annual VIP subscription fee, not unlike Amazon Prime, could smooth profitability for this initiative while creating store evangelists.
Don't Forget New Music
Naturally, you'll want to sell music in your shop. No one's asking you to turn the place into a record store (though you could find worse role models). A carefully curated selection of physical media, particularly vinyl not only draws in music fans – your natural customers – but gets them excited about hearing their favorites on the great equipment you sell. Don't have the expertise to run a music section in your store? What about partnering with the local record shop? These days they're full up with customers evenings and weekends, and would probably love to have more selling space.
Don't Forget Old Music
How many older music fans wish they had the convenience of their long-acquired CD collection without having to deal with physical media? Isn't that benefit one of the reasons they're coming to a next-gen audio retailer? Plenty of internet services earn $1 and up per disc for ripping services, why shouldn't your shop? A new music server is a not-insubstantial purchase. A new music server with the customer's music already is obviously a more enticing sale, with value-add the customer can't get from Amazon.
These are only a few thoughts for in-store activities and they've been focused on 2-channel music. That won't be the only opportunity in next-gen audio, of course. Which retailer (or manufacturer) will come up with best practices for selling audio solutions designed for gaming or VR? What about other immersive formats, such as Atmos, or audio for other-than-music, such as the coming hearables market? There's a big world of sound out there and it's getting bigger. We look forward to watching the future of audio evolve, and even more satisfyingly, having a hand in it.
# # #