Musical Instrument & Supply Stores

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 2,400 musical instrument and supply retailers in the US sell musical instruments, sheet music, and related products and services. Firms may provide rental, lease, or repair services for musical instruments. Some firms provide music instruction or lessons. Companies may specialize in a particular product category, such as pianos or guitars.

Competition from Alternative Sources

Musical instrument and supply retailers compete with a variety of alternative sources, including mass merchandisers, warehouse clubs, online-only retailers, and direct-to-consumer channels.

Unpredictable Trends and Fads

While not as unpredictable as the fashion industry, the musical instrument and supply market has its share of trends and fads.

Industry size & Structure

The average musical instrument and supply store operates out of a single location, employs 11 workers, and generates $1-2 million annually.

    • The musical instrument and supply store industry consists of about 2,400 firms that employ about 27,700 workers and generate $4.5 billion annually.
    • The musical instrument and supply store industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for about 55% of industry revenue. The top four firms account for 41% of industry revenue.
    • Large companies include Guitar Center, Sam Ash, and Schmitt Music Company. Some large domestic firms will ship merchandise to foreign countries.
                                    Industry Forecast
                                    Musical Instrument & Supply Stores Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    May 3, 2023 - Consumer Confidence Falls in April
                                    • Consumer confidence levels fell in April 2023 after a slight increase in March 2023, according to data from The Conference Board. The Conference Board’s consumer confidence index dipped to 101.3 in April 2023 from 104 in March 2023. According to Ataman Ozyildirim, a senior director of economics at The Conference Board, “Consumers became more pessimistic about the outlook for both business conditions and labor markets. Compared to last month, fewer households expect business conditions to improve and more expect worsening of conditions in the next six months. They also expect fewer jobs to be available over the short term. April’s decline in consumer confidence reflects particular deterioration in expectations for consumers under 55 years of age and for households earning $50,000 and over.” Plans to purchase appliances, autos, homes, and vacations cooled in April 2023, a sign that consumers are pulling back amid reduced optimism, per Ozyildirim.
                                    • Slower consumer spending, reduced credit availability, and rising e-commerce use are expected to contribute to the closure of 50,000 retail stores by 2027, according to a new forecast by UBS reported in Retail Dive. The forecast assumes that 25% of online orders will be fulfilled by a retail store by 2027, up from 15% currently. The US presently has about 940,000 retail stores, excluding fuel and food service. Since January 2021, more than 5,000 stores across all retail segments have closed or are set to close due to several factors, such as higher costs and a decline in units per store. Store closures likely will disproportionately affect smaller chains. Per the UBS report, “We believe this trend should continue in the years to come, with consumers consolidating their trips and shifting towards online channels. As underperforming retail stores are shuttered, it should help the store productivity of surviving locations.”
                                    • The global pianos market is projected to grow at a CAGR of over 3% from 2022 to 2030, climbing from $2.2 billion in 2022 to $2.9 billion by 2030, according to Reportlinker. The acoustic segment is projected to record a 3.6% CAGR during the period, and the digital segment is expected to grow at 2.3%. Regionally, the US market is estimated to reach $652.3 million in 2022, and China is estimated to climb at a CAGR of 2.7% during the 2022 to 2030 period, reaching $498.9 million. Other countries expected to grow during the period are Japan (3%), Germany (2.5%), and Canada (2.4%).
                                    • The National Retail Federation is projecting US retail sales growth of 4% to 6% in 2023, climbing to $5.13 trillion to $5.23 trillion. In 2022, retail sales grew by 7% to $4.9 trillion. The non-store and online sales segment is expected to grow by 10% to 12% in 2023 to a range of $1.41 trillion to $1.43 trillion. Much of the growth is driven by multichannel sales, which uses the physical store as part of the fulfillment process. Brick-and-mortar stores remain the primary point of purchase for consumers, accounting for some 70% of total retail sales. According to NRF President and CEO Matthew Shay, “In just the last three years, the retail industry has experienced growth that would normally take almost a decade by pre-pandemic standards. While we expect growth to moderate in the year ahead, it will remain positive as retail sales stabilize to more historical levels.”
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