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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 2,600 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 10 workers, and generates $1-2 million annually.

    • The musical instrument and supply store industry consists of about 2,600 firms that employ about 26,500 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

                                    Coronavirus Update

                                    Apr 4, 2022 - Pandemic-driven Industry Rebound Continues
                                    • Music stores may be negatively impacted by the pandemic-related drop in church attendance. Pew Research Center found that nearly a third of regular churchgoers who stopped attending due to the coronavirus pandemic have not returned to church buildings. Some choose to participate online, but others have dropped out completely. About a third of instruments sold are used within the worship setting, according to instrument manufacturer Fender.
                                    • Retail sales of musical instruments and supplies increased 22% year over year in 2021 to $8.9 billion, according to Music Trades magazine. The boom has strengthened the financial position of many of the industry’s long-troubled players. Musical instrument manufacturer Gibson Brands, which went through bankruptcy in 2018, saw its sales surge enough for its private equity owners, including KKR, to pay themselves hundreds of millions in dividends. Debt-laden retail giant Guitar Center, which had filed for bankruptcy in November 2020 and emerged a month later, has reportedly filed documents for an IPO. Online retailer Sweetwater went on a hiring spree, nearly doubling staff to 2,400 employees and reporting record sales of $1.4 billion in 2021, a 25% jump from 2020, when sales climbed 20% year over year.
                                    • Strong demand for some musical instruments and supplies may continue if another spike in new COVID-19 cases hits the US. New COVID-19 case rates increased in late April, with the seven-day rolling average increasing to roughly 85,630 on May 11, up from 72,300 on May 7, 58,000 on May 1 and 30,000 cases per day on April 8, according to a New York Times COVID-19 case tracker. Experts note that the American population has different vaccination rates, levels of previous exposure to the virus, and degrees of underlying health conditions, so the trajectory of new cases could vary. Analysts note that the data regarding new cases are getting less reliable as the public testing infrastructure continues to wind down and home test results are less likely to be reported to officials.
                                    • People are changing their priorities about consumption because of the pandemic, according to the results of a survey conducted for consulting firm EY’s Future Consumer Index. Many respondents said that they want to buy fewer, higher-quality products that can last longer. Fewer people — only 27% — now agree with the statement that they buy more things because it makes them happy. And 85% say that they want to consider sustainability when shopping. “There’s often a large intention and action gap with consumers, so we don’t know what the actual result will be,” said Kristina Rogers, global consumer leader at EY. “But I think we’re seeing a lot now around consumers ready to change their behavior to make better-informed [decisions about] products for the good of society. And in fact, what’s coming through now is much more demand for brands and companies to take some responsibility for leading some of that positive change.”
                                    • An Institute for Supply Management (ISM) barometer of business conditions at service-style companies such as retailers and restaurants decreased 1.2 points in April to 57.1% and signaled that labor and supply shortages as well as high inflation are hurting the economy. Results over 50% are viewed as positive for the economy and anything over 55% is considered exceptional. Experts say that demand is not the issue — businesses still have more than they can handle. Ongoing shortages of labor and supplies, high energy prices, and the worst bout of inflation in 40 years are the biggest hurdles. Service-oriented companies have generally fared worse during major viral outbreaks like the coronavirus pandemic according to the ISM. Their workers deal directly with customers and their businesses are more affected by government restrictions.
                                    • Use of some form of digital payment increased again in 2021, according to a consumer survey conducted by management consulting firm McKinsey. The 82% of respondents using digital payments — defined to include browser-based or in-app online purchases, in-store checkout using a mobile phone and/or QR code, and person-to-person (P2P) payments — in 2021 exceeds the prior year’s 78% and the 72% of five years earlier. McKinsey cautions, however, that some shifts in digital adoption during 2020 and 2021 appear to be related to the COVID-19 pandemic and may prove to be transitory.
                                    • Sales at sporting goods, hobby, musical instrument, and book stores increased 3.2% month over month on an adjusted basis in March but decreased 5.7% year over year during the period, according to the US Department of Commerce. The sales data measures dollars spent at US businesses, so the increase partly reflects inflation in the cost of everyday products from food to gasoline. Consumer prices are increasing at the fastest pace in years, a phenomenon largely attributed to the uneven reopening of the global economy.
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