Sam Ash still rockin' after eight decades - Company Profile

DSN Retailing Today, May 19, 2003 by Doug Desjardins

NEW YORK -- The retail market for musical instruments caters to a unique audience outside the mainstream, but like most retail channels, it, too, is feeling the effects of the ongoing economic slump. Mars Music, one of its largest retailers, went out of business this year, and others are struggling. But New York's Sam Ash Music, one of the oldest retailers in the business, has seen its sales pick up the past two years despite being a high-end retailer in low-budget times.

One of the secrets to Sam Ash's success has been the Internet, a venue it entered just a few years ago. According to David Ash, president of the 79-year-old retailer whose headquarters are located on Long Island, "Internet sales increased by double digits last year, and it's the fastest growing part of our business. So I'd say it's a profitable business."

Ash says many retailers in the music business, his own included, have been slow to adopt new technology and get into e-commerce. "We're definitely behind other industries in terms of technology and we're rushing to catch up," said Ash.

That's because most retailers in the music business are small operators with single stores or small chains, not the type of companies ready to invest heavily in technology. And they cater to musicians, people who generally don't fit the mold of the average consumer. "The musical instrument business is a lot different than other types of retail," says Ash. "Only 10% of the population buys instruments on a regular basis, so it's very specialized."

Not surprisingly, many retailers in the business are musicians themselves, and that's the case with the man who founded the chain. Sam Ash was a violinist who emigrated from Austria in 1907 and settled in New York City. He earned a living playing with various bands before founding his own outfit, the Sam Ash Orchestra.

By the early 1920s, Ash was married and ready to quit touring and settle down. So he gravitated to what he knew best and opened the first Sam Ash Music store in Brooklyn, N.Y., in 1924, pawning his wife's engagement ring to come up with the $400 down payment. The store became a local landmark, and when he turned the business over to his sons Jerry and Paul in the 1950s, they launched an expansion plan and pioneered the megastore concept.

The stores today average about 20,000 square feet and carry a full range of instruments and accessories, from vintage guitars to state-of-the-art recording equipment. "We sell everything from 25-cent guitar picks to $100,000 mixing boards," said Ash.

And the 37-store chain has a reputation for quality that attracts some the music industry's top artists. During their U.S. tours, members of the Rolling Stones have stopped in, along with Elton John and Joe Cocker. Bruce Springsteen and members of the E Street Band frequent the New Jersey and New York outlets, as do Bette Midler, Diana Ross and Stevie Wonder.

Ash recalls an incident years ago when Wonder visited a store in search of a new sound system. "Our employee showed him what we had and Stevie Wonder asked him, 'Which one would you buy if you were going to use it?"' said Ash. "After our employee told him which one he would buy, Wonder bought two of them. As when he was helping load them into the car, Stevie said, 'All I need is one. The other one is for

In addition to providing musicians with the tools of their trade, Sam Ash supports the local music scene in its markets--and generates plenty of publicity--by teaming up with radio stations and promoters to sponsor concerts and special events. "Sometimes we'll supply the sound equipment and other times we'll sponsor the events on our own," said Ash.

Ash credits the Internet business and recent efforts to improve in-store technology for keeping the chain going in a tough environment. The chain does not release financials, but Ash said sales have increased the past two years. In 1999, the chain teamed up with AT&T to launch its Internet business and improve its store operations. Sam Ash joined AT&T frame relay and now uses the technology to track inventory and sales reports from stores--a useful tool for a relatively small chain with stores from coast to coast.

"It's essential to have the right technology to be effective, and being effective is the name of the game," said Ash. "You have to deliver the best products to customers in the most cost-effective way, and that's what we do."

Sam Ash is also working to find new ways to cut down on shipping costs and consolidate its buying from manufacturers. While shipping in the music business isn't time sensitive as in other industries, but it can be costly, particularly for a chain as spread out as Sam Ash. Most of its stores are concentrated on the East Coast, but it has outlets in Tennessee, Illinois, Nevada and California.

That layout wouldn't make sense for most businesses, but Ash says it does in the musical instrument matrix. "You have to be a destination that attracts people from miles around, and that's what we do," said Ash. "If your stores are too close together in this business, you just cannibalize your own sales."