Music retailers operate in a smaller world

DSN Retailing Today, August 16, 2004

Now that the dust has settled and the music retail business has stabilized, the landscape looks much different than it did when consolidation started back in 2001. The combination of Internet downloads and stiff competition from mass merchants like Wal-Mart and Target ravaged music retail specialists and forced them to shutter hundreds of stores.

Wherehouse Entertainment was probably the hardest hit. The chain had 405 stores when the shakeout began in 2002 and it went into a tailspin that concluded with a bankruptcy filing last year. Wherehouse was purchased by Trans World Entertainment in late 2003 and now operates 113 stores under new ownership.

Musicland also lost a hefty chunk of its holdings during the past three years. The chain had 1,331 Sam Goody, Media Play and Suncoast Stores when it was purchased by Best Buy in 2001, but closed more than 250 store in 2003 prior to its purchase by Sun Capital Partners. The chain now has 914 stores.

The venerable Tower Records chain followed a similar path. Tower had 215 stores in the United States and overseas in early 2002, but the rapid decline in CD sales forced it to sell its international stores and downsize domestically. The chain, which emerged from bankruptcy in March, is now on the sales block with 93 stores remaining. Even Trans World has fewer stores than it did

three years ago despite the fact that it's been buying struggling retailers such as Wherehouse. Trans World, which operates stores under several banners including Coconut's Music and Strawberries, had nearly 1,000 stores in 2001 and now operates 850.