GAK, Bax Music, and now PMT. Major music retailers in the UK are having a rough go of it, as all three of those major brands have closed this year. Notably, PMT was the fourth-largest UK music retailer by revenue, with dozens of stores throughout England and Wales selling everything from guitars and drums to headphones and DJ equipment.
But the rise in online shopping and the ability of online-first retailers to offer customers lower prices via fewer overheads otherwise associated with brick-and-mortar retail have contributed to its increasingly unsustainable business model, and it just entered administration last week.
For these reasons, according to YouTube music industry commentator KDH, the music retail business is “heading towards a monopoly”.
“Physical stores will always have more overhead than a warehouse that can buy in bulk and ship out. I said it two months ago back when GAK went under, and I believe it,” KDH says. “I remember one comment was laughing at it. But every day it’s getting truer and truer. We are heading towards a monopoly, which is not good for the end consumer.”
KDH says larger retailers are now able to consolidate and grow their market share via their ability to buy from suppliers in bulk, which leads to lower prices for their customers, something smaller retailers are unable to provide.
One brand that continues to survive in the current market is Behringer, which focuses on sound equipment and DJ gear. Behringer is a subsidiary of a major conglomerate in music products called Music Tribe. Other subsidiaries include Coolaudio, Tannoy, and Lab Gruppen.
With the support of Music Tribe, which is worth over $2 billion, Behringer was able to court “Super Partners” in prominent retailers like Sweetwater that buy wholesale orders of products. As with any retail environment, wholesale amounts to lower prices for individual items, savings that are passed on to the consumer.
“As small retailers close down, and now even the bigger retailers close down because they can’t compete with online prices, well, what’s gonna happen?” KDH adds. “You’re gonna be left with one or two who might have started out cheap, but then when there’s no competition, raise the prices up.”
KDH goes on to predict that a monopoly won’t sprout up overnight, but that it is impending:
“That probably will happen. It’s not gonna happen immediately, but it’s gonna happen in, I don’t know, 10 years.”
“A store like PMT whose annual turnover is tens of millions is not closing because kids don’t want to play music or people aren’t buying music gear,” he continues. “It’s closing because it can’t compete against online.”
Watch KDH’s full analysis of the situation below:
The post Is UK music retail heading for a monopoly? This YouTuber thinks so – he explains why appeared first on MusicTech.
Recommended Comments
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.