With 4.83 million total sales last week, Billboard notes that the week ending Sept. 12 was the slowest ever in the SoundScan era. That beats the record low of 4.95 million set earlier this summer. Now, one of the largest outlets for major-label product—and one of the industry leaders in driving the price of the CD below $9.99—has declared that it will continue its trend of devoting less floor space to CDs.
The news was somewhat expected, as stories out of this year’s National Assn. of Recording Merchandisers trade convention continued to speculate that mass retailers would further curtail their music offerings. On Wednesday, Billboard’s Glenn Peoples pointed to an Investors.com story that referred to a recent Best Buy investors call in which Best Buy executive Brian Dunn was quoted as saying the “CD section in particular will shrink in space allotment” in favor of higher-margin items.
Best Buy isn’t alone. Wal-Mart also has been gradually cutting the amount of new music it stocks. As CD sales dip, Apple’s iTunes store has become the dominant retail player—accounting for about 28% of the market, according to Billboard estimates. Sales at “non-traditional” outlets—the category Nielsen SoundScan has created for all digital, venue and mail-order purchases—hit an all-time high in 2009, topping the 100 million mark for the first time.
Sales at mass-merchant retailers, which include Best Buy, Target and Wal-Mart, have been steadily dipping. SoundScan reported in 2009 that mass-merchant sales declined for the second year in a row. The sector had reported growth from 2002 through 2006, often using new releases as a “loss leader,” a heavily discounted item designed to get foot traffic into the store.
Best Buy plans to allocate less floor space to CDs and DVDs this fall, according to a report of a Tuesday conference call with analysts. No indication was given on the treatment of new release and catalog titles in this latest reduction of CD shelf space. Said CEO Brian Dunn:
“We’ll have another store reset before the holidays, which will include an increase in the space for higher-growth and, in the aggregate, higher-margin categories, like Best Buy Mobile, e-readers and gaming, with a heavy emphasis on new gaming platforms and pre-owned game titles. This will be enabled by our reorganization of the DVD and CD sections. The CD section in particular will shrink in space allotment.”
The extra space created by shrinking CD and DVD sections will help create a space for demonstrations of new motion-controlled video games, Microsoft’s Kinect and Sony’s Move.
Best Buy had a 8.7% share of the U.S. music retail market in 2009, according to Billboard estimates, down from 10.7% in 2008. Walmart had an estimated 12.5% share in 2009, down from 15% in 2008. Both retailers have consistently reduced the CD’s footprint in their stores. (Investors.com)
The outlook for movies and music dimmed Tuesday when consumer electronics retailer Best Buy (BBY) said it will cut back on shelf space for DVDs and CDs this holiday season.
The entertainment software market has been in decline for years, and so has the space Best Buy has allocated for compact discs and digital video discs. The space for CDs and DVDs is going to get even smaller this fall.
“We’ll have another store reset before the holidays, which will include an increase in the space for higher-growth and, in the aggregate, higher-margin categories, like Best Buy Mobile, e-readers and gaming, with a heavy emphasis on new gaming platforms and pre-owned game titles,” Best Buy Chief Executive Brian Dunn said in a conference call with analysts Tuesday. “This will be enabled by our reorganization of the DVD and CD sections. The CD section in particular will shrink in space allotment.”