“We are heading towards a monopoly”: YouTuber predicts the future of UK music retail following PMT closure
There’s no dancing around it. The future of brick-and-mortar musical instrument retail looks bleak. In the past few months, we’ve seen the closure of several revered brands, like GAK and Bax Music, which shut up shop in March and April, respectively.
Hell, last week alone, PMT – the fourth largest UK music retailer by revenue – entered administration, and Hobgoblin, a family-run music retail chain, launched a crowdfunding round to help secure its future on UK high streets.
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So with all these closures – in some cases of decades old musical institutions – what do they mean for the future of the industry?
YouTuber KDH reckons the closure of all these businesses could lead to a “monopoly”, as fewer retailers gain larger market shares. These remaining retailers are often those with larger online businesses and warehouse locations.
“Physical stores will always have more overheads than a warehouse that can buy in in bulk and ship out,” KDH says.
“I said it two months ago back when GAK went under, and I believe it,” he continues. “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 goes on to note the distribution model of Behringer – a brand whose parent company is valued at over $2 billion – which sells synths, guitar pedals and loads of other musical gear cheaply.
He notes how Behringer has a list of “Super Partners” – retailers which order in larger quantities that it can subsequently offer lower rates to.
KDH says for these Super Partners, “the price is more competitive than for anybody who is buying in smaller quantities, which means people are going to buy from them because it’s less money”.
This effectively means larger retailers are able to offer lower prices to their customers by virtue of their ability to order in bulk in the first place, compounding the problem.
“And 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?” he 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.
“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. It’s closing because it can’t compete against online.”
Watch KDH’s full analysis of PMT’s closure below:
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Source: www.guitar-bass.net
