Price-conscious consumers are buying more used pianos than new, hurting revenue
Los Angeles, CA (PRWEB) May 11, 2012
Piano and keyboard sales depend on various economic factors, such as consumer sentiment, income, housing starts and government investment. The housing bust, financial crisis and subsequent recession slashed demand for pianos and keyboards from consumers and institutions. “As unemployment rose and incomes fell,” says IBISWorld industry analyst Brian Bueno, “consumers cut back on discretionary purchases, including musical instruments.” In turn, the Piano and Keyboard Manufacturing industry experienced steep revenue declines. Despite growth in 2010 and 2011, and an expected 5.3% jump over 2012, revenue is projected to equal $242.2 million this year, roughly $91.1 million below total revenue in 2007. Its current position reflects steep revenue drops of 30.4% and 23.5% in 2008 and 2009, respectively.
Following the recession, the industry has failed to regain its position because of the continued drag on incomes due to high unemployment and weak demand from consumers hesitant or unable to finance their purchases. Moreover, imports account for the vast majority of US piano and keyboard demand, depressing the potential for growth among US manufacturers. Overall, revenue is estimated to decline at an average annual rate of 6.2% over the five years to 2012. Few firms in the Piano and Keyboard Manufacturing industry remain in the United States; however, the two largest firms, Steinway Musical Instruments Inc. and Samick Musical Instrument Co., control over half of the market.
As many consumers across the country lost their houses or moved into smaller homes, a glut of pianos entered the US supply of used pianos and keyboards. According to Bueno, these used instruments represent significant external competition for manufacturers because customers may choose to purchase less expensive used pianos rather than new ones. The increase in supply and decline in demand combined to create a particularly negative pricing environment, especially for manufacturers that had to lower prices to compete with used instruments. Customers choosing to purchase used pianos and keyboards largely contributed to a relatively weak revenue recovery between 2010 and 2012.
The industry is expected to enter a period of sustained growth as it rides a wave of rising demand along with US economic expansion. Over the five years to 2017, IBISWorld forecasts industry revenue to increase at a quick pace. Nevertheless, the industry will continue to be weighed down by heavy import competition, weak housing starts, credit-wary consumers and competition from used instruments in the early part of the outlook period. For more information, visit IBISWorld’s Piano and Keyboard Manufacturing report in the US industry page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Firms in this industry manufacture pianos and keyboards, including grand pianos, upright pianos, electronic player pianos and digital pianos. These instruments are manufactured or assembled domestically and sold to US and international markets (e.g. individuals, schools, conservatories and houses of worship) directly or through retail locations, such as musical instrument stores.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.