While cheaper imports helped to stimulate sales, they also pressured profitability
Los Angeles, CA (PRWEB) February 08, 2013
The Retail Market for Musical Instruments is increasingly optimistic as consumers buy items that they delayed purchasing during the recession. Following the collapse of the US economy, reduced disposable income caused industry revenue to dip 0.7% in 2010 as consumers substituted toward cheap imported instruments. As a result, import penetration into the manufacturing sector spiked 9.3% in 2010, and it is estimated to rise at a 1.7% annualized rate in the five years to 2013. At the same time, according to IBISWorld industry analyst Agata Kaczanowska, “A higher quantity of musical instruments encouraged retailers to stock and display them, which ultimately boosted industry sales over the past five years.” Revenue is forecast to rise at a 1.2% annualized five-year rate to $6.7 billion in 2013, including a 4.4% jump in 2013 as disposable income growth enables consumers to loosen their purse strings.
Companies in the Retail Market for Musical Instruments may also generate revenue from products sold alongside instruments, like sheet music or CDs. Sales of audio and video equipment like amplifiers and microphones are excluded in this industry, as are musical instrument repairs and rentals. Although the industry is historically dominated by traditional brick-and-mortar locations, e-tailers like Amazon, smaller niche websites and big-box stores like Target are increasingly selling industry products. As a result, the total number of retailers is expected to rise strongly over the five years to 2013. “This influx of retailers has lowered the market share concentration for this already-fragmented industry as new entrants siphon revenue from established companies, like industry leader Guitar Center,” says Kaczanowska.
By carrying a variety of instruments and related products, stores benefit from high-volume and convenience sales, decreasing the costs per unit for each sale. As a result, mass merchandisers like Walmart have been able to offer discounted prices on musical instruments. Price competition has been further fueled by low-margin imported instrument sales, especially through online outlets that make it convenient for consumers to shop around and compare prices. As a result, industry profit has dwindled from its 2008 level.
Nonetheless, industry growth is set to persist in 2014, with a continued uptick in disposable income. In the medium-term, however, higher disposable income will be balanced out by declining leisure time as the unemployment rate drops. Consequently, consumers will be less inclined to buy musical instruments. During the next five years, industry revenue growth is estimated to slow, exacerbated by the rising popularity of low-priced imports. For more information, visit IBISWorld’s The Retail Market for Musical Instruments in the US industry report 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
Companies in this industry sell musical instruments, such as guitars and pianos, and may also generate revenue from products sold alongside instruments, like sheet music or CDs. This report shows the size of the retail market for instruments and includes all major retail channels, including specialty stores, general merchandisers and e-retailers. Sales of audio and video equipment like amplifiers and microphones are excluded in this industry, as are musical instrument repairs and rentals.
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.