G47.591 Musical Instrument Retailers in The UK Industry Report

Out of tune: Online-only retailers are a rising
threat as consumers spend more online
IBISWorld Industry Report G47.591

Musical Instrument Retailers
in the UK
February 2017 Chris Edwards
2 About this Industry 14 Demand Determinants 26 Operating Conditions

2 Industry Definition 14 Major Markets 26 Capital Intensity
2 Main Activities 15 International Trade 27 Technology & Systems
2 Similar Industries 16 Business Locations 27 Revenue Volatility
2 Additional Resources 28 Regulation & Policy
18 Competitive Landscape 28 Industry Assistance
3 Industry at a Glance 18 Market Share Concentration
18 Key Success Factors 29 Key Statistics
4 Industry Performance 18 Cost Structure Benchmarks 29 Industry Data
4 Executive Summary 20 Basis of Competition 29 Annual Change
4 Key External Drivers 21 Barriers to Entry 29 Key Ratios
5 Current Performance 21 Industry Globalisation
8 Industry Outlook 30 Jargon & Glossary
10 Industry Life Cycle 22 Major Companies
22 S&T Audio Ltd
12 Products & Markets 22 Gear4music Ltd
12 Supply Chain
12 Products & Services
www.ibisworld.co.uk | 020 3008 6568 | info@ibisworld.co.uk

WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 2
About this Industry
Industry Definition Operators in the industry sell musical This industry includes the sale of musical
instruments, including guitars, amplifiers, instruments via the internet if the seller
keyboards and associated accessories. also operates bricks-and-mortar stores.
Main Activities The primary activities of this industry are

Musical instrument retailing
Recording equipment retailing
Sheet music retailing
The major products and services in this industry are

Amplification and DJ equipment
Audio recording equipment
Brass and woodwind instruments
Expendables, accessories, sheet music and other items
Guitars
Keyboards, pianos and organs
Orchestral stringed instruments
Percussion instruments
Similar Industries G47.430 Audio & Video Equipment Retailers in the UK

Firms in this industry sell audio and video playing and recording equipment.
G47.650 Toy Retailing in the UK

Companies in this industry sell toys, which sometimes include musical instruments targeted at beginners.
G47.790 Second-Hand Goods Stores in the UK

Operators in this industry sell second-hand goods, including musical instruments.
G47.910 E-Commerce & Online Auctions in the UK

Businesses in this industry sell products online, including musical instruments, sheet music and
related products.
Additional Resources For additional information on this industry

www.mi-pro.co.uk
Musical Instrument Professional
www.ons.gov.uk
Office for National Statistics
www.retail-week.com
Retail Week
Industry at a Glance
Musical Instrument Retailers in 2016-17
Key Statistics Revenue Annual Growth 12-17 Annual Growth 17-22

Snapshot
£438.2m 3.8% 1.6%
Profit Wages Businesses
£17.1m £68.2m 1,688

Revenue vs. employment growth Real household disposable income
Market Share
Gear4music Ltd 10 8
10%
5 6
S&T Audio Ltd
0 4
7.6%
% change
% change
-5 2
-10 0
-15 -2
Year 09 11 13 15 17 19 21 23 Year 10 12 14 16 18 20 22
Revenue Employment
SOURCE: WWW.IBISWORLD.CO.UK
p. 22
Products and services segmentation (2016-17)
Key External Drivers

7%
Brass and woodwind instruments 16.2%
Real household 9%
disposable income Expendables, accessories,
sheet music and other items
Total online expenditure
Population aged
11 to 19 years 9.2%
Average weekly 15.5%
Amplification and
hours of work DJ equipment
13.8%
15%
p. 4
14.3% SOURCE: WWW.IBISWORLD.COM
Guitars SOURCE: WWW.IBISWORLD.CO.UK
Industry Structure Life Cycle Stage Mature Regulation Level Light

Revenue Volatility Low Technology Change Medium
Capital Intensity Low Barriers to Entry Medium
Industry Assistance None Industry Globalisation Low
Concentration Level Low Competition Level Medium
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 29
Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive The Musical Instrument Retailers increase by 2.9% in the current year.
Summary industry endured tough conditions at the Musical instrument retailers have
start of the five years through 2016-17. faced increasing external competition
Subdued economic performance during over the past five years, particularly from
this time resulted in uncertainty among online-only retailers. These businesses
consumers, who subsequently reduced typically offer a wider range of products
their expenditure on discretionary goods. at heavily discounted prices because they
This consumer behaviour affected a do not have the operational costs that
number of retail industries including the come with running bricks-and-mortar
Musical Instrument Retailers industry, stores. As a result, industry operators
which was already declining. However, have been forced to reduce their prices to
this negative tone changed in 2013-14 remain competitive and maintain the
thanks to rapidly improving economic flow of demand. Profit margins were low
at the start of the period, forcing several
operators to exit the industry.
Operatorshave been forced to reduce their Economic conditions are forecast to
improve further over the next five years,
prices to compete with online-only retailers however external competition is likely to
restrain industry growth. Technological
conditions. Retail activity increased as a advances are anticipated to lead to new
result of the strengthening economy, leisure-time activities and online retailing
rising real disposable income and higher is projected to become even more of a
consumer confidence. Over the five years threat as consumers’ lives become more
through 2016-17, industry revenue is internet-based. Those instrument
estimated to increase at a compound retailers that can afford to invest in
annual rate of 3.8% to reach £438.2 multichannel retailing may be able to
million. The EU referendum result is survive the squeeze, but it is likely that
expected to dampen consumer spending more enterprises will be forced out of the
in the final quarter of 2016-17. However, industry. IBISWorld forecasts that
so far consumer spending has remained industry revenue will increase at a
resilient despite the fall in consumer compound annual rate of 1.6% over the
confidence following the referendum. five years through 2021-22, reaching
Total industry revenue is expected to £473.5 million.
Key External Drivers Real household disposable income associated with maintaining a bricks-
Trends in disposable income affect and-mortar store limit their ability to
demand for musical instruments. A rise compete with online-only retailers. Total
in income levels enables consumers to online expenditure is expected to
purchase new musical goods and increase in 2016-17, which is a potential
consumers with heightened disposable threat to the industry.
income are more likely to choose a more
expensive option. Real household Population aged 11 to 19 years
disposable income is expected to increase Musicians often play instruments during
slightly over 2016-17. adolescence. An opportunity exists to
offer more school music programmes as
Total online expenditure this younger demographic expands.
Specialist retailers in the industry face Schools typically increase their spending
heavy competition from online retailers, on musical equipment as the student
which are appropriating industry population rises. The population aged
revenue. Although many industry between 11 and 19 is forecast to continue
retailers also operate online, the costs increasing steadily in 2016-17.
Key External Drivers Average weekly hours of work practice. Having more leisure time could
continued The more time consumers spend working, encourage more people to take up an
the less time they have available for instrument, which would benefit retailers.
leisure activities. Fluctuations in Over 2016-17, the average number of
consumers’ available leisure time hours worked per week is anticipated to
influences demand for musical decline slightly. However, a large
instruments because those that choose to proportion of the consumer base for
learn a musical instrument must dedicate musical instruments consists of students
some of their spare time to lessons and or schoolchildren below working age.
Real household disposable income Total online expenditure
8 200
6
150
4
% change
£ billion
100
2
50
0
-2 0
Year 10 12 14 16 18 20 22 Year 07 09 11 13 15 17 19 21
Current Musical instrument retailers struggled at

the start of the five years through 2016-
over the past three years. As a result,
industry revenue is estimated to increase
Performance 17. Consumers have shifted their interests at a compound annual rate of 3.8% over
from traditional hobbies, such as learning the five years through 2016-17, reaching
to play an instrument, to those more £438.2 million.
aligned with the digital age. This Musical instrument retailers do,
deterioration in demand was exacerbated however, still face challenges. Industry
by the economic downturn, which participants have encountered growing
resulted in falling consumer confidence competition from external retailers.
and lower disposable incomes. However, Online-only retailers present the biggest
conditions for businesses in the industry threat because their smaller overheads
improved dramatically from 2013-14 allow them to offer a wider range of
onwards and industry revenue is forecast products at much lower prices. In
to increase by 2.9% during the current response to this growing threat, and in
year. Rising real disposable income and order to salvage demand, industry
the stronger economic conditions have retailers have been forced to cut their
resulted in an increase in retail activity prices to increase footfall in stores.
Harmonious The economic downturn created five-year period, high unemployment

resolution difficult conditions for many and low real wage growth resulted in
industries, including musical low demand for new instruments.
instrument retailers. At the start of the Budget-conscious musicians became
Harmonious more likely to eschew musical including rising consumer confidence

resolution instrument retailers and purchase and increasing real disposable income,
second-hand instruments from have enabled the industry to recover
continued
websites such as eBay. Improving some of the ground that it lost during
economic conditions since 2013-14, the economic downturn.
EU Referendum The depreciation of the pound that

followed the EU referendum in 2016 is Retailers
are expected to
expected to have a significant impact on
musical instrument retailers over
pass rising purchase costs
2016-17 onwards. The vast majority of from the depreciation of
products sold in the industry are the pound on to customers
imported, so a weaker pound will likely
result in rising purchase costs. Retailers
are expected to pass some of these limit price increases despite rising
rising purchase costs on to customers. purchase costs to avoid losing business
However, the degree to which retailers to online-only retailers.
are able to pass on price rises depends Some operators in the Musical
on the level of competition and Instrument Retailers also operate
profitability in the industry. Large European online sales portals. One such
external competitors such as online- company is Gear4music Ltd. Because
only retailers are expected to keep this firm is able to sell to the European
prices low in an effort to win market market in addition to domestic
share from bricks-and-mortar stores. customers, the business is expected to
This may result in an erosion of profit benefit from increased revenue in
margins within the industry as stores pound terms.
Drumming up support The industry has traditionally been costs and wider consumer base. The
composed of retailers that cater to a number of enterprises is estimated to
specific product area. However, the decline at a compound annual rate of
prevalence of the internet and internet- 0.2% over the five years through 2016-17,
enabled devices has led to the emergence with employment figures projected to
of a new type of competition. The boom in stagnate over the same period.
e-commerce has resulted in a wide variety As consumers have become more
of products being sold over the internet. technologically aware, mobile commerce
Over the five years through 2016-17, total has grown rapidly. Consumers have
online expenditure is estimated to become more impulsive in their
increase rapidly. Online-only retailers can purchasing decisions, which drives
circumvent some of the overhead costs revenue away from traditional bricks-
that traditional retailers with bricks-and- and-mortar retailers. Many larger
mortar stores face and are therefore able companies in the industry have handled
to engage in aggressive price competition. this by beginning to offer their stock
Intense pressure has led to the exit of online. Some instrument retailers have
several retailers, while others have moved been able to leverage their experience
their operations completely online, and knowledge of the market to become
hoping to take advantage of the lower successful online.
School of rock One key market for musical of £18 million to the Arts Council to
instrument retailers is school deliver music education. This increase
children. The spending habits of brought the total amount available to
musical instrument buyers are linked music education hubs to over £75
to the changing musical tastes of the million in 2015-16. A further £225
population and the evolution of the million of funding over the next four
school curriculum. Demand is also years was announced in November
determined by the importance 2016. However, the proportion of this
parents place on their children funding that will be allocated to the
learning a musical instrument. In purchase of new instruments is
January 2015 the UK government expected to be relatively low. Despite
announced additional funding for this, an increase in music tuition is
music and arts education expected to have the secondary effect
programmes. Part of this of increasing household purchases of
announcement included an increase musical instruments.
Traditional operations The Musical Instrument Retailers

transposed industry is in the process of changing. Operatorsthat can offer
The penetration and sophistication of
electronic instruments has allowed multichannel retail options
individuals to purchase advanced have performed better than
studio equipment and music
technology relatively inexpensively.
traditional operators
Greater availability and price
competitiveness of MIDI controllers convenient because the software can
and digital instruments, such as be downloaded immediately.
electronic drums, has also spurred Retailers that have been able to
demand for new instruments. keep up with digital enhancements
Musical instruments are also are faring better. Those that can
increasingly being used in afford to offer multichannel retailing
conjunction with software, which options also tend do better than
makes purchasing online even more traditional retailers.
Highly strung One area in which traditional alternative investment because they
bricks-and-mortar stores’ revenue generally appreciate in value and are
remained robust during the difficult relatively immune to the effects of
start to the five-year period through inflation. As a result, products in this
2016-17 is in the sale of high-value category performed strongly at the
antique instruments, particularly start of the period, when the effects
stringed instruments. This is because of the economic downturn were still
stringed orchestral instruments are being felt. As economic conditions
expensive, so dealers do not have to began to improve from 2013-14
sell very many to generate a high onwards, demand for antique
level of revenue. Additionally, in an instruments declined slightly despite
unstable economic climate, antiques demand for products as a form of
are often considered to be a good alternative investment.
Industry Over the five years through 2021-22,

the UK economy is forecast to Industry revenue
Outlook continue to improve, despite
10
economic uncertainty arising from
the EU referendum result. GDP 5
growth and continued low
unemployment are expected to 0
% change
support consumer expenditure. This
is expected to result in consumers -5
maintaining stable levels of spending

-10
despite forecast inflationary
pressures. However, despite resilient -15
economic conditions, demand for the Year 09 11 13 15 17 19 21 23
industry’s products is expected to be
dampened by external competition SOURCE: WWW.IBISWORLD.CO.UK
from online retailers and changing

consumer trends and tastes. Over the compound annual rate of 1.6% to
five years through 2021-22, industry £473.5 million. This is expected to
revenue is projected to rise at a include growth of 2.6% in 2017-18.
Technological timbre The popularity of alternative recreational instruments there are likely to be fewer
activities affects demand for musical lifelong players. As such, the general
instruments. Sport, hobbies, the internet tenor of the industry is expected to shift
and video games all compete with music slightly, towards more technological
for a share of consumers’ free time. offerings. Enterprises specialising in
Online entertainment is expected to product categories such as home
continue performing strongly. This trend recording and computer-based
has long-term consequences for equipment are expected to be in a better
instrument retailers because as children position to prosper in the five years
become less interested in musical through 2021-22.
Orchestrating online Competition from online-only traders, even more difficult to match the prices of
operations which is already strong, is likely to online traders and will need to focus on
increase over the next five years as UK improving their customers’ loyalty,
consumers continue to purchase more promoting the benefits of expert advice
over the internet. Total online expenditure and hands-on retailing where customers
is expected to continue to rise sharply over can try before they buy. Retailers are likely
the five years through 2021-22, presenting to face more showrooming, a practice in
both an opportunity and threat to which consumers visit bricks-and-mortar
retailers. As consumers increasingly look stores to decide which piece of musical
online for purchases, the number of equipment to purchase and then look
high-street shops is falling. Online-only online for a cheap online-only to buy it
musical instrument traders are expected from. It is anticipated that consumers will
to flourish and the influx of new players in also continue using online auction sites to
this industry sector will intensify purchase used musical equipment
competition and further drive down online cheaply, further weighing on the
prices. Many traditional musical performance of traditional bricks-and-
instrument retailers are likely to find it mortar retailers.
Striking a chord Despite strong external competition, convenient way for musicians to
there are several advantages that purchase products quickly. Items such
bricks-and-mortar stores can offer as replacement strings, reeds and
musicians over online-only retailers. For drumsticks are often purchased in a
example, bricks-and-mortar stores offer hurry. As a result, ordering online can
consumers the opportunity to test an be impractical. Another important area
instrument prior to purchase to see that bricks-and-mortar stores can excel
whether it meets their needs. It is also in is repair services. Instrument repair
easier for staff to give personalised or modification services are expected to
advice to customers. Furthermore, support a steady stream of custom over
physical stores are usually the most the five years through 2021-22.
Banding together Industry consolidation is expected to by the wayside. Technological advances in

continue over the five years through 2021- audio recording mean demand for
22 and enterprise numbers are forecast to recording equipment will continue to
decline at a compound annual rate of grow. Retailers that offer a superior
0.1%. Operating profit is likely to drop service and in-depth advice will be partly
slightly over the period. The proliferation insulated from competing cheaper online
of cheaper products online and price sellers that cannot offer the same level of
reductions from larger players are customer service. The number of people
expected to squeeze margins even more in employed by the industry is expected to
the future. The cost of doing business in increase over the five years through
such a competitive environment is high, 2021-22 as businesses increase their focus
and some smaller players are likely to fall on customer service.
Life Cycle Stage Online sales mean consumers are not buying
as many of the industry’s products
Industry enterprise numbers are declining
Technological change is driving limited
growth in some product categories
20 Maturity Quality Growth

% Growth in share of economy
Key Features of a Mature Industry

Company High growth in economic
consolidation; importance; weaker companies Revenue grows at same pace as economy
level of economic close down; developed Company numbers stabilise; M&A stage
importance stable technology and markets Established technology & processes
Total market acceptance of product & brand
15 Rationalisation of low margin products & brands
10
Quantity Growth
Many new companies;
Sound Recording minor growth in economic
& Music Publishing importance; substantial
5 technology change
0 Toy Retailing
Primary Education
Musical Instrument Retailers
-5 Decline
Audio & Video Equipment Retailers Shrinking economic
importance
Consumer Electronics Manufacturing
-10
-10 -5 0 5 10 15 20
% Growth in number of establishments
SOURCE: WWW.IBISWORLD.COM.AU
Industry Life Cycle The Musical Instrument Retailers customers the benefits of personalised
industry is in the mature stage of its life advice and services, or seek niches in the
cycle. Over the 10 years through 2021-22, market. Alternatively, those that can offer
Thisindustry the industry’s contribution to GDP is multichannel services may survive. Some
is M
ature expected to decrease. The compound potential for growth does exist in the
annual rate of industry value added industry. Home recording equipment is a
growth is expected to be 0.2%, compared rapidly growing product category as this
to the 2.3% forecast for GDP over the type of technology becomes more
same period. Consumers who would have advanced, cheaper and easier to use, and
once considered taking up a musical is being increasingly marketed at
instrument are being offered a greater hobbyists and amateur musicians.
array of options when it comes to Retailers able to market these products
spending their leisure time. are likely to succeed. Retailers will find it
Competition from alternative outlets is increasingly difficult to attract new
a strong contributing factor to the customers to traditional orchestral
industry’s flagging fortunes. Online instruments like violins, oboes and
retailers are undercutting traditional trombones as these product types fall out
retailers’ prices and many industry of favour with the overall market and
operators are not able to compete on this businesses concentrate on a small
basis. Operators must show potential number of specialist retail areas.
Products & Markets

Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain KEY BUYING INDUSTRIES

J59.200 Sound Recording & Music Publishing in the UK
Audio recording studios purchase specialist recording equipment from music retailers,
including computers and peripherals, studio outboard gear, musical instruments
and amplifiers.
P85.200 Primary Education in the UK
Primary schools purchase musical instruments, sheet music and related products to provide
students with as part of their music curriculum.
P85.310 General Secondary Education in the UK
Secondary schools purchase musical instruments, sheet music and related products to provide
students with as part of music tuition.
Z99 Consumers in the UK
UK consumers, particularly amateur musicians and the parents of children taking up a musical
instrument, purchase musical instruments, sheet music and accessories from retailers.
KEY SELLING INDUSTRIES

C26.400 Consumer Electronics Manufacturing in the UK
Manufacturers of amplifiers, public address systems and specialised audio recording
equipment are key suppliers to this industry.
C32.200 Musical Instrument Manufacturing in the UK
Manufacturers of musical instruments, including string, woodwind, brass, percussion and
electronic instruments supply this industry.
Products & Services Audio recording equipment Amplification and DJ equipment

Products in this category include tape Amplification and DJ equipment is
machines, audio processing devices, and another significant product segment. It
computer hardware and software for includes dedicated guitar and bass guitar
audio recording. This segment accounts amplifiers, speaker cabinets, public
for approximately 16.2% of industry address speakers and related equipment,
revenue. Once solely used by specialist turntables, mixers and other equipment
recording studios, this equipment is designed for DJs. DJ equipment has been
becoming more advanced, cheaper and the fastest growing product type in this
easier to use, so it is increasingly category, since the professional and
marketed to everyday consumers. Most amateur DJ market has embraced digital
musical instrument retailers stock some media. Over 2016-17 the percentage of
kind of audio recording equipment, industry revenue generated by the sale of
which can range from basic handheld amplification and DJ equipment is
recording devices to dedicated digital expected to increase to 15.5%.
recording workstations and specialised
processing components like Orchestral stringed instruments
preamplifiers, effects units and Orchestral stringed instruments, such as
compressors. Demand for these products violins, violas, cellos and double basses,
is being driven by the expanding home are estimated to contribute 15% of industry
recording market, which is making up for revenue. Cheaper items in this product
lagging demand from the studio segment are generating a declining
recording industry. The percentage of proportion of revenue due to the fact that
industry revenue generated by the sale of fewer British children are taking up
home recording equipment is expected to instruments and only a small share of
increase slightly over 2016-17. those are favouring traditional instruments
Products & Markets
Products & Services like the violin over instruments commonly Keyboards, pianos and organs
continued used in popular music. However, this Keyboards, pianos and organs are
product segment generates a significant estimated to generate 13.8% of industry
proportion of revenue because orchestral- revenue. The majority of this comes from
grade instruments, many of which are electric pianos and synthesisers. Acoustic
considered antiques and works of art in pianos represent a significant cost for most
their own right, sell for a large amount of consumers, as they start from around
money. For example, some violins sell for £2,000 and can often cost more than
more than £1 million. The Lady Blunt £10,000. The percentage of revenue
Stradivarius violin dating from 1721 sold contributed by acoustic pianos has been
for £9.8 million in 2011. Although this falling for some time because they are so
violin was sold through an auction, these expensive and relatively inexpensive
high prices demonstrate that businesses substitutes are easily available. Digital
can generate large amounts of revenue pianos, electric pianos, synthesisers and
even if their sales volumes are low. The MIDI keyboards make up an expanding
percentage of revenue derived from the share of this product segment. This reflects
sale of orchestral stringed instruments is changing trends in musicians’ preferences
expected to remain relatively constant and in popular music in general. The
over 2016-17. proportion of revenue derived from the
sale of keyboards, pianos and organs is
Guitars expected to decrease over 2016-17.
Electric and acoustic guitars generate an
estimated 14.3% of industry revenue. Other products
Despite becoming slightly less popular in Percussion instruments account for 9.2%
recent years, guitars are still the most of industry revenue. The majority of this
popular musical instrument among segment’s revenue comes from selling
Britons. They can be bought for as little drum kits. Other products included in the
as £30, but high-end models can cost segment are shakers, gongs, zithers,
over £3,000. Affordable guitars are triangles and orchestral percussion
mass-produced offshore in places like instruments such as timpani and
Korea, Mexico and China. More marimba. Traditional brass and
expensive models tend to be produced woodwind instruments like trumpets,
locally, or in the United States, Canada or trombones, oboes and clarinets are
Europe. The proportion of revenue declining as a share of sales. These
derived from the sale of guitars is currently make up approximately 7% of
expected to decline slightly in 2016-17. overall industry revenue.
Products and services segmentation (2016-17)

7%
9%
Brass and
woodwind instruments 16.2%
Expendables, accessories,
sheet music and other items
9.2%
15.5%
Amplification and DJ equipment
13.8%
15%
14.3%
Total £438.2m Guitars SOURCE: WWW.IBISWORLD.CO.UK
Products & Markets
Products & Services A 6% share of industry revenue comes 3% of revenue comes from selling sheet
continued from expendables and accessories, music and other products. Sheet music
including strings, rosin, tuners, music has become a less lucrative product
stands, straps, reeds, cables and plectra. because musicians are increasingly
The segment’s share of industry revenue accessing sheet music cheaply or for free
has increased over recent years. A further via the internet.
Demand Musical instruments are considered to be relative cost, attractiveness and

Determinants discretionary purchases, meaning that availability of competing leisure activities
overall demand for industry products is affect whether consumers will participate
sensitive to changes in consumer in music activities. Accordingly,
confidence and household disposable technological advances in recording
income. Growth in income enables equipment, sound reinforcement
consumers to purchase a broader range equipment and other musical electronics
of goods, including rare instruments or can have a positive effect on demand.
ones of higher quality. Furthermore, Music and instrument introduction
demand for musical instruments is very and lessons usually begin at a young age,
responsive to price changes. A rise in commonly during school years. As a
income levels may lead consumers to result, the relative share of consumers
purchase musical instruments in general, aged 11 to 19 is viewed as the key market
replace existing instruments or upgrade for musical instrument retailers.
to high-end products. Consequently, changes in this age group
The amount of available leisure time can have a notable impact on industry
also affects demand for musical sales. By exposing children to music at a
instruments. Leisure time availability younger age, children may gain an
determines how much time consumers appreciation for music and decide to take
have to spend on their hobbies, which music lessons. This association provides
may include learning to play a musical a long-term opportunity to sustain
instrument or participating in a school demand, as consumers in this age group
band or orchestra. In turn, consumer will likely continue to pursue their
interest in sports and other leisure-time interest and skill at playing instruments
activities determines demand. The even as they mature.
Major Markets Hobbyists and students emerging market for industry retailers is
Hobbyists are the largest market for the the retired. Those in the baby-boomer age
industry and are estimated to generate group who are approaching retirement age
61.5% of revenue. Students, parents of are buying more instruments as they
students, recreational players and aspiring develop new hobbies. Demand from the
professionals are included in this category. hobbyists market is expected to increase
Many children learn musical instruments over 2016-17.
either as part of their school curriculum or
as an extracurricular activity; they often Professionals
then develop into lifelong players and Professional and semi-professional
consumers of the industry’s products. musicians account for approximately
Long-term amateur players are more likely 21.2% of the market. This segment
to own multiple instruments or more includes band and orchestra members,
expensive instruments than beginners. It is soloists and other music professionals,
estimated that half of all households own and businesses that require the industry’s
at least one musical instrument. An products, for instance recording studios.
Products & Markets
Major Markets Professionals demand the highest-quality tuition providers are included in this
continued products, upgrade their equipment market segment. Schools often
regularly and are more likely to own purchase instruments and other
more than one instrument. They are also industry products for students to use
less sensitive to price than other as part of their curriculum or in
consumer groups because owning a extracurricular activities, such as
quality musical instrument is central to orchestra or choir performances. In
their livelihood. Demand from this November 2016 the UK government
category is expected to remain strong announced an additional £225
during 2016-17. million funding for music education
over the next four years. This follows
Education sector funding increases over 2015-16.
The education sector makes up Consequently the amount of demand
approximately 17.3% of the market from the educational sector is
for musical instruments at the retail expected to increase over the
level. Schools and private music current year.
Major market segmentation (2016-17)
17.3%
Education sector 61.5%
Hobbyists and students
21.2%
Professionals
Total £438.2m SOURCE: WWW.IBISWORLD.CO.UK
International Trade The Musical Instrument Retailers involved in getting these items to
industry is not highly globalised market is accounted for at the
because it is a retail industry that sells manufacturing level. Musical
primarily to local residents. The instrument retailers have no significant
majority of products sold are operations outside the United Kingdom,
manufactured outside the United although agents operate on behalf of J
Kingdom, but the international trade & A Beare Limited in South Korea.
Products & Markets
Business Locations 2016-17
SCOTLAND
6.6
NORTH
EAST
3.1
NORTHERN NORTH
IRELAND WEST
3.2 11.1
YORKSHIRE
8.8
EAST
MIDLANDS
7.1
WEST
MIDLANDS EAST OF
9.0 ENGLAND
9.5
WALES
4.1
LONDON
13.9
SOUTH
SOUTH EAST
Establishments (%) WEST 14.9
Cold Zone (<10) 8.7
<25
<50
Hot Zone (<100)
Not applicable
Products & Markets
Business Locations The location of industry

Distribution of establishments vs. population
establishments broadly follows each
region’s population and consumer
20
demand. Generally, the more
residents in a particular area, the
15
stronger the demand for musical
Percentage
instruments and supplies. However, a
few other trends are notable and 10
specific to certain regions.
5
The South East and London
The South East accounts for 13.7% of 0
the UK population and 14.9% of
East Midlands
East of England
London
North East
North West
N. Ireland
Scotland
South East
South West
Wales
West Midlands
Yorkshire
industry establishments. This region is
just outside London so retailers have
good access to consumers that earn
higher wages but are paying less rent
Establishments
or other overheads. The higher levels of
Population
disposable income make establishment SOURCE: WWW.IBISWORLD.CO.UK
numbers high in London. Since it is a

major metropolitan area, London is a Other regions
destination for those looking to The North West, which includes cities
purchase musical instruments. It has a such as Manchester and Liverpool,
strong music scene and a higher accounts for 11% of the UK population
concentration of professional and and has 11.1% of establishments. At the
aspiring musicians than other parts of other end of the scale, the North East and
the country. London accounts for Northern Ireland have the lowest number
13.9% of industry establishments, of industry establishments due to lower
which is greater than its 13.2% share of population numbers and lower average
the population. income, particularly in the North East.
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalisation
Market Share The Musical Instrument Retailers instrument stores. This can partly be
Concentration industry is highly fragmented, as attributed to consumer preference for
demonstrated by the large proportion of local music shops that can deliver
small players. The four largest companies personalised and knowledgeable services.
Level
are estimated to contribute just 26.9% of Customer loyalty can be an important
Concentration in total industry revenue in 2016-17. Only factor in the performance of musical
this industry is L ow two companies generate 5% or more of instrument retailers because many have
industry revenue and most enterprises been operating in the same place for
only operate one establishment. Some decades. Tight margins mean few
consolidation has taken place over the operators are absorbing their competitors
past five years but there is still no and larger firms have been reluctant to
dominant nationwide chain of musical invest in developing bigger chains.
Key Success Factors Proximity to key markets Experienced work force

Although customers often shop around for Musical instrument retailers need
instruments, outlets need to be located in capable and knowledgeable staff in
IBISWorld identifies high-traffic and high-visibility areas. order to provide customers with
250 Key Success detailed and specialised information
Factors for a Attractive product presentation about the products on sale.
business. The most Attractive promotions and displays
encourage browsing customers to buy Provision of goods currently
important for this
smaller items on impulse. favoured by the market
industry are: Supplying the musical instrument
Having a good reputation brands and products that are
A reputation for stocking quality products demanded by consumers benefits
and offering expert advice can contribute retailers because customers often
greatly to an industry retailer’s success. seek out a specific product.
Cost Structure Profit value items is expected to bolster musical

Benchmarks Operators in the Musical Instrument instrument retailers operating profit over
Retailers industry have not only had to the year. Larger players have been in a
deal with a drop in demand due to better position to respond to a changing
dwindling interest in music as a hobby, trading landscape and higher penetration
but have also faced intense external by external players.
competition over the past five years. One
of the major threats to traditional Purchases
industry retailers has been the prevalence As is characteristic of a retail industry,
of online shopping. Online retailers are the major cost faced by operators is
not subject to the higher operating costs purchases, which are estimated to
of bricks-and-mortar retailers, so can absorb 68.9% of revenue. The cost of
often charge lower prices. purchases has decreased over the past
Despite strong competition, average five years as the range of imported
industry operating profit margin is merchandise has widened and become
expected to increase slightly over 2016-17 less expensive. Cheaper merchandise
to reach 3.9%. Relatively strong consumer imported from countries with low
spending and greater demand for high- labour costs, like South Korea, China,
Cost Structure Thailand and Vietnam, makes up a especially when selling audio recording
Benchmarks significant proportion of purchases. and computing products, where
Low-cost musical instrument producers customers require technical expertise.
continued
are beginning to manufacture a wider Industry operators often seek out
range of products. However, the employees who are musicians
depreciation of the pound that followed themselves. Wages have fallen as a
the EU referendum is expected to result percentage of revenue over the past five
in rising purchase costs over the second years because wage costs improved
half of 2016-17. This is expected to labour efficiency of stores. In 2016-17
affect smaller operators to a greater wages are expected to account for 15.6%
extent than their larger competitors, of industry revenue.
which are more likely to have long-term
purchasing contracts with suppliers or Rent, depreciation and utilities
utilise currency-hedging strategies to Rent is estimated to account for 3.9%
defend themselves from volatility in the of industry revenue in 2016-17 as
value of the pound. retailers rely on leases. To keep costs
low, industry operators seek out
Wages cheaper properties, such as stores just
Musical instrument retailing is a labour- outside shopping centres rather than
intensive industry that often relies on inside. Depreciation costs are estimated
one-on-one selling techniques. Labour at just 1.2% of industry revenue.
tasks include general shopkeeping duties Retailers lease stores instead of owning
and answering customer queries. Staff them, which keeps costs low.
need some specialised knowledge, Depreciable assets include computer
Sector vs. Industry Costs
Average Costs of
all Industries in Industry Costs
sector (2016-17) (2016-17)
100
2.2 5.0 3.9 n Profit
1.1 3.9 1.0 n Rent
1.4 6.9 1.2 5.5 n Utilities
n Depreciation
80 8.5 15.6 n Other
n Wages
n Purchases
Percentage of revenue
60
40
74.9 68.9
20
0
Cost Structure inventory systems, cash registers and Other costs

Benchmarks point-of-sale systems. Costs tend to Other costs include insurance,
differ significantly between operators, security and advertising. Advertising
continued
depending on their size and the extent costs make up 1.4%. Most of these
of their capital investment. Utilities are costs remain constant but advertising
also considered minor to the industry costs are increasing as retailers
and equal 1% of revenue. compete with external retailers.
Basis of Competition Internal competition customer service experience helps to

Musical instrument retailers compete ensure return business and offers an
with each other on the basis of price, advantage over online-only retailers.
Level & Trend product range, customer service, Location and store promotions also
ompetition
C in location and store promotions. affect internal competition. A store’s
this industry is Consumers are relatively price location influences the number and
Mediumand the conscious, especially when type of potential consumers it can
purchasing more expensive products, reach. Musical instrument retailers
trend is I ncreasing
and will compare prices in different often aim to situate their stores near
shops to find the lowest price centres where there is likely to be a
possible. Given the high cost of some high density of musicians, such as
products, operators aim to ensure schools and universities, and areas
that prices are in line with industry with a high level of footfall such as
averages and that any reductions in shopping districts. Retailers also
purchase prices from suppliers are balance these benefits with rental
passed on to consumers. They also overheads and space requirements.
aim to offer a high standard of
customer service and expert External competition
experience to recommend and Online-only stores have emerged as a
demonstrate products to customers, serious threat to musical instrument
which consumers would not get if retailers, adding to the industry’s
they purchased online. already significant external
Products sold by this industry can competition. Consumers may be
have a broad price range. To reach most tempted to utilize bricks-and-mortar
of the consumer market, operators stores to try out instruments and
compete on the basis of the brand, equipment before shopping around
quality and range of products offered. online to get the best price.
Players try to appeal to consumers who Furthermore, online retailers compete
are in the market for high-end items with online-only retailers such as
such as high specification musical Amazon that offer a wide selection of
instruments, but they also want to products, low prices and the added
attract consumers looking to purchase convenience of shopping from home.
smaller accessories, such as Due to the large amount of buying
replacement strings, reeds and parts. power and relatively low overheads in
Customer service is also an comparison to bricks-and-mortar
important consideration in internal stores, online-only retailers can often
competition. A store’s retail staff must sell products at cheaper prices. The
be well versed in the technical industry also competes with online
functions of the products offered. auction websites such as eBay that sell
Furthermore, it is important that a wide selection of second-hand
stores offer repair services. A good musical instruments and equipment.
Barriers to Entry The Musical Instrument Retailers

industry exhibits moderate barriers to Barriers to Entry checklist
Level & Trend entry, which is common in the retail Competition Medium
sector. The major expense new Concentration Low
arriers to Entry
B entrants face is acquiring stock and Life Cycle Stage Mature
in this industry are retail space near consumers. Capital Intensity Low
Mediumand S teady Established players in the industry Technology Change Medium
have access to economies of scale, Regulation & Policy Light
meaning they can offer large discounts. Industry Assistance None
They typically have strong
relationships with their suppliers, SOURCE: WWW.IBISWORLD.CO.UK
which makes acquiring stock easier.

Employees must be adequately trained Prospective entrants will have to
because good knowledge of the product dedicate a large share of their budget to
is necessary when selling to customers. advertising and marketing to become
Once in the industry, new entrants better known. However, new entrants
face a number of barriers to success. may work in niche markets and offer a
Retailers have established relationships particular product type, especially at the
with customers, particularly those in the higher end of the market. Competition is
music industry, and new entrants are high for more affordable instruments
likely to struggle to attract customers and existing, larger retailers will find it
away from established operators. easier to price out smaller operators.
Industry Globalisation measures the extent of companies that operate globally is

Globalisation foreign activity by domestic operators small. However, the manufacturing
in this industry and the presence of process for musical instruments is
foreign operators in the domestic highly globalised. The final stages of the
market. The majority of establishments manufacturing process tend to take
in the industry are UK-owned place in the United States of America,
companies. Similarly, the share of UK Asia or mainland Europe.
Major Companies
Gear4music Ltd | S&T Audio Ltd | Other Companies
Major players
S&T Audio Ltd 7.6%
(Market share)
82.4%
Other
Gear4music Ltd 10% SOURCE: WWW.IBISWORLD.CO.UK
Player Performance Previously known as Red Submarine Ltd, manufacturers. In recent years the
the company renamed itself Gear4music company has expanded its online presence
Ltd in 2014-15 to match the name of its in Europe, and now delivers to 21
Gear4music Ltd website Gear4music.com. Founded in countries, with its website translated into a
Market share: 10% 1995, the company sells musical range of languages.
instruments and equipment in the United
Kingdom. It offers a range of electric, Financial performance
acoustic and bass guitars, percussion Over the five years through 2016-17, the
instruments and recording equipment, company’s industry-related revenue is
alongside traditional orchestral forecast to increase at a compound
instruments, pianos, studio gear, home annual rate of 33.8% to reach £43.8
audio and DJ equipment. Although million, far exceeding expected growth in
Gear4music conducts the majority of its the wider industry. Strong growth has
business through its website, it also has a been driven by rapidly increasing online
bricks-and-mortar store in York. sales. The company’s operating profit is
The company generates the majority of projected to increase over the same
its revenue through its online store, period, despite some fluctuation, due to a
Gear4music.com. The website stocks over recent increase in the volume of sales of
36,000 products from more than 700 high-value products.
Gear4music Ltd - financial performance

Revenue Operating Profit
Year* (£ million) (% change) (£ million) (% change)
2011-12 10.2 N/C 0.4 N/C
2012-13 12.3 20.6 0.3 -25.0
2013-14 17.7 43.9 0.2 -33.3
2014-15 24.2 36.7 0.1 -50.0
2015-16 35.5 46.7 1.2 1,100.0
2016-17** 43.8 23.4 1.3 8.3
*Year end February **Estimate

SOURCE: COMPANIES HOUSE AND IBISWORLD
Player Performance S&T Audio Ltd, founded in 1999, Kingdom, including outlets in
operates musical instrument shops Manchester, Liverpool and Birmingham.
under several names. One of these is PMT also operates an online store. Based
S&T Audio Ltd Professional Music Technology (PMT), a in Southend-on-Sea, the company
Market share: 7.6% chain of 15 stores throughout the United employs over 150 in-store experts, who
Major Companies
Player Performance work alongside administrative staff have struggled. This is the result of a
continued who support the company’s online strong expansionary strategy and the fact
endeavours and its brick-and-mortar it has kept its products competitively
stores. To complement PMT, S&T priced. A simultaneous expansion in
Audio Ltd also runs an extensive online online retailing has allowed the business
retailing operation under the Dolphin to thrive. The group’s products tend to be
Music brand. musical instruments used in
contemporary music, though it does also
Financial performance hold a small amount of more traditional
Over the five years through 2016-17, S&T stock. It often sells in large volumes and
Audio Ltd’s revenue is expected to grow caters extensively to beginner and
at a compound annual rate of 11.8% to intermediate ability levels. Operating
£33.5 million. The company has profit is estimated to increase over the
performed strongly in an environment current year due to greater sales volumes
where many musical instrument retailers and higher demand.
S&T Audio Ltd - financial performance

2011-12 19.2 N/C 0.6 N/C
2012-13 21.1 9.9 0.8 33.3
2013-14 24.7 17.1 1.4 75.0
2014-15 26.3 6.5 1.3 -7.1
2015-16 29.9 13.7 1.5 15.4
2016-17** 33.5 12.0 1.4 -6.7
*Year end April **Estimate

Other Companies Dawsons Music Ltd outlets in Altrincham, Bangor,

Estimated market share: 4.9% Basingstoke, Belfast, Chester,
Dawsons Music began trading in Huddersfield, Leeds, Liverpool,
Warrington in 1898. The company is still Manchester, Reading, Stockport and
based in the North West and operates 11 Warrington. The company also retails
Dawsons Music Ltd - financial performance

Year* (£ million) (% change) (£ million)
2011-12 14.8 N/C 0.0
2012-13 16.2 9.5 0.1
2013-14 18.1 11.7 0.3
2014-15 18.9 4.4 0.4
2015-16 20.8 10.1 0.2
2016-17** 21.3 2.4 0.3
*Year end May **Estimate
Major Companies
Other Companies online and through a mail-order service. Due to the high level of skill required to
continued Dawsons offers a full range of musical deal in this area of the industry, wages are
instruments and related products, from comparatively high. Unlike many
orchestral instruments, guitars, drums, operators in this sector, J & A Beare’s key
pianos and keyboards, to audio recording competitors are not online retailers but
equipment, computers, public address auction houses and global specialist violin
systems and DJ equipment. stores. As a result, the effect of the
Dawsons’ revenue has performed recession has been somewhat different for
better than the industry as a whole. The the company. It has been able to capitalise
company has remained profitable over on the fact that high-end violins are a good
the past five years. Company revenue is store of value. This phenomenon does not
forecast to increase at a compound translate to the rest of the industry.
annual rate of 7.6% to £21.3 million over Due to the high value of the company’s
the five years through 2016-17. goods, J & A Beare can generate a
significant level of revenue, especially
J & A Beare Ltd relative to the wider industry. Nonetheless,
Estimated market share: 4.4% its profit margin has remained slim. J & A
Founded in 1892, J & A Beare Ltd merged Beare has partly benefited from the boom
with Morris and Smith in 1998. A retailer in alternative investments following the
of high-end violins, violas and cellos, as financial crisis. Art, precious jewellery and
well as a selection of bows ranging in antiques provided a safe haven from
price from £2,000 upwards, J & A Beare inflationary central bank monetary policy
also restores violins for sale and, on rare and volatile exchange rates. Revenue more
occasions, manufactures violins in-house than doubled in 2011-12 due to several
at its Marylebone shop. In addition to sales of extremely high-value instruments.
domestic operations, the company also Despite remaining high in 2012-13,
operates in Seoul, South Korea, through revenue regressed closer to historical levels
an agent. Apart from instruments, the in the following year, totalling
company also sells a selection of bows and approximately £20 million due to reduced
related equipment. J & A Beare’s product sales volumes of high-value items.
portfolio is heavily weighted towards Revenue has remained around £20 million
antique stringed instruments. Like most in the years since. Over the five years
high-quality antiques, these instruments through 2016-17, the company’s revenue is
tend to appreciate in value. They are expected to decrease at a compound
often purchased on behalf of a annual rate of 17.8% to £19.4 million. The
particular performer by an orchestra, company’s operating profit margin is also
musical institution, or by a single or expected to decrease over the five years
group of investors as a form of through 2016-17 due to a reduced number
alternative investment. of sales after 2012-13.
J & A Beare Ltd - financial performance

2011-12 51.8 N/C 1.7 N/C
2012-13 53.0 2.3 0.4 -76.5
2013-14 23.4 -55.8 1.1 175.0
2014-15 19.5 -16.7 0.4 -63.6
2015-16 19.3 -1.0 0.5 25.0
2016-17** 19.4 0.5 0.6 20.0
*Year end April **Estimate
Major Companies
Other Companies Music in Print Ltd a more favourable retail environment, an

continued Estimated market share: 3.2% expansion of online operations and an 18
Music in Print Ltd, which trades as month accounting year. Both Music Sales
Musicroom.com, was established in 1995 Ltd and Music in Print Ltd are ultimately
by the Music Sales Group, a London- owned by the Music Sales Group Ltd.
based sheet music publisher that has
been in operation for over 200 years. White Rabbit Records Ltd
Music in Print Ltd operates 15 bricks- Company exited in 2013
and-mortar stores under the Musicroom Previously trading as Digital Village and
brand, retailing an extensive range of also known as DV247, White Rabbit
sheet music, tutor material, instruments Records was a privately owned business
and related accessories. Musicroom incorporated in 1974. The company
stocks an extensive range of educational operated eight UK outlets, located in
resources and child-sized instruments. North London, East London, South
Music in Print Ltd was quick to London, West London, Bristol,
establish an online presence. This has Southampton, Birmingham and
proven to be an important driver of Cambridge. The company sold guitars,
growth in recent years, as online retailing drums, microphones, audio recording
has boomed and allowed the company to equipment and computers, and DJ
reach a wider customer base. Integration equipment and accessories. Digital Village
between its online and traditional also offered its products online and was a
retailing operations through services such major supplier of musical instruments and
as click and collect has boosted revenue. other products to the UK education sector.
Over the five years through 2016, Buyers for the retail estate were sought
Music in Print Ltd’s revenue is expected as sales fell but, despite several attempts,
to decrease at a compound annual rate of this was unsuccessful and administrators
5.9% to £14.2 million. However, this were called in during May 2013. The
figure is distorted by an unusually high administrators acted by immediately
base year revenue figure. The company closing all but one DV247 shop. This
performed particularly strongly in the remaining store and the DV247 brand
year through June 2012, partly because were purchased by a subsidiary of the
Musicroom.com’s online operations and German-based company Music Store
revenue, which generated over £6.4 later in May 2013. The remaining store
million, were transferred from Music and its website still operate through a
Sales Ltd to Music in Print Ltd. Revenue new company under the management of
increased sharply again in 2012-13 due to the Music Store director, Michael Sauer.
Music in Print Ltd - financial performance

Year* (£ million) (% change) (£ million)
2011-12 19.2 N/C -0.9
2012-13** 25.0 30.2 -0.7
2014 15.6 -37.6 -0.8
2015 14.4 -7.7 -1.0
2016*** 14.2 -1.4 -1.0
*Year end June through 2011-12. Year end December thereafter **78 weeks through December 2013 ***Estimate
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensity IBISWorld determines the capital

intensity of an industry by comparing Capital intensity
Capital units per labour unit
wage costs with capital costs, using
Level
depreciation as a proxy. Like most retail 0.5
The levelof capital industries, musical instrument retailing
intensity is L ow is more labour intensive than capital 0.4
intensive. Labour is necessary to 0.3

provide efficient customer service,
manage inventory levels, restock 0.2
shelves, arrange promotional activities 0.1

and carry out general administrative
duties. Some operators offer music 0.0
Economy Wholesale and Musical
lessons and provide instrument repairs, Retail Trade Instrument
Retailers
tasks which require the right Dotted line shows a high level of capital intensity
qualifications and training. SOURCE: WWW.IBISWORLD.CO.UK
Wage costs are estimated to account

for 15.6% of industry revenue in 2016-17 costs of online retailers are the key
and wages are typically higher than reason they can offer such low prices.
those offered by online-only retailers. Depreciation, including on items like
The low operating and establishment cash registers, scanners and radio-
Tools of the Trade: Growth Strategies for Success
New Age Economy Investment Economy

Recreation, Personal Services, Information, Communications,
Health and Education. Firms Mining, Finance and Real
benefit from personal wealth so Estate. To increase revenue
stable macroeconomic conditions firms need superior debt
are imperative. Brand awareness management, a stable
and niche labour skills are key to macroeconomic environment
product differentiation. and a sound investment plan. Capital Intensive
Labour Intensive
Sound
Recording
& Music
Musical Publishing
Instrument Toy Retailing
Retailers
Traditional Service Economy
Primary Old Economy
Education
Wholesale and Retail. Reliant Audio Consumer Agriculture and Manufacturing.
on labour rather than capital & Video Electronics Traded goods can be produced
to sell goods. Functions cannot Equipment Manufacturing using cheap labour abroad.
Retailers
be outsourced therefore firms To expand firms must merge
must use new technology or acquire others to exploit
or improve staff training to economies of scale, or specialise
increase revenue growth. in niche, high-value products.
Change in Share of the Economy SOURCE: WWW.IBISWORLD.CO.UK

Capital Intensity frequency technology, is estimated to spend £12.97 on wages, demonstrating

continued account for 1.2% of industry revenue. a low level of capital intensity. Capital
For every £1.00 spent on capital, expenses vary between players but are
industry operators are expected to generally low.
Technology & Systems Technological advances in upstream Additional technological advances in

manufacturing industries have this industry include mobile payment
Level resulted in the introduction of higher- systems and automated inventory
quality products that can be sold at equipment. The introduction of these
The level
of lower prices. For example, technologies has assisted retailers with
Technology Change technological advances in sound more efficient management and
is M
edium reinforcement systems, recording distribution chains. Inventory can be
equipment and musical instrument kept low while popular products can be
digital interface products have ordered easily during peak periods.
occurred over the past five years. Mobile payment applications and
Consumers can now affordably create systems have made the purchase process
an in-home recording studio, which faster and more efficient for both retailers
has improved store sales. and consumers.
Revenue Volatility Revenue volatility in this industry is low Revenue is also affected by the
and is affected by several factors. expansion of industry product offerings
Demand is influenced by variations in at external competitors, such as large
Level
disposable income and consumer online-only retailers. In recent years,
The level of confidence. Consumers are price these external players have placed
Volatility is L ow conscious, so the purchase of musical increasing pressure on the industry by
instruments depends on the level of offering consumers a broad range of
income at their disposal. Demand is also products at competitive prices. This
affected by fluctuations in the level of has offset revenue growth somewhat
consumer confidence. Retail spending during times of strong sales, and
generally rises when consumers are more exacerbated declines during periods of
confident about their financial position. low demand.
A higher level of revenue Volatility vs Growth

volatility implies greater
industry risk. Volatility can 1000 Hazardous Rollercoaster
negatively affect long-term
Revenue volatility* (%)
strategic decisions, such as 100

the time frame for capital
investment.
10
When a firm makes poor
investment decisions it Musical
may face underutilised 1 Instrument
capacity if demand Retailers
suddenly falls, or capacity 0.1 Stagnant Blue Chip
constraints if it rises –30 –10 10 30 50 70
quickly. Five-year compound annual revenue growth (%)
* Axis is in logarithmic scale
Regulation & Policy The industry has a light and steady Additionally, industry operators must
level of regulation. Companies must comply with the provisions of the 2010
comply with the National Minimum Equality Act, which generally requires
Wage Act and labour laws governing that stores be accessible to customers
matters such as working conditions. with disabilities.
Industry Assistance The industry does not receive any

industry assistance.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UK February 2017 29
Key Statistics
Industry Data Industry
Revenue Value Added Wages Domestic
(£ million) (£ million) Establishments Enterprises Employment Exports Imports (£ million) Demand
2007-08 433.9 98.5 1,773 1,712 4,480 -- -- 79.8 N/A
2008-09 387.5 86.5 1,754 1,703 3,920 -- -- 72.5 N/A
2009-10 366.4 83.9 1,751 1,705 3,960 -- -- 70.6 N/A
2010-11 371.3 89.5 1,752 1,707 3,980 -- -- 72.7 N/A
2011-12 364.2 90.1 1,749 1,702 3,912 -- -- 71.8 N/A
2012-13 357.3 90.5 1,744 1,698 3,802 -- -- 70.3 N/A
2013-14 380.4 87.6 1,742 1,695 3,760 -- -- 67.4 N/A
2014-15 403.5 88.1 1,741 1,693 3,794 -- -- 67.0 N/A
2015-16 426.0 90.9 1,742 1,690 3,864 -- -- 68.4 N/A
2016-17 438.2 90.7 1,743 1,688 3,914 -- -- 68.2 N/A
2017-18 449.4 91.3 1,739 1,686 3,866 -- -- 67.4 N/A
2018-19 458.4 91.2 1,737 1,684 3,894 -- -- 68.4 N/A
2019-20 463.4 91.3 1,739 1,680 3,904 -- -- 69.8 N/A
2020-21 469.2 91.8 1,738 1,678 3,954 -- -- 70.8 N/A
2021-22 473.5 92.2 1,737 1,679 3,998 -- -- 73.4 N/A
Annual Change Industry Domestic

Revenue Value Added Establishments Enterprises Employment Exports Imports Wages Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2008-09 -10.7 -12.2 -1.1 -0.5 -12.5 N/A N/A -9.1 N/A
2009-10 -5.4 -3.0 -0.2 0.1 1.0 N/A N/A -2.6 N/A
2010-11 1.3 6.7 0.1 0.1 0.5 N/A N/A 3.0 N/A
2011-12 -1.9 0.7 -0.2 -0.3 -1.7 N/A N/A -1.2 N/A
2012-13 -1.9 0.4 -0.3 -0.2 -2.8 N/A N/A -2.1 N/A
2013-14 6.5 -3.2 -0.1 -0.2 -1.1 N/A N/A -4.1 N/A
2014-15 6.1 0.6 -0.1 -0.1 0.9 N/A N/A -0.6 N/A
2015-16 5.6 3.2 0.1 -0.2 1.8 N/A N/A 2.1 N/A
2016-17 2.9 -0.2 0.1 -0.1 1.3 N/A N/A -0.3 N/A
2017-18 2.6 0.7 -0.2 -0.1 -1.2 N/A N/A -1.2 N/A
2018-19 2.0 -0.1 -0.1 -0.1 0.7 N/A N/A 1.5 N/A
2019-20 1.1 0.1 0.1 -0.2 0.3 N/A N/A 2.0 N/A
2020-21 1.3 0.5 -0.1 -0.1 1.3 N/A N/A 1.4 N/A
2021-22 0.9 0.4 -0.1 0.1 1.1 N/A N/A 3.7 N/A
Key Ratios Revenue per Share of the

IVA/Revenue Imports/Demand Exports/Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) (£’000) (%) per Est. (£) (%)
2007-08 22.70 N/A N/A 96.85 18.39 2.53 17,812.50 0.01
2008-09 22.32 N/A N/A 98.85 18.71 2.23 18,494.90 0.01
2009-10 22.90 N/A N/A 92.53 19.27 2.26 17,828.28 0.01
2010-11 24.10 N/A N/A 93.29 19.58 2.27 18,266.33 0.01
2011-12 24.74 N/A N/A 93.10 19.71 2.24 18,353.78 0.01
2012-13 25.33 N/A N/A 93.98 19.68 2.18 18,490.27 0.01
2013-14 23.03 N/A N/A 101.17 17.72 2.16 17,925.53 0.01
2014-15 21.83 N/A N/A 106.35 16.60 2.18 17,659.46 0.01
2015-16 21.34 N/A N/A 110.25 16.06 2.22 17,701.86 0.01
2016-17 20.70 N/A N/A 111.96 15.56 2.25 17,424.63 0.01
2017-18 20.32 N/A N/A 116.24 15.00 2.22 17,434.04 0.00
2018-19 19.90 N/A N/A 117.72 14.92 2.24 17,565.49 0.00
2019-20 19.70 N/A N/A 118.70 15.06 2.24 17,879.10 0.00
2020-21 19.57 N/A N/A 118.66 15.09 2.28 17,905.92 0.00
2021-22 19.47 N/A N/A 118.43 15.50 2.30 18,359.18 0.00
Figures are inflation-adjusted to 2016-17. SOURCE: WWW.IBISWORLD.CO.UK

Jargon & Glossary
Industry Jargon MULTICHANNEL RETAILINGUsing multiple different MUSICAL INSTRUMENT DIGITAL INTERFACE (MIDI)
channels to interact with potential customers. These A way of allowing different instruments to interact with
could include the internet, mobile phones and each other electronically.
bricks-and-mortar outlets. SYNTHESISERAn electronic instrument that
generates sound by using filters and tone generators
to create waveforms.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY REVENUEThe total sales of industry goods
new companies struggle to enter an industry, while low and services (exclusive of excise and sales tax); subsidies
barriers mean it is easy for new companies to enter an on production; all other operating income from outside
industry. the firm (such as commission income, repair and service
CAPITAL INTENSITY Compares the amount of money income, and rent, leasing and hiring income); and
spent on capital (plant, machinery and equipment) with capital work done by rental or lease. Receipts from
that spent on labour. IBISWorld uses the ratio of interest royalties, dividends and the sale of fixed
depreciation to wages as a proxy for capital intensity. tangible assets are excluded.
High capital intensity is more than £0.333 of capital to INDUSTRY VALUE ADDED (IVA)The market value of
£1 of labour; medium is £0.125 to £0.333 of capital to goods and services produced by the industry minus the
£1 of labour; low is less than £0.125 of capital for every cost of goods and services used in production. IVA is
£1 of labour. also described as the industry’s contribution to GDP, or
CONSTANT PRICESThe pound figures in the Key profit plus wages and depreciation.
Statistics table, including forecasts, are adjusted for INTERNATIONAL TRADE The level of international
inflation using the current year (i.e. year published) as trade is determined by ratios of exports to revenue and
the base year. This removes the impact of changes in imports to domestic demand. For exports/revenue: low is
the purchasing power of the pound, leaving only the less than 5%; medium is 5% to 20%; and high is more
‘real’ growth or decline in industry metrics. The inflation than 20%. Imports/domestic demand: low is less than
adjustments in IBISWorld’s reports are made using the 5%; medium is 5% to 35%; and high is more than
Office for National Statistics’ implicit GDP price deflator. 35%.
DOMESTIC DEMAND Spending on industry goods and LIFE CYCLEAll industries go through periods of growth,
services within the UK, regardless of their country of maturity and decline. IBISWorld determines an
origin. It is derived by adding imports to industry industry’s life cycle by considering its growth rate
revenue, and then subtracting exports. (measured by IVA) compared with GDP; the growth rate
EMPLOYMENTThe number of permanent, part-time, of the number of establishments; the amount of change
temporary and casual employees, working proprietors, the industry’s products are undergoing; the rate of
partners, managers and executives within the industry. technological change; and the level of customer
acceptance of industry products and services.
ENTERPRISE A division that is separately managed
and keeps management accounts. Each enterprise NONEMPLOYING ESTABLISHMENTBusinesses with
consists of one or more establishments that are under no paid employment or payroll, also known as
common ownership or control. nonemployers. These are mostly set up by self-employed
individuals.
ESTABLISHMENT The smallest type of accounting unit
within an enterprise, an establishment is a single PROFIT IBISWorld uses earnings before interest and
physical location where business is conducted or where tax (EBIT) as an indicator of a company’s profitability.
services or industrial operations are performed. Multiple It is calculated as revenue minus expenses, excluding
establishments under common control make up an interest and tax.
enterprise. VOLATILITY The level of volatility is determined by
EXPORTSTotal value of industry goods and services sold averaging the absolute change in revenue in each of the
by UK companies to customers abroad. past five years. Volatility levels: very high is more than
±20%; high volatility is ±10% to ±20%; moderate
IMPORTSTotal value of industry goods and services
volatility is ±3% to ±10%; and low volatility is less than
brought in from foreign countries to be sold in the UK.
±3%.
INDUSTRY CONCENTRATIONAn indicator of the
WAGESThe gross total wages and salaries of all
dominance of the top four players in an industry.
employees in the industry. Benefits and on-costs are
Concentration is considered high if the top players
included in this figure.
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
www.ibisworld.co.uk | 020 3008 6568 | info@ibisworld.co.uk
At IBISWorld, we know that industry intelligence

is more than assembling facts
It is combining data with analysis to answer the
questions that successful businesses ask
Identify high-growth, emerging and shrinking markets
Arm yourself with the latest industry intelligence
Assess competitive threats from existing and new entrants
Benchmark your performance against the competition
Make speedy market-ready, profit-maximising decisions
Who is IBISWorld?
We are strategists, analysts, researchers and marketers. We provide
answers to information-hungry, time-poor businesses. Our goal is to
provide real-world answers that matter to your business. When tough
strategic, budget, sales and marketing decisions need to be made, our
suite of Industry and risk intelligence products give you deeply
researched answers quickly.
IBISWorld Membership
IBISWorld offers tailored membership packages to meet your needs.
Disclaimer
This product has been supplied by IBISWorld Ltd. (‘IBISWorld’) solely for use the use of, or reliance upon, the data or information contained herein.
by its authorised licensees strictly in accordance with their licence Copyright in this publication is owned by IBISWorld Ltd. The publication is
agreements with IBISWorld. IBISWorld makes no representation to any sold on the basis that the purchaser agrees not to copy the material
other person with regard to the completeness or accuracy of the data or contained within it for other than the purchaser’s own purposes. In the event
information contained herein, and it accepts no responsibility and disclaims that the purchaser uses or quotes from the material in this publication - in
all liability (save for liability that cannot be lawfully disclaimed) for loss or papers, reports or opinions prepared for any other person - it is agreed that it
damage whatsoever suffered or incurred by any other person resulting from will be sourced to IBISWorld Ltd
Copyright 2017 IBISWorld Ltd

G47.591 Musical Instrument Retailers in The UK Industry Report

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

G47.591 Musical Instrument Retailers in The UK Industry Report

Transféré par

Droits d'auteur :

Formats disponibles

Out of tune: Online-only retailers are a rising

threat as consumers spend more online

IBISWorld Industry Report G47.591

2 About this Industry 14 Demand Determinants 26 Operating Conditions

www.ibisworld.co.uk | 020 3008 6568 | info@ibisworld.co.uk

About this Industry

Main Activities The primary activities of this industry are

The major products and services in this industry are

Similar Industries G47.430 Audio & Video Equipment Retailers in the UK

G47.650 Toy Retailing in the UK

G47.790 Second-Hand Goods Stores in the UK

G47.910 E-Commerce & Online Auctions in the UK

Additional Resources For additional information on this industry

Key Statistics Revenue Annual Growth 12-17 Annual Growth 17-22

£17.1m £68.2m 1,688

Key External Drivers

Industry Structure Life Cycle Stage Mature Regulation Level Light

Real household disposable income Total online expenditure

Current Musical instrument retailers struggled at

Harmonious The economic downturn created five-year period, high unemployment

Harmonious more likely to eschew musical including rising consumer confidence

EU Referendum The depreciation of the pound that

Traditional operations The Musical Instrument Retailers

Industry Over the five years through 2021-22,

maintaining stable levels of spending

from online retailers and changing

Banding together Industry consolidation is expected to by the wayside. Technological advances in

20 Maturity Quality Growth

Key Features of a Mature Industry

Musical Instrument Retailers

Products & Markets

Supply Chain KEY BUYING INDUSTRIES

KEY SELLING INDUSTRIES

Products & Services Audio recording equipment Amplification and DJ equipment

Products & Markets

Products and services segmentation (2016-17)

Products & Markets

Demand Musical instruments are considered to be relative cost, attractiveness and

Products & Markets

Major market segmentation (2016-17)

Total £438.2m SOURCE: WWW.IBISWORLD.CO.UK

Products & Markets

Business Locations 2016-17

Products & Markets

Business Locations The location of industry

numbers high in London. Since it is a

Key Success Factors Proximity to key markets Experienced work force

Cost Structure Profit value items is expected to bolster musical

Sector vs. Industry Costs

Cost Structure inventory systems, cash registers and Other costs

Basis of Competition Internal competition customer service experience helps to

Barriers to Entry The Musical Instrument Retailers

which makes acquiring stock easier.

Industry Globalisation measures the extent of companies that operate globally is

Gear4music Ltd 10% SOURCE: WWW.IBISWORLD.CO.UK

Gear4music Ltd - financial performance

*Year end February **Estimate

S&T Audio Ltd - financial performance

*Year end April **Estimate

Other Companies Dawsons Music Ltd outlets in Altrincham, Bangor,

Dawsons Music Ltd - financial performance

J & A Beare Ltd - financial performance

Other Companies Music in Print Ltd a more favourable retail environment, an