Lessons To Be Learned From Tower Records: When The Market Shifts, You Need To Shift With It
from the end-of-an-era dept
Two months ago, in noting that Tower Records had filed for bankruptcy for the second time in about two years, we wondered if it was the final word on the pure play music retailer. After all, selling music is almost universally recognized as being a good loss leader, not as a pure business. It looks like the folks at Tower were too late to figure this out. While there had been some hope of keeping the company going, in an auction late last week, the winner has decided to liquidate the business, selling off the inventory, shutting down the stores and laying off the people. The company's hometown paper, the Sacramento Bee has a sentimental obituary for the company, noting that the executives at Tower (and plenty of other retailers) never really believed the internet would impact their business. In the end, as sad as it is for those of us who used to spend plenty of extra time (and money) at various Tower Records' stores, it should be a case study for those who don't understand when the market is shifting around them. While other record stores began to recognize that that they needed to completely revamp their business -- from becoming combination music/dance clubs and stores to starting their own record labels or becoming "destinations" rather than just stores -- Tower Records leadership insisted that the web "is certainly never going to take the place of stores."
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I don't think...
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Re: I don't think...
> ...becouse its prices always seem to high when its cheaper on the web
Funny stuff here on Techdirt.
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Re: I don't think...
It's a tough business for those guys to be in. Barnes and Noble, Target, and Wal-Mart not only cream-skim the most popular titles, but they are also probably killing Tower and the other dedicated stores on shipping costs and other overhead. You hear all of the criticisms about not adapting, but it's not that easy. Tower and their competitors did make a major effort to move into video, magazines, even alt. clothing, and nothing seemed to work. Maybe they should've tried to become big players in selling tickets to music shows, which could've created some buzz/traffic at their stores.
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Tower killed Tower...
In Burlington, MA this weekend, there was a large Tower Records next to a Newbury Comics. The Tower had street people boasting "up to" 30% Going out of Business signs, so for the second time in the 10's of times I've visted the Newbury Comics next door to it... I went in. I saw that their video prices sucked, and 10% off of crappy prices, is still crappy prices. I turned to one guy and said, "Do they know they're going out of business... with prices like these?" I saw "Remember the Titans" selling at $19.99... 10% off... why that's only $17.99. Eeesh. Pass. I sniffed at their magazine racks (the only things really at 30% off) and walked out. I visited Newbury and left with some comics. Newbury's DVD and Used DVD prices are fantastic. Even on new items, they seem interested in value and NOT fixated on the term "retail price" ("hey, we're retailers... that MUST be what we should charge!") I've sure their CD prices don't suck either, considering they know their audience (sometimes the emo chicks behind the register look cute too).
Even going out of business, Tower couldn't get any business from me. That's gotta tell ya something. I used to like Tower back in college. They had a store in Boston on Newbury street before they moved some years back (coincidentally next to another still-in-business Newbury Comics). They were a nexus of counter-culture. I remember them being the first place to have a collection of movies like Shaft and other Blaxploitation pics. I remember they also had Star Trek on laser disc, back when I couldn't find laser discs to save my life. They sold to Virgin Megastore, and fell out of my life. It's clear they've kept falling.
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Re: Tower killed Tower...
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Tower Going Out Of Business Pricing
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Because they are uncool
Virgin sells on the Internet too, and has tech running out their ears. Amoeba's biz is used CDs - considering they are fed by radical Californians, the content mix tends to be extremely varied.
I don't want to even consider Wal-Mart - they censor EVERY CD they sell within the store. I still need to replace that one ZZ Top disk.
But still, to bad for Tower - but it was just twitching on the ground.
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I used to work at Tower corporate in IT
At that time, their online store did about the same amount of business as their largest stores did. Because of that, they figured the internet was never going to be a huge thing for music sales and they should treat it just like they would any other of their big stores.
FWIW, from a corporate frugality standpoint, this company was tops. The IT people were in a building in an industrial park. From the outside, you couldn't tell us apart from the place wholesaling oil filters. Inside, it was about as good as cubes get. Way cheaper office space than most places had. Even the bigwigs only had a very few offices in the expensive downtown office.
Unfortunately, they might also have meant that they didn't have any fat to trim when they needed to.
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Tower records
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What's the big deal?
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It was greed more than an underestimation on onlin
Rememebr when the Wiz's average price for a CD was around $11.99? (Maybe back in 95-97). There was a court case to cut CD prices because it was so much cheaper to create CDs than it was when they were first announced. Well, it turned out that they didnt have to lower prices, in fact, they RAISED them afer the hearings by at least $2 across the board!
In fact, after this shift, Tower Records became the worst offender... charging upwards of $18 for a single CD. I remember laughing back then realizeing the course they were now destined for. And I am laughing again today.
Tower, I loved ya, but you did us wrong. Buh-bye.
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No surprise here
Why go to Tower when I can get the same CD ANYWHERE else about 5 dollars cheaper?
Seriously, you do the math.
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Those who forget history are doomed to repeat it.
Like GM and Ford never believing the Japanese could kick their butts. Or the ones in the horse business never imagining the automobile would take over. Or dismissing "talking" movies as a mere gimmick. Silent movies are here to stay.
Chose only one:
- If you don't believe it, it is not true.
- If you don't believe it, I know a good lawyer with reasonable fee for chapter 7 goodness.
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tower rcds
Sad, sad, sad. I remember the day I stood in a long line outside a Sam Goody store at 9am waiting for the store to open in order to be among the first to actually hold and own The Beatles White Album. Today I could sit home and click on a website while watching the home shopping network. A week later I could have my little cd and actually read the lyrics with a magnifying glass while I listen to my digitally enhanced copy. Sam Goody the "real" record store died decades ago and now Tower is dead, dead, dead.
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Re: tower rcds
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Music Experts or Cashiers
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Tower Records Today - Record Companies Tomorrow !
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Bad for Classical
Is it really so great to be able to get everything you want from your PC/Mac at home? I've come across all kinds of good stuff I didn't know about flipping around at the store, talking with other shoppers.
Sure you can get on BBS's and browse online but
I personally find browsing online gets old quick.
I suppose it's an inevitable slide towards instant gratification (high speed downloads) and taking care of "needs" wihtout having to interact with other people.
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what goes around
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By the way, she also mentioned that although she's had a couple of chart hits and a few dozen lp's released, she has never received a royalty check.
What does all this have to do with Tower? Somewhere I heard the retailers are also locked into the game. Tower may have had contracts with the record companies to sell at (or above) a certain price point for some of their stock. Did they do themselves in, or was it the 'system.'
==============
Because something is happening here
But you don't know what it is
Do you, Mister Jones?
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Long time comming...
As a former employee of tower corporate in the Finance dept., I witness first hand the slow choking of tower and the inability or more like unwillingness of the execs to make changes. First, there was nothing frugal about Tower. The spending excesses from every department seemed to be a god given right wich stemed from the original Tower culture of the '70s. Time and time again, my department tried to force the company to cut back at the corporate and store level only to have my hand slapped with a "you don't go there" from the owners/execs. Second, the price fixing lawsuit in the late '90s against the major record labels had a significant impact for the entry of the discounters (i.e. walmart, target, bestbuy etc). Price fixing became PIC (politically incorect) at Tower and was then substituted by MAP (minimum advertised price), however still keeping prices over inflated. It forced Tower to increase the price of the deep catalog items to make up for discounting some on the popular music that competed directly with the discounters. Third, internet sales...I remember sitting at an exec meeting discussing the internet when the Owner and COO at the time stated that internet would never be a viable option for music distribution....WRONG. And, when they finally decided to enter the online business, it was too little too late. Finally, the company had been bleeding from bad investment decisions, unprofitable US stores, UK Tower mismanagement, Latin America fiasco and Japan Tower (which was the only profitable operation but it was sold to cover some debt) and the unwillingness to shut down non performing stores.
Bottom line, it all comes down to this: owner/execs inability to understand the changing market conditions and adjust accordingly and the unwillingness to "Stop the Bleeding"...
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Yeah, Tower is WAY too expensive
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Tower was the foundation of my youth
I knew something was seriously wrong when I went in last summer and they did not have THE WHITE ALBUM by the Beatles. Not have THE WHITE ALBUM? That's not good.
Yes, their CDs were expensive. Yes, they expanded internationally too fast and underestimated the internet and so on.
But back in the day when there was no internet, you would hang out at the record store, flip through the racks when all of the sudden, you came across something. You don't just "find" something on amazon.com. Usually, you already know what you're looking for when you purchase something online. Amazon.com can’t offer assistance when you have the “I’m looking for this CD (enter title) and I can’t remember the name of the band, and so and so was the lead and they were big in the 80s, and their one big hit was “Heart and Soul . . .”, or you heard a 15 second snippet of a song in a commercial and now you’ve got to have it.
As a clerk at Tower, I learned a lot about music, particularly classical, that I never would have learned otherwise. My colleagues and I would rest after filing away CDs and chat about music, and we noted the strong reactions from people who either loved or hated Maria Callas. We had quirky (and nutso) customers too, but that was what made the experience at Tower so wonderful.
The internet will never be able to recreate the idea of browsing through the racks. Half the CDs I own are cds I bought at Tower--things I happened across by accident.
Another thing--the internet makes you pay extra for overnight shipping when you need that item NOW. Tower--it was worth the extra 3 or 4 bucks if I needed it NOW.
And big box stores and the internet offer a lower price because they CAN. They buy enormous quantities--that's their success story. Tower--Tower's idea was to offer at least one CD of every title. They didn't always succeed, but they tried. Royalties, shipping, manufacturing--these are all factored in to the retail price. In the end, the retailer (in this case, Tower) only makes something like a 10% profit. Thus, they have to price their CDs higher than Wal-mart.
I hate spending my time online, looking for CDs. I hate Virgin Records, it's an unpleasant shopping experience. I like to browse. And Tower gave me that.
But now that Tower is to close its doors, one wonders about the music industry itself. With only big box retailers and Virgin and your small mall stores as physical walk-in options--this could mean the end of choice as a consumer.
If Barnes & Noble were to go bankrupt, well, that's it. That means that we no longer really have a choice. MTV and VH1 have sucked for a long time now, no one shows music videos, and I don’t want to watch TV on my computer through the internet. Any media for sale is all about word of mouth, and what's a bestseller. And I'm really sad that it's come down to that.
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Re: Tower was the foundation of my youth
I do agree with the browsing at a record store, but I have also been able to find some things online that I never would have found at a store. Those things are almost always compilations though.
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painful, but adapt
you filled it with vinyl
it is a huge loss to me -- 20+ years of visits ... would the odd disc i passed up the last time have been nabbed already?
i was reminded that J&R music world still sells a lot of classical -- further downtown --their web site looks quite good, haven't been there in a while
yep, can't poke through bins any more anytime soon -- except at used houses, j&r, b&n.
have to read magazines now.. fanfare, gramophone? or play it yourself
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The loss of Tower Records
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I will miss Tower Records
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Blame Russ Solomon (and his son)
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Tower
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Tower Died because the right company didn't buy th
Their business model would have kept Tower flourishing and consumers would have had a brick and mortar representation of Amazon's video, book and music market.
i.e. You go to the Amazon/Tower store check out a song/album/video/book and either buy it new on the spot or order it on the spot used for less and shipped to your home from wherever in the US. Which would have been a big KA-CHING for Amazon.
Savvy internet shoppers were already doing this at Tower anyway, so it would have been win/win for Amazon to own the brick/mortar store and the cheaper alternative.
Of course everyone at Tower hopefully could've kept their jobs and Tower's excellent underpaid team of sullen (yet helpful) employees could still be providing customers with face to face service.
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Falling Tower
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Music is less personal.
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Inevitable.....
I am now in a completely different industry, but music is still my passion. One of the biggest problems I found when dealing with the UK arm of Tower was that although they had knowledgeable staff, they had little if any stock control. I remember going into a fairly small Tower branch many years ago to buy a Doobie Brothers album, couldn't find the one that I was after ('Minute By Minute') yet found TWENTY FIVE copies of Toulouse Street in the section. I wonder how long it took them to get through all of those..... Also, you could never sell any title in to their stores without a bar code number, meaning that other stores were getting titles in before Tower had even ordered it.
Price-wise, they were never particularly cheap, but they were sometimes interesting stores to look around. At the end of the day, they just were too sluggish to change and the 'business carpet' was tugged from under their feet.
Sorry to see them go at street level, but I guess it was inevitable.
Steve. Kent / UK.
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Not Just Tower
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What a joke!!!!
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What a joke!!!!
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What entity did the website get sold to?
Makes me wonder.
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tower out
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What made tower great
What made tower great was the HUGE selection of music that was NOT even carried by such Best buy or like Chains.
Off course, if you don't buy anything but what is number 1 on the charts, tower is a greedy overpriced store.
However, if you have different taste (and many times many of us like both current hits and "other" Music) the day of going to the store and finding such is gone. Anything not "American Idol" or a BIG current name will not be in stock in most stores left.
THIS is what made tower a special store even in 2006. Yes, a current smash hit could be purchased much cheaper at other stores, but for other music it was a grand place to find that music
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Tower Outta business
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Tower Closing
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Times change, Tower didn't
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A LONGTIME EMPLOYEE...
BUT CERTAIN WAREHOUSE AND BUSINESS PRACTICES THAT WERE OUTMODED OR IMPRACTICAL WERE USED-NEVER MODIFIED, AND FINALLY KILLED THE THE PROFIT IN ORDERING NEW STOCK.
GOING TO TOWER EACH TUESDAY IN SEATTLE WAS MY RITE OF YOUTH;
YEAH, ITS TRUE I WOULD GO IN TO SEE WHAT WAS NEW-OR PREUSE MORE CLOSELY SOMETHING I WAS CONSIDERING BUYING-AND THEN GET IT FROM AMAZON...HAD TOWER A SANE INVENTORY CONTROL SYSTEM IN PLACE, THEY COULD HAVE ENTICED ME TO BUY IT FROM THEM-WHICH I SOMETIMES DID ANYWAY.
VERY SAD.
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