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Off key: Industry profitability has come under

pressure due to the depreciation of the pound

IBISWorld Industry Report G47.591


Musical Instrument Retailers
in the UK
March 2019 Raajan Rai

2 About this Industry 15 Major Markets 27 Operating Conditions


2 Industry Definition 16 International Trade 27 Capital Intensity
2 Main Activities 17 Business Locations 28 Technology and Systems
2 Similar Industries 28 Revenue Volatility
2 Additional Resources 19 Competitive Landscape 29 Regulation and Policy
19 Market Share Concentration 29 Industry Assistance
3 Industry at a Glance 19 Key Success Factors
19 Cost Structure Benchmarks 30 Key Statistics
4 Industry Performance 21 Basis of Competition 30 Industry Data
4 Executive Summary 22 Barriers to Entry 30 Annual Change
4 Key External Drivers 22 Industry Globalization 30 Key Ratios
5 Current Performance
8 Industry Outlook 23 Major Companies 31 Jargon & Glossary
10 Industry Life Cycle 23 J & A Beare Ltd
24 Gear4music (Holdings) plc
12 Products and Markets 25 Dawsons Music Ltd
12 Supply Chain 25 S&T Audio Ltd
12 Products and Services 26 Music in Print Ltd
14 Demand Determinants

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


WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   2

About this Industry

Industry Definition Operators in the industry sell musical instruments via the internet if the seller
instruments, including guitars, amplifiers, also operates bricks-and-mortar stores.
keyboards and associated accessories. The industry also includes instrument
This industry includes the sale of musical repair and modification services.

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
Guitars and ukuleles
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.ons.gov.uk
Office for National Statistics
www.psneurope.com
PSN Europe
www.retail-week.com
Retail Week
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   3

Industry at a Glance
Musical Instrument Retailers in 2018-19

Key Statistics Revenue Annual Growth 14–19 Annual Growth 19–24


Snapshot
£440.6m 2% 0.7%
Profit Wages Businesses

£16.3m £69m 1,684


Revenue vs. employment growth Real household disposable income
Market Share
J & A Beare Ltd 8 5
12.8% 6 4

Gear4music 4
3

(Holdings) plc
% change

% change
2
2
12.7% 1
0
0
S&T Audio Ltd
-2
9.6% -1

-4 -2
Dawsons Music Year 11 13 15 17 19 21 23 25 Year 12 14 16 18 20 22 24
Ltd 5.2% Revenue Employment
SOURCE: WWW.IBISWORLD.CO.UK
p. 23
Products and services segmentation (2018-19)
5.9%
Key External Drivers
16%
Brass and woodwind
instruments
Real household 8.2% Audio recording equipment
disposable income Percussion instruments
Total online expenditure
Population aged
11 to 19 years 12.5%
Orchestral stringed instruments
Average weekly 14.9%
Amplification and
hours of work DJ equipment

13.4%
Keyboards, pianos and organs

14.8%
Other products and services
p. 4
14.3%
Guitars and ukuleles SOURCE: WWW.IBISWORLD.COM

Industry Structure Life Cycle Stage Mature Regulation Level Light


Revenue Volatility Low Technology Change Medium
Capital Intensity Low Barriers to Entry Medium
Industry Assistance Low Industry Globalisation Low
Concentration Level Medium Competition Level Medium

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   4

Industry Performance
Executive Summary   |   Key External Drivers   |   Current Performance
Industry Outlook   |   Life Cycle Stage

Executive Summary Operators in the Musical Instrument a decline of 0.8% in the current year, as
Retailers industry sell musical increased spending pressures negatively
instruments, audio recording equipment, affect industry demand and benefit
amplifiers, keyboards and associated external competitors that offer lower
accessories. Improving economic prices. Online-only retailers have become
conditions over the start of the five-year a growing source of competition over
period through 2018-19 bolstered the the past five years due to their low-cost
performance of musical instrument operations allowing them to offer prices at
retailers. With consumer confidence a discount. In response, industry retailers
levels returning to growth and disposable have been forced to offer goods at lower
incomes improving, consumers became prices in order to maintain demand, which
has constrained profit margins. Industry
profitability has come under further
Online-only
retailers have become a growing pressure over recent years due to the
depreciation of the pound following the
source of competition over the past five years EU referendum increasing purchase costs.
External competition is expected to
more comfortable with buying expensive limit industry growth over the next five
industry products. Increased uncertainty years. Technological advances are
since the EU referendum, however, has anticipated to lead to new leisure-time
negatively affected industry revenue over activities and online retailing is projected
recent years. As musical instruments are to become even more of a threat as
generally discretionary purchases, demand consumers’ lives become more internet
is highly price sensitive. Weak consumer based. Those instrument retailers that can
confidence, alongside inflationary pressure afford to invest in multichannel retailing
decreasing the real value of disposable may be able to sustain demand, but more
incomes, has led to consumers purchasing enterprises are expected to be forced out of
fewer or cheaper instruments. the industry. Industry revenue is expected
Over the five years through 2018-19, to increase at a compound annual rate of
industry revenue is expected to increase by 0.7% over the five years through 2023-24,
2%, to reach £440.6 million. This includes reaching £456.7 million.

Key External Drivers Real household disposable income operate online, the costs associated with
Trends in disposable income affect maintaining a bricks-and-mortar store
demand for musical instruments. A limit their ability to compete effectively
rise in disposable income enables with online-only retailers. Total online
consumers to purchase more musical expenditure is expected to increase in
instruments, while more consumers 2018-19, which is a potential threat to
may be encouraged to purchase the the industry.
more expensive option. Real household
disposable income is expected to Population aged 11 to 19 years
marginally increase in 2018-19, although Musicians typically learn how to play
it has remained relatively subdued since instruments during adolescence.
the EU referendum result. Schools typically increase their
spending on musical equipment as
Total online expenditure the student population rises. The
Specialist retailers in the industry face population aged between 11 and 19 is
heavy competition from online retailers, forecast to continue increasing steadily
which are increasingly gaining custom in 2018-19, and an opportunity exists
at the expense of industry demand. to offer more school music programmes
Although many industry retailers also as this younger demographic expands.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   5

Industry Performance

Key External Drivers Average weekly hours of work practice. Having more leisure time
continued The more time consumers spend could encourage more people to take
working, the less time they have up an instrument, which would benefit
available for leisure activities. retailers. Over 2018-19, the average
Fluctuations in consumers’ available number of hours worked per week
leisure time influences demand for is anticipated to increase slightly.
musical instruments because those However, a large proportion of the
that choose to learn a musical consumer base for musical instruments
instrument must dedicate some consists of students or schoolchildren
of their spare time to lessons and below working age.

Real household disposable income Total online expenditure

5 120

4 100
3
80
% change

£ billion
60
1
40
0

-1 20

-2 0
Year 12 14 16 18 20 22 24 Year 10 12 14 16 18 20 22 24

SOURCE: WWW.IBISWORLD.CO.UK

Current The Music Instrument Retailers


industry has performed relatively
Industry revenue is estimated to
have fallen over the two years through
Performance well over the past five years, despite 2018-19, primarily due to the effects
consumers shifting their interests from of the EU referendum result. As the
traditional hobbies, such as learning majority of the products sold by
to play an instrument, to those more retailers are imported from abroad,
aligned with the digital age. Industry the weakness of the pound since the
revenue is anticipated to increase at EU referendum has increased purchase
a compound annual rate of 2% over costs. Musical instruments are relatively
the five years through 2018-19, to discretionary purchases, which means
reach £440.6 million. Musical that demand is sensitive to price.
instrument retailers have faced Demand is expected to fall for retailers
increased competition from external that pass increased import costs on
competitors, particularly online-only to consumers in the form of higher
retailers. Due to their low overhead prices. Decreased demand due to
costs, online-only retailers typically price sensitivity is exacerbated by
offer lower prices than bricks-and- high uncertainty and weak consumer
mortar establishments. Industry confidence; more consumers are
retailers have been forced to cut budgeting and limiting discretionary
prices and constrain profit in order purchases. In the current year, industry
to maintain demand. revenue is estimated to fall by 0.8%.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   6

Industry Performance

EU referendum Concerns surrounding future


effects employment and economic conditions The
weak pound has
since the EU referendum have led to
consumers becoming more cautious
increased purchase
with their spending. Rising inflationary costs, as the majority of
pressures have also weighed on the products sold are imported
real value of disposable income levels.
These factors are expected to have been
responsible for the decline in industry maintenance services is expected to have
revenue in 2017-18, and are expected increased over recent years, with more
to continue weighing on revenue in consumers opting to have instruments
the current year. Weak confidence repaired rather than replaced.
and relatively constrained household The majority of products sold by the
disposable incomes have led to industry are imported, so the weakness
consumers purchasing fewer of the pound since the EU referendum
instruments or buying cheaper options. has increased purchase costs. Large
A growing number of consumers are external competitors, such as online-
also expected to have opted to buy only retailers, have kept prices low in
instruments from the industry’s an effort win market share from bricks-
primary source of competition, online- and-mortar stores. A number of
only retailers, further intensifying operators that operate solely through
competitive threats. Demand from physical establishments are expected
hobbyists is expected to be particularly to have absorbed cost increases to the
constrained by weak consumer detriment of profit margins. Companies
confidence, but demand from those that that have already slim margins may
require musical instruments for their have been forced to pass on cost
career, such as musicians, is expected to increases to consumers. Retailers
be more stable. Musicians are also more that operate through physical
likely to have established relationships establishments while also having
with their retailers, making them less online operations may be better able
likely to purchase from competitors. to absorb cost increases due to their
Additionally, demand for repair and already relatively low cost-base.

Online orchestration The industry has traditionally been base. The number of enterprises
composed of retailers that cater to a operating in the industry is expected to
specific product area. However, the decline at a compound annual rate of
growing penetration of smart phones 0.1% over the five years through 2018-
and online shopping has led to the 19. In response to increased price-based
emergence of a new type of competition. competition, industry retailers have
Online-only retailers face lower aimed to differentiate their services
overhead costs than bricks-and-mortar through entering more niche markets,
stores, which means they are able to such as repair and maintenance
offer lower prices. Intense competition services, and by placing greater
has forced a number of operators to exit emphasis on customer service. This
the industry, while others have altered has allowed the number of people
their business models and moved their employed in the industry to increase
operations online in attempt to benefit at a compound annual rate of 0.8%
from lower costs and a wider consumer over the five years through 2018-19.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   7

Industry Performance

Online orchestration As consumers have become stores to online retailers. Many larger
continued more technologically aware, mobile companies in the industry have adapted
commerce has grown rapidly. The ease of to this by offering their stock online. Some
m-commerce encourages consumers to be instrument retailers have been able to
more impulsive in their purchases, which leverage their experience and knowledge
diverts demand from bricks-and-mortar of the market to become successful online.

School of rock One key market for musical instrument


retailers is school children. The spending Anincrease in music
habits of musical instrument buyers are
linked to the changing musical tastes of
tuition has boosted
the population and the evolution of the household purchases
school curriculum. Demand is also of musical instruments
determined by the importance parents
place on their children learning a musical
instrument. In January 2015 the UK million per year between 2015-16 and
government announced additional 2018-19. However, the proportion of this
funding for music and arts education funding allocated to the purchase of new
programmes. Part of this announcement instruments is expected to be relatively
included an increase of £18 million to the low. Despite this, an increase in music
Arts Council to deliver music education. tuition is expected to have the secondary
This increase brought the total amount effect of increasing household purchases
available to music education hubs to £75 of musical instruments.

Traditional operations The Musical Instrument Retailers drums, have also spurred demand for
transposed industry is in the process of changing. new instruments. Musical instruments
The penetration and sophistication of are also increasingly being used in
electronic instruments has allowed conjunction with software, which makes
individuals to purchase advanced purchasing online even more convenient
studio equipment and music technology because the software can be downloaded
relatively inexpensively. The greater immediately. Retailers that have been
availability and price competitiveness able to keep up with digital enhancements
of musical instrument digital interface are faring better. Those that can afford to
(MIDI) controllers and digital offer multichannel retailing options also
instruments, such as electronic tend do better than traditional retailers.

Highly strung One area in which traditional bricks- often considered to be a good
and-mortar stores have performed alternative investment because they
relatively well is in the sale of high- generally appreciate in value and are
value antique instruments, particularly relatively immune to the effects of
stringed instruments. This is because inflation. Products in this category
stringed orchestral instruments are performed relatively well over the
expensive, so dealers do not have to beginning of the period, when the
sell very many to generate a high level effects of the economic downturn
of revenue. Additionally, antiques are were still being felt.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   8

Industry Performance

Industry Over the five years through 2023-24,


industry revenue is expected to increase at Industry revenue
Outlook a compound annual rate of 0.7%, to reach
8
£456.7 million. Online-only retailers are
likely to remain a prominent competitive 6
threat to musical instrument retailers. 4
The growing popularity of online shopping

% change
and increasing total online expenditure is 2
expected to drive external competition 0
over the coming years, although it is also
likely to present opportunities for industry -2
retailers to expand their online operations. -4
Nonetheless, the proliferation of cheaper Year 11 13 15 17 19 21 23 25
products and price reductions from larger
players is expected to weigh on profit SOURCE: WWW.IBISWORLD.CO.UK

margins over the period. Constrained


disposable incomes at the beginning of the likely to severely affect the market for
period are also likely to limit expenditure second-hand instruments, with potential
on high-margin products. The United trading restrictions particularly affecting
Kingdom leaving the European Union is private individuals.

Ringing the changes Increasing IT adoption, digital competition and further drive down
proficiency and online shopping is likely prices. Many traditional retailers are likely
to intensify competitive pressures from to find it more difficult to match the prices
online-only retailers over the next five of online traders and will need to focus on
years. IBISWorld projects total online gaining customers’ loyalty by promoting
expenditure to increase at a compound the benefits of expert advice and hands-
annual rate of 10% over the five years on retailing. However, retailers are also
through 2023-24; strong growth in online likely to face more showrooming, a
expenditure is likely to pose both an practice in which consumers visit bricks-
opportunity and a threat to retailers. With and-mortar stores to decide which
online shopping becoming an increasingly product to purchase and then look online
popular avenue for consumers to make for lower prices. Consumers will also
their purchases, UK high street sales have continue using online auction sites to
been faltering. In comparison, online-only purchase used equipment cheaply,
retailers are expected to flourish and the further weighing on the performance of
influx of new players will intensify traditional bricks-and-mortar retailers.

Striking a chord Despite strong external competition, way for musicians to purchase products
there are several advantages that bricks- quickly. Items such as replacement
and-mortar stores can offer musicians strings, reeds and drumsticks are often
over online-only retailers. For example, purchased in a hurry. As a result, ordering
consumers shopping at bricks-and-mortar online can be impractical due to delivery
stores have the opportunity to test an waiting hours. Another important area
instrument and determine if it meets their that bricks-and-mortar stores can excel
needs before making a purchase. It is also in is repair services. Instrument repair
easier for staff to give personalised advice or modification services are expected to
to customers. Furthermore, physical support a steady stream of custom over
stores are usually the most convenient the five years through 2023-24.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   9

Industry Performance

Exit from the The UK’s exit from the European Union Trade barriers are also expected to
European Union is expected to affect musical instrument make it harder for private individuals to
retailers, especially in regards to sales of trade second-hand instruments with
second-hand instruments. The majority people outside the United Kingdom.
of new instruments are imported from European single market rules have enabled
countries outside the European Union private individuals to easily trade second-
so are unlikely to be greatly affected hand instruments between EU countries.
by the UK’s exit from the European However, added complexity after the
single market. However, the market United Kingdom leaves the European
for second-hand instruments is likely Union is expected to result in increased
to be more greatly affected, as retailers difficulty when trading across European
and individuals import a large number borders. This could enable musical
of second-hand instruments from the instrument retailers to gain more of the
European Union. Following the UK’s second-hand instrument market, as they
exit from the European Union, trade are likely to be better equipped to navigate
barriers will likely make it more trade legislation. However, the degree to
expensive for retailers to import which this occurs is highly uncertain until
second-hand instruments from the UK’s future trading relationship with
European countries. European Union is finalised.

Banding together Industry consolidation is anticipated to fall by the wayside. However,


continue over the next five years through technological advances in audio
2023-24, and enterprise numbers are recording mean demand for recording
forecast to decline at a compound equipment will continue to grow.
annual rate of 0.1%. Meanwhile, profit Retailers that offer a superior service
margins are anticipated to slim over and in-depth advice will be partly
the period. The proliferation of cheaper insulated from competing cheaper
products online and price reductions online sellers that cannot offer the same
from larger players are expected to level of customer service. The number
squeeze margins even more in the of people employed by the industry is
future. The cost of doing business in expected to increase over the five years
such a competitive environment is high, through 2018-19 as businesses increase
and some smaller players are likely to their focus on customer service.

Price-fixing On 17 April 2018, the Competition


and Markets Authority (CMA) launched Price-fixing
allegations
an investigation on the allegations could expose the industry
against the use of aggressive price-
fixing strategies among a number to increased regulation
of leading musical instrument
manufacturers. The allegations are instrument manufacturers are
based on the assumptions that these infringing competition law, this is likely
instrument manufacturers have used to significantly affect the industry. This
pricing algorithms as a method of would likely alter the pricing structure
offering different prices in different of industry retailers depending on if
markets. The list included Fender, they sourced their goods from those
Yamaha, Roland and Casio. Although manufacturers, and would expose
the CMA is in the early-stages of the the industry to increased regulatory
investigation, if details emerge that supervision over the coming period.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   10

Industry Performance
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
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   11

Industry Performance

Industry Life Cycle The Musical Instrument Retailers and many industry operators are not able
industry is in the mature stage of its life to compete on this basis. Operators must
cycle. Industry value added, a measure show potential customers the benefits of
Thisindustry of the industry’s contribution to the personalised advice and services, or seek
is M
 ature wider economy, is expected to decline niches in the market. Alternatively, those
at a compound annual rate of 0.1% that can offer multichannel services may
over the decade through 2023-24. In survive. Some potential for growth does
comparison, UK GDP is expected to exist in the industry. Home recording
increase at a compound annual rate of equipment is a rapidly growing product
1.7% over the same period. Although this category as this type of technology
indicates the industry is declining, the becomes more advanced, cheaper and
industry exhibits a number of traits easier to use, and is being increasingly
characteristic of a mature industry. marketed at hobbyists and amateur
Consumers who would have once musicians. Retailers able to market these
considered taking up a musical products are likely to succeed. Retailers
instrument are being offered a greater will find it increasingly difficult to attract
array of options when it comes to new customers to traditional orchestral
spending their leisure time. Competition instruments like violins, oboes and
from alternative outlets is a strong trombones as these product types fall
contributing factor to the industry’s out of favour with the overall market
flagging fortunes. Online retailers are and businesses concentrate on a small
undercutting traditional retailers’ prices number of specialist retail areas.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   12

Products and Markets


Supply Chain  |   Products and 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
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 and Services Audio recording equipment amplifiers, speaker cabinets, public
Products in this category include tape address speakers and related equipment,
machines, audio processing devices, and turntables, mixers and other equipment
computer hardware and software for audio designed for DJs. DJ equipment has been
recording. Once solely used by specialist the fastest growing product type in this
recording studios, this equipment is category, since the professional and
becoming more advanced, cheaper and amateur DJ market has embraced digital
easier to use, and therefore increasingly media. Revenue derived from this segment
marketed to everyday consumers. Most is anticipated to reach 14.9% in 2018-19.
musical instrument retailers stock some
kind of audio recording equipment, which Guitars and ukuleles
can range from basic handheld recording Despite slow growth in guitar sales in
devices to dedicated digital recording recent years, guitars are still the most
workstations and specialised processing popular musical instrument among
components like preamplifiers, effects Britons. They can be bought for as little
units and compressors. Demand for these as £30, but high-end models can cost
products is being driven by the expanding over £3,000. Affordable guitars are
home recording market, which is making mass-produced offshore in places like
up for lagging demand from the studio Korea, Mexico and China. More
recording industry. Revenue generated expensive models tend to be produced
from this segment is estimated to have locally, or in the United States, Canada
increased over the period, and is or Continental Europe.
anticipated to account for 16% of In recent years some forms of popular
industry revenue in 2018-19. music that traditionally feature guitars
have fallen out of favour with audiences.
Amplification and DJ equipment However, growing popularity for country
Amplification and DJ equipment is music is expected to have driven sales of
another significant product segment. It acoustic guitars over the past five years.
includes dedicated guitar and bass guitar In addition, several prominent female
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   13

Products and Markets

Products and Services guitarists, such as Taylor Swift, Haim, expanding share of this product segment.
continued Courtney Barnett and St Vincent have This reflects changing trends in musicians’
driven popularity among women. The preferences and in popular music in
product segment has a large resale general. The proportion of revenue derived
market that operates both through from keyboards, pianos and organs is
auction platforms such as eBay, which anticipated to have marginally increased
are excluded from this industry, and over the five-year period.
music retailers. In addition, this product
category has been supported by fast Orchestral stringed instruments
growth in ukulele sales over the past five Orchestral stringed instruments, such
years. However, ukuleles still account for as violins, violas, cellos and double
a very small share of revenue from this basses, are estimated to contribute 12.5%
product category. Nonetheless, overall of industry revenue. Cheaper items in
revenue derived from this segment is this product segment are generating a
estimated to have remained relatively declining proportion of revenue due to
steady over the five years through the fact that fewer British children are
2018-19, and is estimated to account for taking up instruments and only a small
14.3% of industry revenue in 2018-19. share of those are favouring traditional
instruments like the violin over
Keyboards, pianos and organs instruments commonly used in popular
Keyboards, pianos and organs are music. However, this product segment
estimated to generate 13.4% of industry generates a significant proportion of
revenue. The majority of this comes revenue because orchestral-grade
from electric pianos and synthesisers. instruments, many of which are
Acoustic pianos represent a significant considered antiques and works of art in
cost for most consumers, as they start from their own right, sell for a large amount
approximately £2,000 and can often cost of money. For example, some violins sell
more than £10,000. The percentage of for more than £1 million. The Lady Blunt
revenue contributed by acoustic pianos Stradivarius violin dating from 1721 sold
has been falling for some time because for £9.8 million in 2011. Although this
they are so expensive and relatively violin was sold through an auction, these
inexpensive substitutes are easily available. high prices demonstrate that businesses
Digital pianos, electric pianos, synthesisers can generate large amounts of revenue
and MIDI keyboards make up an even if their sales volumes are low.

Products and services segmentation (2018-19)


5.9%
Brass and woodwind
8.2%
Percussion instruments
instruments
16%
Audio recording equipment

12.5%
Orchestral stringed instruments
14.9%
Amplification and DJ equipment

13.4%
Keyboards, pianos and organs
14.8%
Other products and services

14.3%
Total £440.6m Guitars and ukuleles SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   14

Products and Markets

Products and Services Percussion instruments become a less lucrative product however,
continued Percussion instruments account for an because musicians are increasingly
estimated 8.2% of industry revenue. The accessing sheet music cheaply or for free
majority of this segment’s revenue comes via the internet.
from selling drum kits. Other products Some musical instrument retailers also
included in the segment are shakers, offer repair and maintenance services. The
gongs, zithers, triangles and orchestral range and variety of instruments that can
percussion instruments such as timpani be repaired may differ among industry
and marimba. The proportion of revenue retailers. For example, some may only
derived from percussion instruments is specialise in the repair and maintenance
estimated to have marginally increased of guitars, and can provide services
over the past five years. ranging from guitar setups, fretwork and
bracing modification, to refinishing and
Brass and woodwind instruments neck resets. In order to retain custom
Traditional brass and woodwind in an increasingly competitive retail
instruments like trumpets, trombones, environment, more retailers have aimed to
oboes and clarinets are declining as a differentiate themselves through offering
share of sales, with consumer preferences niche services such as instrument repairs.
trending more towards other industry Some retailers have instead decided to
products over recent years. As a result, operate solely as instrument repair firms.
revenue derived from this segment is Nonetheless, repair and maintenance
also expected to have decreased, and is services have served as an increasingly
expected to reach 5.9% of industry attractive avenue for industry retailers
revenue in 2018-19. to advance customer loyalty and repeat
purchases. However, in order to carry out a
Other products and services comprehensive repair service, retailers are
An estimated 8.5% of industry revenue required to have experienced employees
comes from expendables and accessories, with a high degree of technical competency
including strings, rosin, tuners, music in the functioning and components of
stands, straps, reeds, cables and plectra. the products offered. Revenue generated
This segment’s share of industry revenue from repair and maintenance services is
has increased over recent years. Further estimated to have increased over recent
revenue comes from selling sheet music years, accounting for 6.3% of industry
and other products. Sheet music has revenue in 2018-19.

Demand Musical instruments are considered to time also affects demand for musical
Determinants be discretionary purchases, meaning instruments, as it determines the amount
that overall demand for industry of time consumers have to spend on their
products is sensitive to changes in hobbies. In turn, consumer interest in
consumer confidence and household sports and other leisure activities
disposable income. Growth in income determines demand. The relative cost,
enables consumers to purchase a attractiveness and availability of
broader range of goods, including rare competing leisure activities can influence
instruments or ones of higher quality, a consumers decision to play a musical
and allows them to replace existing instrument as a hobby. Meanwhile,
musical instruments. Furthermore, demand can be positively affected by
demand for musical instruments is technological advances in recording
responsive to price changes. equipment, sound reinforcement
The amount of available leisure equipment and other musical electronics.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   15

Products and Markets

Demand Uptake of a musical instrument likely to continue playing into adulthood,


Determinants usually happens at a young age. As a providing a long-term opportunity to
result, growth in the population aged sustain demand. The population aged
continued
between 11 and 19 benefits sales. Children between 11 and 19 is expected to increase
exposed to music at a young age are more steadily over the next five years.

Major Markets Hobbyists and students Professionals


Hobbyists are the largest market for the Professional and semi-professional
industry and are estimated to generate musicians are estimated to account for
60.7% of revenue in 2018-19. Students, approximately 21.4% of the market. This
parents of students, recreational players segment includes band and orchestra
and aspiring professionals are included members, soloists and other music
in this category. Many children learn professionals. This segment also includes
musical instruments either as part of businesses that require the industry’s
their school curriculum or as an products, such as recording studios.
extracurricular activity and they often Professionals demand the highest quality
then develop into lifelong players and products, upgrade their equipment
consumers of the industry’s products. regularly and are more likely to own more
Long-term amateur players are more than one instrument. They are also less
likely to own multiple instruments or sensitive to price than other consumer
more expensive instruments than groups because owning a quality musical
beginners. It is estimated that half of instrument is central to their livelihood.
all households own at least one musical Demand from this category is expected
instrument. An emerging market for to remain strong during 2018-19.
industry retailers is the retired. Those
in the baby-boomer age group who are Education sector
approaching retirement age are buying The education sector makes up
more instruments as they develop new approximately 17.9% of the market for
hobbies. Demand from the hobbyists musical instruments at the retail level.
market is expected to increase in the Schools and private music tuition
current year. providers are included in this market

Major market segmentation (2018-19)

17.9%
Education sector 60.7%
Hobbyists and students

21.4%
Professionals

Total £440.6m SOURCE: WWW.IBISWORLD.CO.UK


WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   16

Products and Markets

Major Markets segment. Schools often purchase UK government announced an


continued instruments and other industry additional £225 million funding for
products for students to use as part of music education over the four years
their curriculum or in extracurricular through 2020. Consequently, demand
activities, such as orchestra or choir from the educational sector is expected
performances. In November 2016 the to increase in the current year.

International Trade The Musical Instrument Retailers manufacturing level. Musical


industry sells primarily to local instrument retailers have few
residents. The majority of products significant operations outside the
sold are manufactured outside the United Kingdom, although Gear4music
United Kingdom, but the international sells to European customers and
trade involved in getting these items agents operate on behalf of J & A
to market is accounted for at the Beare Ltd in South Korea.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   17

Products and Markets

Business Locations 2018-19

SCOTLAND
6.4

NORTH
EAST
3.2
NORTHERN NORTH
IRELAND WEST
3.4 11.3

YORKSHIRE
8.8

EAST
MIDLANDS
6.9
WEST
MIDLANDS EAST OF
9.0 ENGLAND
9.2
WALES
4.0
LONDON
14.1
SOUTH
SOUTH EAST
Establishments (%) WEST 14.9
Cold Zone (<10) 8.8

<25
<50
Hot Zone (<100)
Not applicable

SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   18

Products and Markets

Business Locations The location of establishments in


Distribution of establishments vs. population
the Musical Instrument Retailers
industry is dispersed on the basis of
20
population, disposable income and
consumer demand. Generally, the
15
more residents in a particular area,

Percentage
the stronger the demand for musical
instruments and supplies. 10

The South East and London 5


The South East accounts for
the largest share of industry 0
establishments, estimated at 14.9%,

East Midlands
East of England
London
North East
North West
N. Ireland
Scotland
South East
South West
Wales
West Midlands
Yorkshire
and also has a high population
density, accounting for 13.8% of the
UK population. This region is just
outside of London so retailers have
Establishments
good access to consumers that earn
Population
higher wages but are paying less rent SOURCE: WWW.IBISWORLD.CO.UK

or other overheads. London is also a


significant region for the industry Other regions
due to its relatively affluent The North West region of England, which
population, as well as it being a includes major cities such as Manchester
major metropolitan area. London and Liverpool, accounts for 11.3% of
is a popular destination for those industry establishments and is home to
looking to purchase musical 11% of the UK population. At the other
instruments, and it has a higher end of the scale, the North East and
concentration of professional and Northern Ireland have the lowest number
aspiring musicians than other parts of industry establishments due to lower
of the country. London is home to population numbers and lower average
14.1% of industry establishments. income, particularly in the North East.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   19

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 industry


Concentration is highly fragmented, as demonstrated by Enterprises by employment size, 2018
the large proportion of small players. The Employees Share of total (%)
industry traditionally displays a low level 0-4 71.8
Level
of market concentration. However, in the 5-9 18.0
Concentration in this current year, concentration is expected to 10-19 6.7
industry is M
 edium transition from low to moderate, largely 20-49 2.5
due to a jump in J & A Beare Ltd’s revenue 50-99 0.5
in 2017-18. The four largest companies 100-249 0.3
are estimated to contribute 40.3% of 250+ 0.2
total industry revenue in 2018-19. Most
enterprises in the industry operate SOURCE: OFFICE FOR NATIONAL STATISTICS

through just one establishment. Some


consolidation has taken place over the decades. Tight margins mean few
past five years but there is still no operators are absorbing their competitors
dominant nationwide chain of musical and larger firms have been reluctant to
instrument stores. This can partly be invest in developing bigger chains.
attributed to consumer preference for The fragmented nature of the industry
local music shops that can deliver can be demonstrated through the size of
personalised and knowledgeable services. employment across industry enterprises.
Customer loyalty can be an important According to statistics from the Office for
factor in the performance of musical National Statistics, approximately 89.8%
instrument retailers because many have of industry enterprises employ fewer
been operating in the same place for than 10 people.

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

Cost Structure Profit operating costs of bricks-and-mortar


Benchmarks Operators in the Musical Instrument retailers, so can often charge lower prices.
Retailers industry have faced intense Since the referendum result, the weak
external competition over the past pound and increased consumer spending
five years. One of the major threats to pressures are expected to have weighed
traditional industry retailers has been on industry margins over recent years.
the prevalence of online shopping. Online Larger players have been in a better
retailers are not subject to the higher position, however, to respond to the
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   20

Competitive Landscape

Cost Structure changing trading landscape and higher competitors, which are more likely to
Benchmarks penetration by external players. In the have long-term purchasing contracts with
current year, average industry profit suppliers or be able to utilise currency-
continued
margins are estimated at 3.7%. hedging strategies to defend themselves
from fluctuations in the pound.
Purchases
As is characteristic of a retail industry, Wages
the major cost faced by operators is Musical instrument retailing is a labour-
purchases, which are estimated to absorb intensive industry that often relies on
72.5% of revenue. The cost of purchases one-on-one selling techniques. Labour
has decreased over the past five years as tasks include general shopkeeping
the range of imported merchandise has duties and answering customer queries.
widened and become less expensive. Staff need some specialised knowledge,
Cheaper merchandise imported from especially when selling audio recording
countries with low labour costs, like and computing products, where
South Korea, China, Thailand and customers require technical expertise.
Vietnam, makes up a significant Operators offering repair and
proportion of purchases. Low-cost maintenance services also require staff
musical instrument producers are competent in the functions and dynamics
beginning to manufacture a wider range of the products offered in order to carry
of products. However, the sharp fall in out a comprehensive repair on goods.
the value of the pound following the EU Industry operators often seek out
referendum result is expected to have employees who are musicians themselves.
resulted in purchase costs increasing Wages have fallen as a percentage of
over recent years. Increased purchase revenue over the past five years despite
costs are estimated to have affected employment increasing, which is
smaller operators more than their larger expected to have been due to industry

Sector vs. Industry Costs

Average Costs of
all Industries in Industry Costs
sector (2018-19) (2018-19)
100
5.0 3.7 n Profit
2.3 1.1 1.2 3.9 1.0 n Rent
1.6 6.3 1.5 0.5 n Utilities
1.0 15.7 n Depreciation
80
8.7 n Other
n Marketing
Percentage of revenue

n Wages
60 n Purchases

40
74.0 72.5

20

0
SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   21

Competitive Landscape

Cost Structure retailers placing greater emphasis on costs low. Depreciable assets include
Benchmarks increasing the number of employees per computer inventory systems, cash
establishment to better customer service. registers and point-of-sale systems.
continued
In 2018-19 wages are expected to account Costs tend to differ significantly between
for 15.7% of industry revenue. operators, depending on their size and the
extent of their capital investment. Utilities
Rent, depreciation and utilities are also considered minor to the industry
Rent is estimated to account for 3.9% of and absorb an estimated 1% of revenue.
industry revenue in 2018-19 as retailers
rely on leases. To keep costs low, industry Other costs
operators seek out cheaper properties, Other costs include insurance, security
such as stores just outside shopping and marketing. Marketing costs make up
centres rather than inside. Depreciation an estimated 1.5% of industry revenue.
costs are estimated at just 1.2% of Most of these costs remain constant
industry revenue. Retailers lease stores but marketing costs are increasing as
instead of owning them, which keeps retailers compete with external operators.

Basis of Competition Internal competition Customer service is important and


Musical instrument retailers compete retail staff must be well versed in the
with each other on the basis of price, technical functions of the products
Level & Trend product range, customer service, offered. Furthermore, it is important
 ompetition
C in location and store promotions. that stores offer repair services. A good
this industry is Consumers are relatively price customer service experience helps to
Mediumand the conscious, especially when purchasing ensure return business and offers an
more expensive products, and will advantage over online-only retailers.
trend is I ncreasing
compare prices in different shops to Location and store promotions also
find the lowest price possible. Given affect internal competition. A store’s
the high cost of some products, location influences the number and
operators aim to ensure that prices are type of potential consumers it can reach.
in line with industry averages and that Musical instrument retailers often aim
any reductions in purchase prices from to situate their stores near town centres,
suppliers are passed on to consumers. close to schools and universities, and
They also aim to offer a high standard of areas with a high level of footfall such
customer service and expert experience as shopping districts. Retailers also
to recommend and demonstrate balance these benefits with rental
products to customers, which overheads and space requirements.
consumers would not get if they
purchased online. External competition
To reach most of the consumer Online-only stores have emerged as a
market, operators compete on the serious threat to musical instrument
basis of the brand, quality and range of retailers. Consumers may be tempted
products offered. Players try to appeal to utilize bricks-and-mortar stores to try
to consumers who are in the market for out instruments and equipment before
high-end items such as high specification shopping around online to get the best
musical instruments, but they also want price. Furthermore, online retailers
to attract consumers looking to purchase compete with online-only retailers such
smaller accessories, such as replacement as Amazon that offer a wide selection
strings, reeds and parts. of products, low prices and the added
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   22

Competitive Landscape

Basis of Competition convenience of shopping from home. sell products at cheaper prices. The
continued Due to the large amount of buying industry also competes with online
power and relatively low overheads auction websites such as eBay that
compared with bricks-and-mortar sell a wide selection of second-hand
stores, online-only retailers can often musical instruments and equipment.

Barriers to Entry The Musical Instrument Retailers


industry exhibits moderate barriers Barriers to Entry checklist

Level & Trend to entry, which is common in the Competition Medium


retail sector. The major expense Concentration Medium
 arriers to Entry
B new entrants face is acquiring stock Life Cycle Stage Mature
in this industry are and retail space near consumers. Capital Intensity Low
Mediumand S  teady Established players in the industry have Technology Change Medium
access to economies of scale, meaning Regulation and Policy Light
they can offer large discounts. They Industry Assistance Low
typically have strong relationships with
their suppliers, which makes acquiring SOURCE: WWW.IBISWORLD.CO.UK

stock easier. Employees must be


adequately trained because good Prospective entrants will have to
knowledge of the product is necessary dedicate a large share of their budget
when selling to customers. to 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
music industry, and new entrants are is 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 that operate globally is small. although
Globalisation foreign activity by domestic operators Gear4music has operations in Europe.
in the industry and the presence of However, the manufacturing process
Level & Trend foreign operators in the domestic for musical instruments is highly
market. The majority of establishments globalised. The final stages of the
 lobalisation
G in this in the Musical Instruments Retailers manufacturing process tend to take
industry is L owand industry are UK-owned companies. place in the United States, Asia or
the trend is S  teady Similarly, the share of UK companies mainland Europe.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   23

Major Companies
J & A Beare Ltd | Gear4music (Holdings) plc
S&T Audio Ltd | Dawsons Music Ltd | Other Companies

Major Players Dawsons Music Ltd 5.2%


Gear4music (Holdings) plc 12.7%
(Market Share)

59.7%
Other

S&T Audio Ltd 9.6%


J & A Beare Ltd 12.8% SOURCE: WWW.IBISWORLD.CO.UK

Player Performance Founded in 1892, J & A Beare Ltd Beare’s key competitors are not online
merged with Morris and Smith in 1998. retailers but auction houses and global
The company is an upper-end retailer of specialist violin stores.
J & A Beare Ltd high-end violins, violas and cellos, as
Market Share: 12.8% well as a selection of bows ranging in Financial performance
price from £2,000 upwards. J & A Beare J & A Beare Ltd’s revenue is expected to
also restores violins for sale and, on rare increase at a compound annual rate of
occasions, manufactures violins in-house 19.2% over the five years through 2018-
at its Marylebone shop. In addition to 19, reaching £56.3 million. Due to the
domestic operations, the company also high value of the company’s goods, J &
operates in Seoul, South Korea, through A Beare has generated strong revenue
an agent. Apart from instruments, the growth over the period, especially relative
company also sells a selection of bows to the wider industry. Nonetheless, its
and related equipment. J & A Beare’s profit margin has remained slim. The
product portfolio is heavily weighted company has particularly reported
towards antique stringed instruments. strong revenue performance over recent
Like most high-quality antiques, these years, despite high uncertainty and a
instruments tend to appreciate in value. competitive retail environment. Revenue
They are often purchased on behalf of a surged over 2016-17 and 2017-18 due
particular performer by an orchestra, to the rapid depreciation of the pound
musical institution, or by a single or increasing the value of inventory and
group of investors as a form of increasing export sales. The weak
alternative investment. pound is therefore expected to continue
Due to the high level of skill required supporting revenue growth over 2018-19.
to deal in this area of the industry, To some extent, strong revenue growth
wages are comparatively high. Unlike has supported company operating profit
many operators in this sector, J & A over recent years.

J & A Beare Ltd - financial performance


Revenue Operating Profit
Year* (£ million) (% change) (£ million) (% change)
2013-14 23.4 N/C 1.1 N/C
2014-15 19.5 -16.7 0.4 -63.6
2015-16 19.3 -1.0 0.5 25.0
2016-17 27.9 44.6 0.8 60.0
2017-18 43.5 55.9 1.2 50.0
2018-19** 56.3 29.4 1.4 16.7

*Year end March **Estimate


SOURCE: COMPANIES HOUSE AND IBISWORLD
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   24

Major Companies

Player Performance Gears4music is one of the largest


musical retailers in the United Kingdom. Gear4music (Holdings) plc -
Founded in 1995, the company offers a
Gear4music industry-related performance*
range of electric, acoustic and bass
(Holdings) plc guitars, percussion instruments and Revenue
Market Share: 12.7% recording equipment, alongside Year** (£ million) (% change)
traditional orchestral instruments, 2013-14 13.4 N/C
pianos, studio gear, home audio and 2014-15 18.7 39.6
DJ equipment. Although Gear4music 2015-16 26.0 39.0
conducts the majority of its business
2016-17 34.8 33.8
through its website, it also has a bricks-
and-mortar store in York. Previously 2017-18 44.3 27.3
known as Red Submarine Ltd, the 2018-19 55.9 26.2
company renamed itself Gear4music
Ltd in 2014-15 to match the name of its *Estimate **Year end February through 2017-18, year end March
thereafter
website. In June 2015, the group listed SOURCE: IBISWORLD
on the Alternative Investment Market
(AIM) of the London Stock Exchange,
becoming Gear4music (Holdings) plc. to increase at a compound annual rate
The company generates the majority of 33.1% to reach £55.9 million, far
of its revenue through its online store. exceeding expected revenue growth
The website stocks over 44,700 products in the wider industry. The company’s
from more than 790 manufacturers. The strong performance has been driven
company has significantly expanded its by rapidly increasing online sales. The
online presence over the past decade, and company has reported considerable
now delivers to more than 190 countries, growth in operating profit over the
with its website translated into a range period, with the jump in 2016-17
of languages. The company also operates accounting for the majority of this
distribution centres Sweden and increase. In the beginning of the
Germany, although the operations of period, investments in the company’s
these two distribution centres are infrastructure as well as associated
excluded from the UK industry. costs with its public offering weighed on
operating profit. Nonetheless, increased
Financial performance operating profit over the period has
Over the five-year period through been thanks to an increase in the
2018-19, Gear4music (Holdings) plc’s volume of sales of high-value products
industry-related revenue is anticipated and greater economies of scale.

Gear4music (Holdings) plc - financial performance


Revenue Operating Profit
Year* (£ million) (% change) (£ million)
2013-14 17.7 N/C 0.1
2014-15 24.2 36.7 0.2
2015-16 35.5 46.7 0.3
2016-17 56.1 58.0 2.6
2017-18 80.1 42.8 2.0
2018-19** 104.6 30.6 2.4

*Year end February through 2017-18, year end March thereafter **Estimate
SOURCE: COMPANIES HOUSE AND IBISWORLD
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   25

Major Companies

Player Performance S&T Audio Ltd, which was founded in Financial performance
1999, operates musical instrument Over the five years through 2018-19, S&T
shops under several different names. Audio Ltd’s revenue is expected to grow at
S&T Audio Ltd One of these is Professional Music a compound annual rate of 11.4% to £42.3
Market Share: 9.6% Technology, a chain of 16 stores million. The company has performed
Industry Brand Names throughout the United Kingdom, strongly in an environment where
Professional Music including outlets in Manchester, many musical instrument retailers have
Technology Liverpool and Birmingham. Professional struggled. This is the result of a strong
Dolphin Music Music Technology also operates an expansionary strategy and competitively
online store. Based in Southend-on- priced products. A simultaneous expansion
Sea, the company employs over 150 in online retailing has spurred growth in
in-store experts who work alongside its online business, which has further
administrative staff supporting the supported revenue growth. The group’s
company’s online endeavours and products tend to be musical instruments
its brick-and-mortar stores. To used in contemporary music, though it
complement Professional Music does also hold a small amount of more
Technology, S&T Audio Ltd also runs traditional stock. It often sells in large
an extensive online retailing operation volumes and caters extensively to beginner
under the Dolphin Music brand. and intermediate ability levels.

S&T Audio Ltd - financial performance


Revenue Operating Profit
Year* (£ million) (% change) (£ million) (% change)
2013-14 24.7 N/C 1.4 N/C
2014-15 26.3 6.5 1.3 -7.1
2015-16 29.9 13.7 1.5 15.4
2016-17 33.8 13.0 2.3 53.3
2017-18 37.9 12.1 2.6 13.0
2018-19** 42.3 11.6 3.0 15.4

*Year end April **Estimate


SOURCE: COMPANIES HOUSE AND IBISWORLD

Player Performance Dawsons Music began trading in equipment, computers, public address
Warrington in 1898. The company is still systems and DJ equipment. On 13
based in the North West and operates December 2018, Dawsons was acquired
Dawsons Music Ltd nine outlets in cities such as Manchester, by private equity firm SKG Capital
Market Share: 5.2% Liverpool, Leeds and Reading, as well as Nominees through majority ownership.
an Education Department in Northern
Ireland. The company also retails online Financial performance
and through a mail-order service. Dawsons has recorded relatively strong
Dawsons offers a full range of musical revenue growth over the past five-year
instruments and related products, from period. Increased investment into its
orchestral instruments, guitars, drums, e-commerce technology and its growing
pianos and keyboards, to audio recording online retailing business has driven
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   26

Major Companies

Player Performance company growth over the period, attributes to operating in a competitive
continued allowing it to capture greater market market. Dawsons Music Ltd’s revenue
share. Although the company has is expected to increase at a compound
remained profitable, margins remain annual rate of 4.9% over the five years
relatively slim, which the company through 2018-19, reaching £23 million.

Dawsons Music Ltd - financial performance


Revenue Operating Profit
Year* (£ million) (% change) (£ million)
2013-14 18.1 N/C 0.3
2014-15 18.9 4.4 0.4
2015-16 20.8 10.1 0.2
2016-17 21.0 1.0 0.2
2017-18** 22.1 5.2 0.3
2018-19** 23.0 4.1 0.4

*Year end May **Estimate


SOURCE: COMPANIES HOUSE AND IBISWORLD

Other Companies Music in Print Ltd, which trades as customer base. Integration between its
Musicroom.com, was established in online and traditional retailing operations
Player Performance 1995 by the Music Sales Group, a London- through services such as click and collect
based sheet music publisher that has been has supported revenue for the majority
in operation for over 200 years. Music in of the period. However, the company
Music in Print Ltd Print Ltd operates 11 bricks-and-mortar has reported declining rates of revenue
Market Share: 2.8% stores under the Musicroom brand, growth over recent years, which it has
retailing an extensive range of sheet attributed to a competitive retail
music, tutor material, instruments and environment. The company last reported
related accessories. Musicroom stocks an revenue of £11.9 million in December
extensive range of educational resources 2017. However, in January 2017, the
and child-size instruments. Music in company filed for exemption accounts,
Print Ltd was quick to establish an online and has not released operating profit
presence. This has proven to be an figures from December 2015 onwards.
important driver of growth for the IBISWorld estimates the company to
company, as online retailing has boomed generate revenue of £9.8 million for the
and allowed the company to reach a wider year through December 2018.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   27

Operating Conditions
Capital Intensity   |   Technology and Systems   |   Revenue Volatility
Regulation and Policy   |   Industry Assistance

Capital Intensity IBISWorld determines the capital


intensity of an industry by comparing Capital Intensity
Capital units per labour unit
labour costs with capital costs, using
Level
wages as a proxy for labour and 0.5
The levelof capital depreciation as a proxy for capital. Like
intensity is L ow most retail industries, musical instrument 0.4

retailing is more labour intensive than 0.3


capital intensive. Labour is necessary to
provide efficient customer service, 0.2

manage inventory levels, restock shelves, 0.1


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

Wage costs are estimated to account for


15.7% of industry revenue in 2018-19 and radio-frequency technology, is estimated
wages are typically higher than those to account for 1.2% of industry revenue.
offered by online-only retailers. The low For every £1.00 spent on capital, industry
operating costs of online retailers are the operators are expected to spend £13.05 on
key reasons as to why they can offer such wages, demonstrating a low level of capital
low prices. Depreciation, including on intensity. Capital expenses vary between
items such as cash registers, scanners and players but are generally low.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   28

Operating Conditions

Technology and Technological advances in upstream kept low while popular products can
Systems manufacturing industries have resulted be ordered easily during peak periods.
in the introduction of higher quality Mobile payment applications and
Level products that can be sold at lower systems have made the purchase
prices. For example, technological process faster and more efficient for
The level
of advances in sound reinforcement both retailers and consumers.
technology change systems, recording equipment and The industry is also increasingly
is M
 edium musical instrument digital interface utilising online retailing, this is
products have occurred over the past particularly with regards to larger
five years. Consumers can now musical instrument retailers. More
affordably create an in-home recording operators in the industry are expected
studio, which has improved store sales. to invest in websites to sell their
Additional technological advances in products to a wider range of consumers.
the industry include mobile payment Over the next five years more companies
systems and automated inventory in the industry are expected to invest
equipment. The introduction of these in websites or apps designed with
technologies has assisted retailers mobile devices in mind, with the aim
with more efficient management and of benefiting from the rising popularity
distribution chains. Inventory can be of mobile-commerce.

Revenue Volatility The Musical Instrument Retailers or will opt for the less expensive
industry exhibits a low level of revenue options. Revenue is also influenced by
volatility. Industry revenue is influenced competition. Due to online-only retailers
Level
by changes in consumer confidence and lacking physical establishments, their
The level of real household disposable income. As overhead costs are typically lower
volatility is L ow musical instruments are considered to than those of bricks-and-mortar
be discretionary purchases, demand establishments. Increased competition
is price sensitive. When consumer and consumer spending pressures have
confidence is low and disposable constrained industry revenue over
incomes are constrained, consumers recent years, contributing to the low
are less likely to purchase instruments, level of revenue volatility.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   29

Operating Conditions

Regulation and 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 organisations to improve access to music
industry assistance. However, the education. In 2015 the government
industry benefits indirectly from announced more funding for music and
Level & Trend government policies to boost music arts education programmes. Part of this
 he level of
T education. One example is the announcement included an increase of
Industry Assistance introduction of music education hubs by £18 million to the Arts Council to deliver
is L owand the the Arts Council in 2012. Music education music education. This increase brought
hubs are intended to work with local the total amount available to music
trend is S teady
authorities, schools, art organisations, education hubs to £75 million per year
in addition to community and voluntary between 2015-16 and 2018-19.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UK March 2019   30

Key Statistics
Industry Data Industry
Revenue Value Added Wages Domestic
(£ million) (£ million) Establishments Enterprises Employment Exports Imports (£ million) Demand
2009-10 379.0 86.8 1,751 1,705 3,960 -- -- 73.0 N/A
2010-11 388.5 93.7 1,752 1,707 3,980 -- -- 76.0 N/A
2011-12 381.5 94.4 1,749 1,702 3,912 -- -- 75.2 N/A
2012-13 373.3 94.5 1,744 1,698 3,802 -- -- 73.4 N/A
2013-14 399.0 91.9 1,742 1,695 3,760 -- -- 70.7 N/A
2014-15 423.6 92.5 1,741 1,693 3,794 -- -- 70.3 N/A
2015-16 446.9 95.3 1,742 1,690 3,864 -- -- 71.7 N/A
2016-17 453.7 93.9 1,743 1,688 3,914 -- -- 70.6 N/A
2017-18 444.3 91.9 1,739 1,687 3,882 -- -- 69.3 N/A
2018-19 440.6 90.5 1,733 1,684 3,916 -- -- 69.0 N/A
2019-20 441.9 90.6 1,730 1,681 3,939 -- -- 69.3 N/A
2020-21 444.1 90.8 1,728 1,679 3,971 -- -- 69.8 N/A
2021-22 446.8 90.0 1,724 1,677 4,015 -- -- 70.4 N/A
2022-23 452.2 90.9 1,723 1,674 4,043 -- -- 71.1 N/A
2023-24 456.7 91.0 1,721 1,672 4,091 -- -- 71.9 N/A

Annual Change Industry Domestic


Revenue Value Added Establishments Enterprises Employment Exports Imports Wages Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2010-11 2.5 7.9 0.1 0.1 0.5 N/A N/A 4.1 N/A
2011-12 -1.8 0.7 -0.2 -0.3 -1.7 N/A N/A -1.1 N/A
2012-13 -2.1 0.1 -0.3 -0.2 -2.8 N/A N/A -2.4 N/A
2013-14 6.9 -2.8 -0.1 -0.2 -1.1 N/A N/A -3.7 N/A
2014-15 6.2 0.7 -0.1 -0.1 0.9 N/A N/A -0.6 N/A
2015-16 5.5 3.0 0.1 -0.2 1.8 N/A N/A 2.0 N/A
2016-17 1.5 -1.5 0.1 -0.1 1.3 N/A N/A -1.5 N/A
2017-18 -2.1 -2.1 -0.2 -0.1 -0.8 N/A N/A -1.8 N/A
2018-19 -0.8 -1.5 -0.3 -0.2 0.9 N/A N/A -0.4 N/A
2019-20 0.3 0.1 -0.2 -0.2 0.6 N/A N/A 0.4 N/A
2020-21 0.5 0.2 -0.1 -0.1 0.8 N/A N/A 0.7 N/A
2021-22 0.6 -0.9 -0.2 -0.1 1.1 N/A N/A 0.9 N/A
2022-23 1.2 1.0 -0.1 -0.2 0.7 N/A N/A 1.0 N/A
2023-24 1.0 0.1 -0.1 -0.1 1.2 N/A N/A 1.1 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. (£) (%)
2009-10 22.90 N/A N/A 95.71 19.26 2.26 18,434.34 0.01
2010-11 24.12 N/A N/A 97.61 19.56 2.27 19,095.48 0.01
2011-12 24.74 N/A N/A 97.52 19.71 2.24 19,222.90 0.01
2012-13 25.31 N/A N/A 98.19 19.66 2.18 19,305.63 0.01
2013-14 23.03 N/A N/A 106.12 17.72 2.16 18,803.19 0.01
2014-15 21.84 N/A N/A 111.65 16.60 2.18 18,529.26 0.00
2015-16 21.32 N/A N/A 115.66 16.04 2.22 18,555.90 0.01
2016-17 20.70 N/A N/A 115.92 15.56 2.25 18,037.81 0.00
2017-18 20.68 N/A N/A 114.45 15.60 2.23 17,851.62 0.00
2018-19 20.54 N/A N/A 112.51 15.66 2.26 17,620.02 0.00
2019-20 20.50 N/A N/A 112.19 15.68 2.28 17,593.30 0.00
2020-21 20.45 N/A N/A 111.84 15.72 2.30 17,577.44 0.00
2021-22 20.14 N/A N/A 111.28 15.76 2.33 17,534.25 0.00
2022-23 20.10 N/A N/A 111.85 15.72 2.35 17,585.95 0.00
2023-24 19.93 N/A N/A 111.64 15.74 2.38 17,575.16 0.00

Figures are inflation-adjusted to 2018-19. SOURCE: WWW.IBISWORLD.CO.UK


WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   31

Jargon & Glossary

Industry Jargon MULTICHANNEL RETAILINGUsing multiple channels SYNTHESISERAn electronic instrument that
to interact with potential customers. These could include generates sound by using filters and tone generators
the internet, mobile phones and bricks-and-mortar outlets. to create waveforms.
MUSICAL INSTRUMENT DIGITAL INTERFACE (MIDI)
A way of allowing different instruments to interact with
each other electronically.

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 INTENSITYCompares 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 TRADEThe 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 DEMANDSpending 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.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists NONEMPLOYING ESTABLISHMENTBusinesses with
of one or more establishments that are under common no paid employment or payroll, also known as
ownership or control. nonemployers. These are mostly set up by self-employed
individuals.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single PROFITIBISWorld uses earnings before interest and tax
physical location where business is conducted or where (EBIT) as an indicator of a company’s profitability. It is
services or industrial operations are performed. Multiple calculated as revenue minus expenses, excluding
establishments under common control make up an interest and tax.
enterprise. VOLATILITYThe 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%.
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