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Can you hear the sound of music at the cash register of the music instruments retail store? Sounds fuzzy, isn't it? Well, there's good reason for this distortion.
While the love for music has not diminished - and one can arguably state that cellphones have made music more available than ever before - has there been a commensurate increase in the sale of musical instruments? While hard data is not easily available, the music instruments retailers are more positive about the future of their business than music producers (where piracy is a perennial problem).
There are different reasons for the positive outlook for the music instruments retail industry in India. First, the sheer size & demographics of the market. With the large number of music loving youngsters, it is but natural that there is always demand for learning music. And, yes, the desire to learn music knows no age boundaries. Even the well-heeled middle-aged person often signs up for music lessons once he is financially secure to give wing to his long held - and often secret - desire! Rising affluence of consumers is likely to create a greater propensity to spend more on expensive and sophisticated musical instruments.
Secondly, the craze for western music in this bracket of youngsters also means that there is constant supply of young enthusiasts. Actually, this craze is not limited to English music alone (though it is often more visible in the press with the visit of international pop stars - think Bieber). The traditional schools of Indian music are also shining, albeit quietly. Added to all this is the rise in the disposable income of middle-class India. Not only do parents today have the inclination to fund music lessons for their child at an early age, there is also a desire to bring up 'well-rounded' children who have a competitive edge in the admissions' market. Hence, the rise of music schools in urban India. Not to be forgotten is the positive contribution & role played by the plethora of music shows on television. This is yet another lever of growth for the industry as it serves to encourage talent.
Does all this translate into big bucks for music instrument retailers? Not quite, as the old bricks-and-mortars firms are finding out. Their challenges are plenty. First, the retail outlets have traditionally been localized family businesses. While usually they have a reputational advantage, they have not been known to think strategically or plan ahead, a generic ailment that many family businesses have been prone to in various industries. Consequently, the challenge of scale has made them less effective. The good news is that some of these firms have taken remedial steps and have begun the shift from being old-fashioned family business to family-owned but professionally managed firms. This professionalization has led to the introduction of modern business systems (think ERP) combined with good sales, brand building & financial management practices.
The new & bigger challenge to them is the rise of e-commerce. To rage against this change is an exercise in futility. Instead, some of the old retailers are viewing this as an opportunity to create a new store front to reach customers from hitherto unserved markets. The variable element now is pricing. The large e-commerce sites are known to be aggressive discounters. Coping with them requires innovative ideas, both in customer service & fulfillment practices.
Yet another opportunity lies in the introduction of the Goods & Services Tax (GST) from July 2017. Many of the logistical hurdles can now be overcome with better resource planning, thus potentially throwing up one large market where products can freely flow.
In the past, it has been largely assumed that the key factors for success in this business are: having a wide (& expanding) range of products, proximity to key markets, goodwill with old and loyal customers and managing inventory. But there are now other variables. There are newer players in the game who are hungry to succeed and who will challenge the existing paradigms. The time is now ripe to raise fresh capital and think differently to compete. The real question remains: are the old warriors ready to learn new techniques to win the battles of today to survive? This will be a combat worth watching.
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