Professional Documents
Culture Documents
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.
Industry at a Glance
Musical Instrument Retailers in 2018-19
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
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.
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
Industry Performance
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.
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
% 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
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.
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 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 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.
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 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
17.9%
Education sector 60.7%
Hobbyists and students
21.4%
Professionals
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
Percentage
the stronger the demand for musical
instruments and supplies. 10
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
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalisation
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.
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
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.
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.
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
59.7%
Other
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.
Major Companies
*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.
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.
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
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
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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