Musicland Stores Take Retailing Online

Wednesday, June 23, was an auspicious day for Musicland Stores Corporation. That day the Minneapolis, Minnesota-based music and video retailer took its sales online. Four websites, each mirroring one of Musicland's four divisions, went live simultaneously with a promotional contest offering customers the chance to win daily and weekly prizes and a $10,000 grand prize---including a Sony home entertainment system. Participants can also win a trip for two to the World Wrestling Federation Summer Slam in Minneapolis on August 22.

Musicland's four divisions---Sam Goody, Media Play, On Cue, and Suncoast Motion Picture Company, a video chain---dominate the music-and-movie market in the upper Midwest. The corporation's 1346 stores also include some in the UK, the US Virgin Islands, and Puerto Rico. The move to online sales by one of the largest music and video specialty retailers is incontrovertible proof of the growing importance of the Internet.

The promotional contest, which runs for 30 days beginning June 23, lets customers register once per day for the grand prize and for lesser prizes---including an unspecified model of DVD player said to be worth $1000. "We're ready to reward our visitors," said Karl Sowa, managing director of Musicland's e-commerce division. "The contest is strategically designed to increase site traffic by spreading word-of-mouth awareness of the launch. The daily entry feature also will encourage customers to bookmark the site during the contest and for future shopping." The well-orchestrated promotion includes a promotional partnership with Comedy Central.

Musicland customers can now shop from home for music and movies that previously required a trip to the store. Musicland vice chairman Keith Benson said his company could eventually offer digital downloads of music directly to consumers over the Internet, as well as in the physical stores. Benson dismissed e-commerce as a threat to traditional retailing. The Internet is simply a parallel line of distribution, in his view: "We don't see this as a big negative to stores. The Internet will be a transfer of market from stores, but since the entire record industry is growing at about 6 to 7% per year, nobody's going to suffer."