NARM Releases Annual Survey Results for 1998

The National Association of Recording Merchandisers (NARM) has released its Annual Survey Results for the 1998 business year, indicating that gross dollar volume for all music products grew by 10%, to $9.69 billion, with the CD market (83.3%, or $8.1 billion) continuing to build on its dominance. The report reveals that DVD sales "literally exploded in 1998," up a staggering 400% to $259 million.

A total of 32 member companies representing 3745 total stores are included in the survey, with 1660 of those stores in malls and the remaing 2085 in strip or freestanding locations. The average number of items purchased per sale held at two, but the average value of that purchase went up about $1, to $20.89. The ongoing shift of sales from mall outlets to freestanding locations leveled off a little, dropping just 1%, to 44% of total sales. Both chain and independent stores say they are staying open for more hours each week, and are reporting that about 15% of the prerecorded music they sell is returned.

Of particular interest to Netizens are survey results profiling the Internet activities of brick-and-mortar music retailers. NARM President Pamela Horovitz states that "Our Annual Survey is the Association's most valuable source of industry data and its most frequently requested statistical report. We are especially excited to be including for the first time a profile of the Internet activities of our brick-and-mortar retail members this year. It's extremely important that we begin benchmarking the e-commerce activities of our members, so we asked how they're marketing and using their websites, how they're handling fulfillment, what's selling, and their downloading plans."

Of those companies queried, 70% say they have an Internet site, with half of those not currently online planning to get wired before the end of the year. 86% of those with websites say they manage them internally, with Internet sales accounting for 1% of a company's music sales if it is a chain store, and 3% if it is an independent retailer. For both types of stores, roughly 75% of online sales are from CDs, and three-fourths of respondents handle their own fullfillment. This is in contrast to many online-only retailers, such as CDnow, who have third-party fullfillment arrangements with their distributors.

One third of the retailers surveyed say they offer music downloads, and of those that don't, 25% are preparing to do so and 40% are not planning to at this time. Interestingly, 60% of respondents say that they accept returns at their brick-and-mortar locations of products purchased online, about half of the companies claim to answer customer inquiries with eight hours, and 75% answer within 24 hours.

Company promotions and customer information are the number one use of websites, followed closely by music sales and other entertainment products. For promoting their online sales, 80% report that they use e-mail as well as in-store and print advertising, and about half use radio and affiliate relationships.