L.A. Times — ‘A grinding halt’: Record stores struggle to stay afloat amid coronavirus crisis

Discussion in 'Music, Movie and Hardware Store Guide' started by steelydanguy, Mar 29, 2020.

  1. steelydanguy

    steelydanguy Forum Resident Thread Starter

    I thought the forum might be interested in this Los Angeles Times article that ran online this weekend.


    By RANDALL ROBERTS
    STAFF WRITER

    MARCH 27, 2020
    4:32 PM

    The city permit that Amoeba Music had been anticipating came on March 18: After a years-long search to finally lock in a new home for its 31,000-square-foot Sunset Boulevard location, the city’s Department of Building and Safety approved construction applications for a new space a few blocks away at the corner of Hollywood and Argyle.

    Little could Amoeba have known when its owners submitted the paperwork that a pandemic of Slayer-esque proportions would prompt the company, which as the country’s largest independent record store employs about 400 workers across its three California locations, to close the same day it got the go-ahead to start work.

    “What would have been a moment of celebration,” Amoeba Music co-owner Jim Henderson says, “was just a further entrenched moment of, ‘Now what?’ ”

    Across Los Angeles and the country, similarly baffled music retailers await word of how the $2-trillion relief package approved by Congress will aid their plight. In the short term, prospects seem dim. Record retail’s most profitable day, April’s annual Record Store Day initiative, has been postponed.

    Nationwide, more than 120 independent shops have temporarily shuttered, according to Billboard, either out of caution or government-dictated stay-at-home orders. Profitable mail order businesses either can’t or won’t ship from UPS or the post office. Those that can, like Amoeba, are doing so with an abundance of caution.

    As with most independent retailers facing extended shutdowns, stores’ survival will depend on the size of savings accounts and the speed of, and access to, government relief.

    A few miles northeast of Amoeba at the Permanent Records Roadhouse in Glassell Park, owner Lance Barresi had banked on the idea that relocating his vinyl store to a space that had a bar and liquor license, which he did at the end of 2019, would yield higher margins.

    COVID-19 has exploded that notion, Barresi says. “The beauty of the Roadhouse is that it’s a bar and a record store in one. The bummer of it is when the city — for the first time ever — tells all bars to close, see you later record store inside that bar.” He shut down his businesses on March 16, out of concern for both his customers and his employees. Walk-in traffic had slowed, he said.

    Plus, he noticed that the shoppers who were still coming were shockingly under-informed, diminishing his ability to protect his clerks and customers. “If you’re sitting in a retail environment by yourself most of the day and the only people that are coming in are the ones who don’t recognize the severity of the situation, that makes things that much scarier for you as the person behind the counter,” he says.

    Music retailers know from adversity, and those that have survived previous crashes can be an industrious bunch. Even before the pandemic, the business of selling physical product was enduring a series of debilitating setbacks. Virtually ignored by major labels that are now all-in on the music streaming model, record retail is a low-margin business that lives and dies on access to new and used product.

    In 2019, a wrench in the supply chain caused by a reliance on overtaxed Indiana-based distributor Direct Shot led to release-day chaos and hindered the ability of retailers to restock in-demand titles. Earlier this year, a fire destroyed the Inland Empire plant of Apollo Masters, which long dominated the market for lacquer masters crucial for most U.S. vinyl pressing plants. How that loss will affect the ability of artists to press new vinyl records remains to be seen.

    Despite the losses, physical music sales, which are the lifeblood of most indie shops, remained strong in the pre-COVID-19 era, says Eric Levin, president of the Alliance of Independent Media Stores, co-founder of Record Store Day and owner of Atlanta-based Criminal Records.

    “We were doing fine. We were up 30% in early 2020,” he says. Most other stores in the 28-member alliance group were also thriving, Levin said.

    In 2019, U.S. sales of vinyl rose by 14.5%, part of a 14-year ascent, according to the Recording Industry Assn. of America. Still, the format accounted for just 4% of U.S. music sales, compared with 82% for streaming. In 2019, 18.8 million new LPs and 46.5 million CDs were sold. By comparison, more than 1 trillion songs were streamed.

    Those numbers, however, don’t account for used-album sales. More profitable than new product, used media is the lifeblood of Amoeba, Permanent, Freakbeat in Sherman Oaks, Gimme Gimme in Northeast L.A., Fingerprints in Long Beach and the dozens of other shops in the region. But with no used music coming in and no physical store to sell what they’ve got, shops are scrambling to find new routes to profitability.

    “I feel like I’ve got nothing to do and a ton to do,” says Dan Cook, Gimme Gimme‘s owner, adding that he feels “a little directionless.” Cook, whose shop was regularly featured in Marc Maron’s TV show “Maron,” has been trying to earn income by listing his stock in online marketplaces and highlighting choice titles on Instagram.

    Freakbeat Records’ Bob Say says via email that the store is “managing to keep the mail-order going. It isn’t close to our usual business but helps pay the employees and rent. Everyone is involved in some aspect from home; making new listings, social media exposure, packing and shipping.

    “Hopefully we can hang on through May,” Say concluded.

    Vinyl buyers are a notoriously demanding lot who expect Amazon Prime-level service regardless of pandemic or pestilence, but Gimme Gimme’s Cook is not even sure he should be going to the post office. At Amoeba, Henderson says online sales have shot up, but the store’s ability to manage the influx has diminished out of concern for employees’ health and social distancing requirements.

    Used records can’t be replenished with a call to a distributor. Many of the better shops fill their racks with vinyl purchased at one of the many massive annual record markets where professional crate diggers from around the world gather, says Permanent’s Barresi. Such convergences can now lead to mass outbreaks.

    “Not only has our business come to a grinding halt, but all of our scheduled spring record-buying trips to record fairs across the country and internationally have been canceled,” Barresi says, listing markets at the Rose Bowl and Pasadena Community College and record fairs in New York and Austin, Texas. The world’s largest event, the twice-yearly Utrecht Record Fair in the Netherlands, also has been canceled.

    Says Barresi with a resigned sigh: “A significant portion of our stock comes from sources that are completely unavailable to us at this point.”

    With little income, stores are having to make hard choices. Amoeba’s Henderson says that the company is unable to pay its 200 salaried employees and has no work for its hourly clerks. Gimme Gimme, says owner Cook, is mostly a one-man operation, but he is continuing to pay his small staff. Permanent’s staff is hourly, but Barresi says he can afford to pay only a few employees right now.

    The Coronavirus Aid, Relief, and Economic Security [CARES] Act does address the needs of small businesses such as Amoeba. Companies with fewer than 500 employees can apply for small-business loans, and money deployed for payroll will be forgiven if used within two months. It also includes aid for rent, mortgage and utilities.

    On the other side of the country at Criminal Records, Levin recalls “feeling neutered” by the COVID-19 invasion: “My staff are record store warriors, and they were really trying,” he says of early efforts to remain viable amid the surreal situation. “When they weren’t doing curbside delivery, they were doing projects and cleaning and painting bins.” But soon fear seeped in. “One by one, they were like, ‘You know, I can’t come in.’” From a moral perspective, Levin had no interest in making demands, so he eventually shuttered mail-order operations.

    He made the decision at the same time that the board of music retailers that plans Record Store Day announced the postponement of the annual event, originally slated for April 18. Levin says that “in the naivety of three weeks ago,” he was among those on the board successfully advocating it move to June 20.

    Asked whether he thought that new date is realistic, Levin pauses. Stressing that he doesn’t speak for the board that will ultimately make the call, he says, “I wouldn’t be surprised if it moved. I would be surprised if it stayed.”

    If the sector’s biggest day of sales is postponed once again, record stores will, again, lose a crucial payday at the worst possible time.

    The financial hit is one thing, says Amoeba’s Henderson, “but there’s also the emotional one. In the L.A. store alone, we have over 30 people who have worked with us since Day One,” he says. “The relationships are really entrenched. We know these people. We know their children and their spouses and significant others. It’s familial.”

    [​IMG]
     
    rocnred, LitHum05, mikeyt and 4 others like this.
  2. Radio

    Radio Forum Resident

    Location:
    Ann Arbor, MI
    steelydanguy likes this.
  3. Chee

    Chee Forum Resident

    Location:
    Denver
    • If it closes the record nation (retail) into June, you'll see a lot of stores gone.
     
  4. Dillydipper

    Dillydipper Sultan Of Snark

    Location:
    Central PA
    You've gotta know, as essential as these dealers are to us (and also to themselves, of course), there are always going to be far much more stock on hand begging to be sold, than there are people willing to go hunting for it. And it's always been a "volume" business: the more volume of variety, the better the shopping, but the less percentage of what's available gets actually sold. It's a sucker's game to enter into the record store industry right now, but those who go out of business will see opportunists hoover-up their stock, and find themselves further saddled with stuff they can't make a dime off, than Clear Channel Radio did when they entered into a lifetime of debt-servicing and disappointing their public.

    So, as much as I want those businesses to stay solvent for my own benefit, I don't have that extra dime to offer them as incentive, and that won't improve on my end anytime soon. And pragmatically, I'm looking at my current state of collection and thinking, it could all end tomorrow and I'd be "good".

    "GoFundMe" to help a failing business model sink their own fortunes as the future moves faster away from their potential success? I'd rather sink my next pocket money surplus into helping my local hospital afford one more ventilator. It may not be worth all that much once the pandemic starts shrinking, but...that's our first priority right now (save for saying alive long enough to vote for our children's sake, that is...).
     
  5. Chee

    Chee Forum Resident

    Location:
    Denver
    You have to beat your competition to what's out there. More people know the value of anything. Look at the We Buy Gold people. You can get close to spot on eBay or what exactly a Rolex from '62 is worth....not pathetic offers. The rents have crucified retail. Remember the rusted F150's at flea markets with people looking like Art Carney in 1984 selling records? I sure miss those days.
     
    Rodz42 likes this.
  6. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA
    Amoeba sold its building for $34 million. Over the years, their WalMart styled operation also put a lot of small retailers out of business.

    I am not going to shed a tear about how they may fund their new construction. They have the money if they want to do it. And to heck with government handouts.

    For the rest of the retailers--yes, this is a hugely sucky time, and many of them won't outlast it.
     
    zoostation and proust78 like this.
  7. Chee

    Chee Forum Resident

    Location:
    Denver
    Amoeba needs no money. The owners got millions each. The rest of the SoCal operations are going to be battered but that means big sales for buyers. Some are fronted by family money so they'll be back with no problems. Flea markets and swap meets with 2.5 months down will have lots of empty buildings. The stuff they paid for from Korea and China on bank loans and borrowed will destroy many. The boutique shops will never be able to pay their 3 months rent due...very high in SoCal.
     
    proust78 likes this.
  8. Chee

    Chee Forum Resident

    Location:
    Denver
    Anybody know if the Greater Orange County Record Show in Buena Park is on in a week? Their site and Facebook site have it still not canceled.
     
  9. Chee

    Chee Forum Resident

    Location:
    Denver
    Still says it is on. Brutal.
     
  10. Chee

    Chee Forum Resident

    Location:
    Denver
    No Buena Park Record Show til July.
     
  11. Rodz42

    Rodz42 Forum Resident

    Location:
    Chicago, IL
    yeah, the ones in the Midwest say that they are still on but I don't think they're updating the listings. It many states it would be against the rules to even have a show right now (California being one)
     
  12. Rodz42

    Rodz42 Forum Resident

    Location:
    Chicago, IL
    not so fast. They're broke regardless. Amoeba Music will begin construction on new location in 'next week or so,' says owner
     
  13. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA
  14. Rodz42

    Rodz42 Forum Resident

    Location:
    Chicago, IL

    it's not like anyone has to donate. I've seen go fund me's for everything during this pandemic

    Who in their right mind would buy stock ownership in a 3 store record shop with massive debt?
     
  15. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA
    Yes, that's a good point: Who would buy stock in that company?

    But if you are bailing them out now, you should get SOMETHING for being so generous.

    If you're going to "give" them money, then if --beyond expectations--they should manage to survive, you should get something for your largess. They could be non-voting shares with distribution rights. So if they start to make money again, you'd get something. If they don't, then you wouldn't.

    A for-profit company asking customers for money and offering absolutely nothing in return doesn't sit right with me. It's not like they were sharing the riches when times were good.
     
    Last edited: Apr 25, 2020
    black sheriff and Shawn like this.
  16. Rodz42

    Rodz42 Forum Resident

    Location:
    Chicago, IL
    I understand your point. The return is basically supporting the store if you like it and helping to keep it around if it manages to survive. I can see where you could get some kind of perk but just keeping it going would be enough many who love shopping there. And I will say that they shared riches with me in the sense that much of my collection since the late 1990's came from those 3 shops
     
  17. The Go Fund Me momentum has slowed at six days at slightly half their goal; but with time they should be able to make their goal.
     
  18. Chee

    Chee Forum Resident

    Location:
    Denver
    Three music stores, stock? The Hastings chain went under after going private. What were they, 36 stores. Second And Charles are the next to go under.
     
  19. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA
    Private companies with multiple owners typically have stock. Even if they are small.
     
    eddiel likes this.
  20. Chee

    Chee Forum Resident

    Location:
    Denver
    Hastings stock tanked when it was public....then the new owner saw he had a road apple no matter what he did. Second And Charles can't survive.
     
  21. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    This is what has me confused...what did they do with the money? Sure it takes money to buy and build another facility but you wouldn't sell your property for $34M only to buy another piece of land and rebuild and spend the entire $34M. Wouldn't you keep some of it?

    I know they are leasing back the space until they move but that's not going to eat up $34M and they would've been paying those lease costs out of their profits (pre C19) anyway so they wouldn't have been dipping into that $34M for that either.

    I don't know. I didn't see the transaction details but it does seem odd to me. Maybe someone with more info can post a better explanation. Maybe's it's a convergence of many factors at one time or something along those lines. But it's a big wad of cash to blow on another facility.
     
    Shawn likes this.
  22. Chee

    Chee Forum Resident

    Location:
    Denver
    These guys were already millionaires. They can get up loans very fast on the $34,000,000 million they received and banked. They could retire now.
     
  23. And if they can't turn a profit selling marijuana then they have much bigger fish to fry!
     
  24. cdash99

    cdash99 Forum Resident

    Location:
    Mass
    Depending on the bank debt, they get first crack at the proceeds, then there are taxes. Who knows what they actually walked away with?
     
  25. Chee

    Chee Forum Resident

    Location:
    Denver
    They each walked away with a few million on top of their few million banked. They want the leaf loot next. In Denver the leaf stores are everywhere. Pressed Mexican was $15 a lid in '76.
     

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