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What The Few Remaining Record Stores Can Learn From the Fall of Tower Records

Updated on June 26, 2010

Tower Records used to be a huge record store. It’s still doing okay for itself as an online music retailer and international franchise but the company’s retail stores all closed in 2006 when the business went bankrupt. Tower Records owned nearly ninety stores spread across twenty states but lost the battle to remain a retailer of tangible music products in a world that is increasingly digital.

Tower Records opened in 1960, at a time when people still bought vinyl records and cassettes were just beginning to be dreamed up.  Life shifts, and Tower Records shifted with it, adding cassettes and then CD’s and eventually music DVD’s to the products which it sold on the shelves of its friendly store.  The changes in physical presentation of music didn’t significantly alter business over the years for this store which at one time boasted over one billion dollars in annual sales.

However, in the past two decades, the speed with which the music industry has shifted has increased dramatically, and Tower Records simply couldn’t keep pace.  Discounted prices of music at other chain stores, online availability of cheaper prices for all music and the relatively new option for music consumers to simply sit at home and download their favorite songs all contributed to a change in the way music is sold, a change which resulted in the fall of Tower Records.  Decreasing sales caused the store to go into debt exceeding $200 million, resulting in a bankruptcy order and the auctioning off of the national music chain to the highest bidder.  The winner of the auction was Great American Group, a retail liquidation company which shut down all of the Tower Records stores in a systematic manner.

What does this mean for you as a music consumer? At first glance, it may seem that Tower Records is just one of many small music providers closing the doors of their physical spaces in order to make room for the convenience of buying music online.  Online purchasing is cheaper for the consumer, more practical for the modern way of life and easier to update than the inventories of physical music stores.  However, the people who were sad about the closing of Tower Records say that there is a place for physical record stores in society.

Retailers of music (and retailers of all products for that matter) have had to learn to make adjustments to the changing way in which products are viewed and sold in today’s global marketplace.  Although the speed with which changes have taken place has increased, change has always been a part of the retail market.  New products come out and replace old ones, new ways of marketing alter the ways in which stores approach sales and new developments in technology change the process by which items are sold.  In the past, most of these changes took place on a physical level – computer scanning technology, the near-demise and then revival of vinyl records in comparison with CD sales, and even the look of different stores have altered over the years to give consumers what they are seeking at any given time.

Today, the shift is not only in the tangible world.  The internet is a very real part of who we are today.  The ability to download music from home is one of the greatest factors influencing the decrease in sales that has lead to the closing of Tower Records and stores like it.  When consumers can just log on to their computers (or even their phones) the very second that they hear a song that they like and can easily download it straight to their iTunes program to take with them on their daily commute, the desire to go browsing through a physical music store inevitably decreases.  Even for those people who used to love just sifting through CD after CD in hopes of discovering some gem they hadn’t found before can now do their sifting online.

However, there are aspects to physical music stores which simply cannot be had online, and there are plenty of who lament the loss of stores like Tower Records. One of the main benefits to the physical music store is the friendly service with which it is accompanied.  Everyone who was a fan of the movie “Empire Records” in the late ‘90’s knows that there is a music culture which comes out through the passion of the people who work together in shared musical space, and that is something which customers seeking recommendations and help choosing music gifts appreciate from their physical stores.

Obviously, the loss of Tower Records indicates that the convenience of the online world is currently winning out against the personal service of the physical music space.  But music stores can make decisions which can help to shift this trend back towards their own benefit.  They just have to make sure that they are providing customers with what they want for today’s world, which means combining the personal service and attractive store displays with a twenty-first century approach to music.

There are a number of things Tower Records might have done to avoid bankruptcy.  Of course, hindsight is 20/20 but currently open record stores may want to consider their options in order to stay in the business.  The main thing to consider is that people don’t just need to get music from their music store anymore; they could do that online.  So the music store needs to go above and beyond just supplying CD’s.  A store which will thrive in spite of online domination of music is a store which offers other products, services and special events to keep people coming together.

Stores which feature in-house live music are likely to draw in customers.  No matter how convenient it is to sit at home and watch music videos, there is something about the live band that people are willing to come out and see.  Even including large screen music videos in the store can draw in more customers and keep stores like Tower Records from going under.  Part of the draw of such events is that music lovers can come together to share experiences with other lovers of the same music.

Music retailers can capitalize on this human need in other ways as well.  Providing in-store wireless internet is one way of drawing people to the store.  Sure, they might even be downloading music while they sit there, but they will also impulse buy a number of items that they want right then.  A store providing music magazines, T-shirts and specialty items will likely have increased sales of these items purchased by consumers who are enjoying the space.  Another addition to a store which is a benefit to both the store and the music consumer is the offering of services, such as transferring the customer’s vinyl music to CD or transferring the customer’s CD’s to iPods and smartphones.

Creativity is at the center of everything in the music business.  Music retailers have to come together with independent musicians and consumers who believe in the importance of independence music to come up with creative ideas for maintaining the small music business while still meeting the needs of music fans of everywhere.  Tower Records may have lost the fight, but rather than being a sign that all is lost, the loss of this particular chain may be an opportunity to consider alternative methods of providing music to communities all across the country. 


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  • Russell-D profile image

    Russell-D 7 years ago from Southern Ca.

    Extremely well thought out piece, with valuable solution ideas. Here's another. Many foogies like me play CD's, but also turn to the HORRORS Turntable, to spin a disc by Billy or s Goodman or early Kenton; those oldies closest to our hearts. Don't we count? We're the generation with money. NO ONE IS TRYING TO ATTRACT OUR BUSINESS and we also give presents. You can't make a living on us, but have a place for us. We pay cash. As a former player, I find what is called JAZZ today often isn't. Good hub. David Russell