Business Overview

Due to the growth and success of digital and streaming music services, such as Spotify and iTunes, record stores no longer appeal to most mainstream consumers of music. Today’s successful record store businesses serve as a resource for individuals with a deep interest in a particular musical style or styles. In a record store, one can find rare albums and collectibles that are not found elsewhere easily. The customers may be collectors or just ordinary music lovers. Vintage record players are usually on display for sale. The record store owner(s) and staff are like walking encyclopedias about favorite music styles and their enthusiastic love for music is contagious.

Who is this business right for?

Do you like listening to music? People attracted to this business love listening to music. They enjoy understanding the detailed history of music (“musicology”). They know how the creation of a music style happened, who performed it, and how popular a style became. They enjoy serving as an authority/guide for others as a curator for specific styles. Independent record stores are not particularly lucrative and are best suited for music lovers, who are content with marginal profits.

What happens during a typical day at a record store?

The daily activities for the staff or owner of a record store include:

  • Marketing efforts to find customers - A combination of selling online with a physical retail presence is most effective. The physical retail store may be very modest. In fact, it should be. However, profits do exist from managing vast catalogs of acquired materials and selling them both online and offline. The marketing budget is usually limited to free postings online such as offerings on Craigslist or eBay. Posting flyers around town and at music events or collector conventions is also helpful.
  • Closing out the accounting for daily sales and updating inventory records – Every day, enter the sales from the day before in the accounting system and update inventory records to reflect the sales.
  • Order fulfillment – Process any sales that need shipment and prepare the packages for pickup by the shipping company.
  • Cash management – Count cash in the register(s) to verify the correct amount exists according to the transactions made. Note any discrepancies. Make change from the register proceeds for large cash bills to make sure the change is available for cash-paying customers. Deposit any excess over the baseline cash requirements into the business banking account.
  • Clean the store – This includes making sure to clean all areas of the store according to a posted daily schedule. Additionally, check the bins for vinyl records for proper alphabetization and artist/genre categories to make sure the correct product, offered for sale, is in the correct place.
  • Promotional materials – Put up and keep current the display of promotional materials.

What is the target market?

People who love listening to music and collecting it are the ones attracted to this business. Another customer type is a DJ looking for extended play or dance mix albums to use in clubs.

How does a record store make money?

Records sell at retail prices with sales tax. For online sales, shipping and handling charges are additional.

What is the growth potential for a record store?

There are no significant franchise opportunities. The trend with record stores is that they are largely independent. This is a very niche area where there are no longer many retail chains. There is less possibility for expansion when starting with one store. Some of the best independent record stores closed down, so this industry sector is reducing not expanding.