Music continues to play in crisis

The year 2008 was profitable for music stores, with 50% increase in turnover and varied orders, from regular to customer-tailored instruments, at prices up to 20,000 euros. However, the market segment is limited, as the effects of the financial crisis have gripped this field as well.

Andrei Zavoranu, ProGuitar: “Unfortunately, the market remains limited’

The musical instrument market in Romania recorded a permanent growth of demand, thus various music stores across the country had a roughly 50% increase in turnover compared to 2007. Nevertheless, the segment remains at an extremely low level compared to western countries.

“If in other countries in the West you would rarely find a household without a musical instrument, Romania, as in many other fields, lags behind”, said Valentin Istrate, managing director at Music Store (Magazinul de Muzica).

As insiders say, some of the factors that fuel this situation, are the weakly developed music industry, the low purchase power of Romanians, absence of specialized retailers in many cities across the country and the relatively narrow offer of musical instruments in Romania, or even musicians’ habit of buying musical instruments from abroad.

“Unfortunately, the market is very limited. This is not America, where every child studies a musical instrument in school. In Romania, music will probably no longer be subject matter in school”, added Andrei Zarnoveanu, director at ProGuitar.

Most expensive guitar from ProGuitar: 20,000 euros

ProGuitar started its activity in 2004 with a retail unit, GuitarShop. This was actually a stall inside Music Store, following to open an independent store, two years, and in July 2008, another GuitarShop unit was opened in Brasov.

The musical instruments are distributed to several stores in the country, such as Muzikia at Timisoara, Barock and Play at Cluj Napoca, ProSound at Iasi and Mezzoforte in Targu-Mures.

The store’s turnover was 3.385 million lei (0.9 million euros) in 2008, up 65% from 2007.

“The opening of an independent store had a major contribution to sales growth, but also the development of online sales on a specialized platform,”, said Andrei Zarnoveanu.

The store is specialized in guitars and displays various products within 425 and 10,000 lei price range, from beginners to professionals. Some of the instruments found in the stores are electric Squier guitars for entry-level, Jackson guitars, very much appreciated by heavy-metal and hard-rock passionate, and electric and bass Fender guitars, icons of the rock music and acoustic guitars, Fender and Ovation.

The most expensive instrument ever sold was a custom-made Fender Telecaster Custom Shop Master built guitar tailored to client’s needs, which cost 20,000 euros.

ProGuitar manager says the effects of the financial crisis started to take shape at late 2008, in December, but not in sales compared to prior month or to a year earlier. The crisis only capped the growth pace of revenues.

“Guitars and accessories for guitars are ideal Christmas gifts, thus, in December we had positive sales, although below our expectations which were probably too optimistic”.

The sales below forecasts affected the business due to the stockpiling instruments and blockage of liquidities. On the other hand, the massive imports for December have declined now, as the sharp depreciation of the local currency has a major negative impact on the company’s cash flow.

Furthermore, ProGuitar director expects a further decrease in sales in the coming period in the wake of soaring expenses on credit rates, incurred by the depreciation of the national currency, growth of unemployment rate and the shock of the crisis.

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