Sluggish First Half Has Retailers Looking Forward

Despite first-half 2001 sales that at times have mirrored the sluggish U.S. economy, music retailers remain cautiously optimistic that stronger numbers will return in the next six months. "Year to date, it has certainly been a difficult music market," says Dave Alder, senior VP of product and merchandising for the Virgin Entertainment Group (VEG), North America. "We expected a much bigger performance across the industry on certain titles."

According to SoundScan, year-to-date unit sales are down 5.5% from last year. By this time last year, the business had seen three of the four biggest debuts of all time, with albums by 'N Sync (first-week sales of 2.4 million units), Eminem (1.8 million), and Britney Spears (1.3 million). While hopeful, not all retailers are confident that anticipated releases from 'N Sync and Mariah Carey, among others, will replicate those numbers. Eminem, in particular, had a street buzz last year that will be hard to reproduce. "There [was] definitely something unique about a white rapper who's dissing everybody from God to his wife," says Scott Levin, director of marketing for Musicland.

Besides 'N Sync and Carey, Alder says, there's not a great deal coming through until August, with the exception of Bjork, Faithless, and Macy Gray. "We can depend on those acts," he says. Potential mega-volume releases from Michael Jackson and Guns 'N' Roses continue to tease retailers, although repeated delays have made some skeptical. "We've been assured we'll have both of them for about the past six years," says Alder.

Numerous retailers report strong growth in rock albums; however, a number of recent releases in the genre have opened big but dropped off quickly. Blink-182's "Take Off Your Pants and Jacket" (MCA), for example, debuted at No. 1 but saw sales slip 53% in its second week. Still, says one retailer, growth for rock acts is "healthy" for the business because "there's an opportunity with those kind of artists to develop catalog."

With the popularity of file sharing on the Internet, some retailers believe today's youth market is buying songs instead of artists. "Kids are more in tune to a particular song they hear on the radio," says Jerry Kamiler, divisional merchandise manager of music for Trans World Entertainment Corp. "They have an allegiance to the last song. As a result, when that sophomore release comes out, it's harder to project how well it's going to do."

One surprise this year is steady sales for movie soundtracks, including "Tomb Raider," "The Fast and the Furious," and "Shrek." "Producers and film companies have taken a little more time to get a marquee artist or two on the [soundtrack]," says Musicland's Levin.