Retail Track: Indie Chain Takes On The Big Boxers

This column may start off sounding like last week's Retail Track, but bear with me.

In August, every newspaper in the land had articles about how digital downloading is killing record stores thanks to Tower's current predicament. In July, the New York Times ran a long piece on the impending death of independent record stores.

That story, which focused on some New York merchants, was distributed widely throughout the music industry, thanks to e-mails criticizing it from the heads of two independent-store coalitions.

Like most newspapers covering Tower, the Times attributed independent record store woes solely to digital downloading, which it blamed for the 25% decline in CD sales between 1999 and 2005. In making its case, the article claimed kids no longer shop in record stores and instead get music off the Internet. According to the Times, record stores are "fast becoming a temple of nostalgia" for older shoppers.

But as last week's column showed, more than digital downloading is behind the troubles facing Tower; so, too, is more at play in New York music retail.

The only thing the Times might be right about is that kids don't visit record stores as much as they used to. That's because the major labels shot the entire industry in the foot, and practically killed off the only configuration kids could afford, when they decided that singles cannibalize album sales. Without singles, kids turned to the Internet, where songs are easier to steal and/or cheaper to buy as a download.

But in using Norman's Sound & Vision in New York's East Village as the jump-off point, the Times writer failed to analyze what else might be impacting that store.

In general, New York is not a kind place for record retailers. With one exception, which I'll get to shortly, New York has never been known to have great independent stores on the caliber of those in Los Angeles or San Francisco.

That's because Manhattan rents are more expensive than anywhere else in the United States, especially for low-margin retailers. In fact, independents are not the only record stores having problems in New York. I could name 15 chain stores that shuttered doors in the past 10 years.

But getting back to Norman's, the Times stated that 10 years ago the store near St. Mark's Place would have been crowded with customers. Besides downloading, couldn't the fact that Best Buy now has a store a quarter-mile south of Norman's, while Circuit City has one that same distance north, also be a factor? It takes a special retailer to stand up to that Best Buy/Circuit City one-two punch.

Such a merchant can be found downtown near the Wall Steet area in J&R's, which has proudly flown the indie flag in Manhattan for 35 years. That was sadly overlooked by the Times—pretty amazing, considering how much advertising the store does in that paper. In fact, J&R Music is one of the most high-profile merchants of any kind in Manhattan.

J&R was the first consumer electronics and music superstore in Manhattan, and it exemplifies New York retail at its best. The staff is knowledgeable and helpful with a New York edge, if you know what I mean.

When other retailers want to expand, they simply bring their concept to the next town. Until recently, J&R simply expanded by opening new store concepts on Park Row, across from city hall. The entire 10-store operation, which also includes a direct-mail/online business, does upwards of $350 million in annual revenue.

Since landing in New York, Best Buy and Circuit City have not laid a glove on J&R, which has a superstore music selection with deep catalog. But the store also emphasizes new music through weekly in-store performances and signings, according to Rachelle Friedman, who owns J&R with husband Joe.

In a first, J&R expanded beyond Park Row, opening a upscale version of its best-selling product lines in a store-within-a-store in Macy's on West 34th Street in late August.

With its new location, "now uptown people and tourists can get to see and feel J&R, too," Friedman says.

Who knows, maybe the Times reporters might wander in off the street too, as they are only seven blocks away.