Retail Track: Emi Follows Through With Vow To Improve Supply Lines

LAST YEAR at the EMI Music Distribution (EMD) roadshow, president Richard Cottrell said that the distribution company had made tremendous strides in improving operations but that there were areas that still needed improvement (Billboard, Sept. 26, 1998). One area he cited was meeting demand for hit albums on a timely basis. As part of the company's efforts to improve, he said, EMD is re-engineering its supply chain.
In an interview with Billboard, he said the company is spending $10 million to install a high-speed manufacturing line in the company's Jacksonville, Ill., plant. Also, he said, EMD was integrating its distribution and manufacturing operations, which will improve communications and provide greater flexibility for the company.
Apparently as a result of those improvements, EMD was able to offer its accounts enhanced service in December. For the holiday selling season, the company offered accounts the ability to order product one day and get it drop-shipped to stores the next, with EMD picking up the cost.
While some majors have typically offered that type of service for breaking artists, it is unusual for a company to offer it on hit product. In explaining the move, executive VP Gene Rumsey says, "All year long through our conversations and policies, we encourage rational buying and we reward and incentivize any efforts to keep returns low. But this is the time of the year that the predictability of sales trends becomes less reliable, so the supply needs to become more reliable. I thought we had a responsibility to do our part in not penalizing rational buying, by bearing the full cost of overnight shipments."
While I was preparing to do the year-end roundup story that appeared in the Merchants & Marketing section in the Dec. 26 issue of Billboard, I saw that at least three Retail Track columns in 1998 touched upon the age-old issue of street-date violations. In one column, I suggested that street-date violations could be brought under control if the majors showed resolve in policing the problem. While they all talk the talk, they don't all walk the walk.
Take for example, what executives at a one-stop did as a result of frustration from all the business they were losing to one-stops that are willing to sell early and thus allow street-date violations. The one-stop in question set up a sting operation and, through a store, placed orders on a Wednesday with a number of one-stops for product coming out the following Tuesday. Even though the "sting" store was ordering from those one-stops for the first time and had no sales history with those suppliers, two one-stops shipped new releases to the store on the Friday before street date, thus demonstrating a willingness to allow merchants to break street date.
When the one-stop took the results of this sting to the majors, only one was willing to punish those one-stops. The rest argued that there was no street-date violation because there was no proof of an early sale at retail. While that is technically true, Retail Track would argue that those majors are not enforcing the spirit of their policies, which is why street-date violations will continue to be an issue for the industry.
MAKING TRACKS: Dominic Pandiscia, previously Northeast regional sales manager for Virgin, will join the national sales staff in Los Angeles, working with head of sales BJ Lobermann. He will be replaced in Hackensack, N.J., by national sales director Paul Babin, currently working out of EMD's Atlanta office . . . Speaking of Virgin, congrats to Faith Henschel, director of product development at Virgin, who recently completed her master's in business administration at Pepperdine University.