Atin Music Special Report: Latin Retailers Ahead Of Curve

Latin music retailers have been one of the few bright spots in an otherwise difficult music retailing landscape.

Buoyed by strong new albums by artists such as Luis Miguel, Grupo Montez De Durango and Juanes, as well as creative marketing, sales in many Latin outlets have increased in recent months. In some cases, they are slightly higher than they were one year ago.

In fact, some chains, including Ritmo Latino and Latin Music Wherehouse, have opened new stores during the past year and plan to expand further.

For example, Los Angeles-based Latin Music Wherehouse, an independent chain owned by Antonio Prajin, has opened eight new stores this year on the West Coast. By year's end, a total of 20 locations should be open, according to his son, George Prajin.

George Prajin, president of the family-owned Z Records, also helps his father run the retail operation.

"The big guys are getting out [of the business], so there's openings for the little guys," says Prajin, referring to the closure of many Tu Música stores.

The father/son duo has taken advantage of the opportunity. When the closures of Tu Música outlets were imminent, the Prajins contacted the respective landlords about opening Latin Music Wherehouse outlets in the same locations.

"Even though the market is diminished, there's still a market there," George Prajin adds. Bigger retailers, he says, "look at it like everything has to have three zeroes behind it. But we're happy with two."

The Prajins' operation benefits from their owning a distributorship, Prajin One-Stop Distributors, and the Z Records label. George Prajin says that control over retail allows him to better position and develop his new acts.

In addition, he adds, "we're expanding our retail base, not necessarily our music base. We're bringing stuff into our stores that Latin music stores usually don't have, like DVDs, videogames and videogame consoles."

He is not alone in this strategy.

Ritmo Latino, the country's biggest Latin-themed retail chain, has constantly grown, thanks to a series of marketing and placement strategies.

Chief among them has been entirely eliminating cassettes from stores to increase room for DVDs, sales of which have exponentially increased in the Latin market.

To boost traffic, Ritmo Latino has also expanded its book section, which is now in 25 stores. Several stores feature game arcades, and five of the chain's outlets are Ritmo Rock stores, dedicated solely to Latin and non-Latin rock and alternative music.

This year alone, Ritmo Latino has opened two new stores, bringing the total number nationwide to 45. Before year's end, there are plans to open new outlets in Dallas—a new market for Ritmo Latino—and in Hollywood, Fla. The chain has been known to launch aggressive cost-cutting campaigns to get clients into its new stores.

In addition, Ritmo Latino's landmark downtown Los Angeles store on South Broadway reopened in September in a bigger locale a few blocks away from its original location.

"We're generating enough sales to expand," says Ritmo Latino president and founder David Massry, who says sales have risen 3% from the previous year.

offer something unique

Offering something unique seems to be the imperative mandate for retailers who aim to thrive in the current environment.

In Miami, Hinsul Lazo, owner of HL Distributors, has put all his energy of late into his 2-year-old Miami-based retail store, El Museo del Disco. Although he says his distribution operation is dead, his retail operation is very much alive.

Lazo's store now stocks more than 25,000 titles, and sales have risen approximately 30% from last year, according to him.

"Sales are up because of the way I market [the store]," Lazo says. "I advertise that I have the best store in the country. Everybody does that, but nobody else can back it up."

Although the majority of Latinos in Miami continue to be Cuban, Lazo recognized several years ago that the population was shifting and that there were significant numbers of Colombians, Brazilians, Argentines and Chileans in the mix, among others. His store aims to serve all those clients' needs. Further, he stocks an artist's entire catalog, unless an album is out of print.

"I'm the king of imports," Lazo says. "You want a record, you don't have to order it. I have it."

Like the Prajins, Lazo benefits from owning his one-stop and having it located next door to his store. If a client wants an album and he doesn't have it in stock, he simply goes to the warehouse and gets it.

Although Museo del Disco, which operates out of a single location, is 7,000 square feet of space, it only stocks music; there are no videogames or arcades.

Lazo is also hoping to expand his online operation. Sales at museodeldisco.com jumped 57% from last year, and he plans to step up promotion for the site. Among other initiatives, prospective buyers will be able to hear every song on each featured disc.

But sales of Latin music are not only prospering at specialty outlets.

The Latin sections of Tower Records stores nationwide, and particularly in markets like Dallas and Fresno, Calif., have seen sales increases for the past two to three months, according to Tower's national Latin market coordinator, Monica Ricardez.

Part of the growth can be attributed to the loss of competition. But in addition, Ricardez attributes her sales spikes, among other things, to a more effective method of supplying product. Tower now works with a centralized purchasing system that ensures all stores have major releases.

"We've been more brainy in how we do our negotiations and how we market to the consumer," Ricardez says. "We've tried to increase our presence out there in the main consumer base, specifically for Latin. At the moment, we're looking for different media in which to advertise, and we're trying to focus titles according to the genre and the market."

In addition, Ricardez says, Tower has increased its bilingual signage and is physically stocking more Latin music in its stores. And like other retailers, it has also revved up its special events.

"We're trying to do a lot of in-stores, whether small, low-key or big," Ricardez says.