How to start a record shop

To start a record shop, first conduct thorough research to identify a suitable location and target market. Then, acquire inventory, build relationships with distributors and collectors, and create a welcoming atmosphere to attract customers and encourage repeat business.

With the rise of digital music, many traditional record shops have been forced to close their doors. However, there is still a strong demand for physical music, and enterprising entrepreneurs are finding ways to tap into this market. For example, in the UK, a company called Vinyl Revival has found success by creating specially curated crates of records for customers.

The crates are based on specific genres or themes, and they help customers discover new music that they might not find otherwise. In addition, Vinyl Revival offers a subscription service, so customers can receive new records on a regular basis. As the popularity of vinyl continues to grow, there is no doubt that record shops will make a comeback. With a little creativity and ingenuity, these businesses can thrive in the digital age.

Of course, record shops used to be infinitely more popular, as streaming and online downloads have harmed the popularity of physical media. However, with the rising sales of vinyl records and the need for fans to own the music created by their favourite artists, there is still space for this sort of business venture to thrive.

Research your target market

If you want to run a successful record store, you’re going to need to know a thing or two about your target audience.

Estimating demand

You should find out whether there is enough local demand for your record shop if you aren’t planning to make the majority of your sales online. The first thing you should do is look at your competitors. Count the number of record stores in your area. HMV, supermarkets and other large stores that sell more mainstream music may not seem to be a threat if you’re targeting a niche area of the market, such as dance music on vinyl. You will have to consider all of these stores when working out if your business will be able to carry the same mainstream titles.

No matter what type of music you offer, you will almost certainly face competition from online music retailers that sell CDs and vinyl in physical formats.

It is clear that the independent record shop has no ability to compete with digital downloads and streaming in the physical format of recorded music.

Shop location

Depending on the type of music and products you intend to stock, your choice of location may be influenced to some extent. Specialist shops may not need a prominent trading position, since word-of-mouth and targeted advertising may be enough to generate enough business instead of relying on passers-by. The main shopping areas may not be enough for a shop that stocks a wide cross-section of music.

Instead of a traditional shop, you might consider a market stall or attending fairs, shows and other events as a mobile vendor. Specialty niche markets are a good place to consider online and mail-order sales.

Consider the demographics of your area, as certain ages and social groups prefer particular musical genres. Music is also purchased more frequently by some demographic groups than by others.

In addition, you should check out local crime rates – you don’t want to deal with too much shoplifting, break-ins, and theft.

Why will customers choose your shop

In addition to deciding on the location, you will need to ensure that customers will prefer your shop over existing outlets once you have chosen the location. Take a look at the competition to see:

• Their product range
• What type of music they specialise in
• Their services, such as ordering difficult-to-find titles
• Whether they participate in Record Store Day or not
• Is there an online store as well
• Their prices
• Their opening hours
• Their staff’s helpfulness and knowledge level
• Their target market
• Modern and smart premises and fittings

You might be able to exploit a gap in the market if this occurs. You might be able to supply difficult-to-find imported titles as your ‘unique selling point’ (USP).

Find out what people want

As a result of competition from national chain HMV (which has also struggled to survive in recent years due to strong competition), small, independent shops in the music retailing sector can find it extremely difficult to survive. There are a number of online retailers of physical music like Amazon and, increasingly, digital stores like iTunes and streaming services like Spotify and Apple Music, as well as other stores. Therefore, you should ensure that the goods you will stock will have a market. You may want to ask people in your area:

• What products they would like you to stock
• If you offer other services, such as club nights or concert tickets, or even something completely unrelated, like a café area in your shop, do you think there would be a demand for them?
• The general opinion they have of your proposals
• Do they dislike anything about the existing record shops in your area?

In order to get some good ideas for your record shop and help to build the community element that independent record shops are increasingly relying on to survive, you may find it helpful to talk with people involved in the music business in your area, including DJs, independent record labels, bands, pub and club owners.

Decide what to sell

You may sell some or all of the following products depending on the type of shop you run:

• Vinyl – record sales have grown enormously in popularity over the last five years, and many independent record shops rely heavily on them for income
• CDs
• Picture discs
• Music DVDs and Blu-ray discs
• Cassettes – these have grown in popularity over recent years, which has largely come as a surprise (they are more of a collector’s item at this stage)
• Posters
• Clothing and other forms of music-based merchandise (band t shirts, etc.)
• Books and magazines
• Video games and gaming consoles
• Portable music players and related accessories
• Concert and other event tickets
• Record players and maintenance equipment

Albums and singles are likely to be stocked in your store.

Customers may use your ordering system to locate hard-to-find titles by using your ordering system. Stocking new and second-hand titles is also an option.

Operating practices

Quality standards

To survive these days, independent record shops must do the following:

• Make sure the shop is clean, tidy, and professionally designed (look critically at the paintwork on the outside)
• Stock up with titles that your target customers are looking for. You should make sure your stock reflects current trends if you are in the music retailing business. Your customers will likely expect you to be knowledgeable about the niche genre and to be able to source hard-to-find titles if you plan to operate in a niche area
• Hire knowledgeable individuals to work as staff members
• Provide high-quality customer service

Window displays can help to attract passing trade – use bright, regularly changing displays to attract the eye. Any other services you provide, such as concert tickets, will be advertised in your shop window.

Also, you can use your shop window to promote any special offers or promotions that you will be holding, or to announce any new titles that have just arrived or will be arriving soon. For many independent record shops, participating in Record Store Day is also very important.

Stock management

Stock management is an essential aspect of running a record shop on a daily basis. One of the cheapest ways to accomplish this is to use a manual system called a ‘master bag’. In this process, paper records are kept of the identities and quantities of orders from suppliers as well as what has been sold in the shop. A comparison of the two records will reveal what titles require ordering, what titles should be discounted, and so on. There is a greater chance of human error in this type of business as it can be time-consuming.

For stock control, you can install a computerised system. The complexity of these systems varies, but theyrange from being a computerised version of master bags to systems that handle everything, even automatically reordering supplies online when they run out. It is quite expensive to buy one of these systems, so you will have to carefully consider whether you can justify the purchase.

Selling online

Online purchases of recorded music are among the most common. CDs (and vinyl) are still very popular online even though many people download music tracks now. Your music store may decide to set up an ecommerce website in order to reach many more customers around the country and the world depending on the type of music you sell.

An online marketplace such as eBay or Amazon is an alternative way to sell online without incurring the cost of setting up your own website and giving you the opportunity to test whether e-commerce works for your business. Especially if you stock rare, niche or hard-to-find recordings, selling online works well.

Keeping in-store and online inventories synchronised

Online and shop inventories can be kept in sync using software systems. An item’s online database is automatically updated if it sells out in the shop. Staff in the shop are also notified if an item sells online so they do not sell that item in the store.

Establish your customer profiles

Your market

In terms of demographics, record shops typically cater to two groups: the young and the old. If you plan to stock mainstream titles, you are likely to attract a large number of teenagers and young adults. Music is most commonly bought by C1s, and least frequently by ABs. Buying music genres is also influenced by social grouping; all social groups tend to love rock and pop music, but C2 and DEs tend to buy dance music and ABs tend to buy classical. As a result of downloads and streaming of music in recent years, CD singles may soon become a thing of the past.

In order to make sure that your stock reflects the tastes of your main customer base, you should conduct market research. From dedicated music lovers to casual shoppers, you can expect a broad range of customers if you plan to provide unrelated services such as café sales.

Students, local DJs, and schools may be eligible for discounts. As well as raising your shop’s profile among a potential large customer base, such a scheme would generate goodwill as well.

Special offers and discounts

Throughout the year, you may want to consider running special offers. You can sell more items through these advertisements if you hope that your special offer will bring more customers into your store. To ensure you are getting more custom during these times, it is important to monitor your takings rather than just giving your regular customers cheaper products. Especially if you don’t have a return agreement with your supplier, offering discounts on selected lines can also help you sell off old stock.

Your business can benefit from participating in Record Store Day by boosting sales and raising its profile.

Make sure your employees know what discounts are available, so they don’t offer unauthorised discounts to their friends and family.

Selling on eBay and Amazon

Your sales can be boosted by selling online. It may not be clear at the start whether the value of the sales you’ll make online will justify the set-up costs of your own ecommerce website.

Trading on eBay or Amazon is another alternative that lets you gain experience selling online but at a much lower cost. Having an online store does not necessarily mean you have to stop selling on eBay and Amazon.

Getting started

Many people already have their own eBay accounts that they use to buy and sell things they no longer need.In eBay’s business listings, you’re legally required to indicate that you’re a business seller if you’re trading as a business. As a result, your personal account needs to be upgraded or a new business account registered. To find out whether you need to register as a business seller, check out the eBay Seller Centre’s definition of ‘trading’.

Likewise, you can register as a business seller on Amazon using an existing account or creating a new one.

HM Revenue & Customs (HMRC) will need to be notified that you are trading if you intend to sell things on eBay or Amazon for the first time – perhaps in a small way. The Gov.uk website provides guidance on what constitutes trading and self-employment. Additionally, it explains how to keep track of your taxes and record keeping.

Decide whether to have your own virtual ‘shop’

Virtual storefronts allow you to showcase all your products in one place and will give your business a valuable online presence.

You can set up an eBay Shop when you sign up to sell on eBay. A template can be used, or you can design your own to create your own shop. If you decide to wait until your monthly sales reach a certain level before upgrading to eBay Shop, you don’t have to choose it right away.

Regardless of the package you choose, Amazon automatically creates your own storefront. It won’t be very customisable, but you can add your name and logo and provide some information about your company.

How much does selling on Amazon and eBay cost?

Learn how much you’ll have to pay in fees before you begin selling on Amazon and eBay. The total fees you pay can be quite substantial, depending on the items you sell and the method you use to sell them. It’s more likely that you will pay a fee regardless of how many items you sell each month than you will pay a fee based on how many items you sell each month.

You can sell as a business seller on eBay and Amazon without paying any monthly fees; however, unless you only sell a few items each month, a subscription-based package is usually more cost-effective.

In order to get a good idea of your actual selling fees per item, you can use eBay’s fee illustrator tool and fee calculator.

Detailed fee guidance is available on Amazon’s website, including some examples of subscription and non-subscription pricing.

Managing your listings

If you plan to sell a large number of items, uploading your inventory to eBay or Amazon can be time-consuming.

You can use free and paid listing tools on eBay and Amazon, respectively.

Promoting your items

You need to do everything you can to stand out from the crowd on eBay and Amazon because there are so many items available at any given time.

Your listings should always include accurate, spelling-checked descriptions, and your photos and other images should showcase the items you’re selling effectively.

Consider taking it a step further by using eBay and Amazon’s marketing tools, such as search engine optimization, cross-promotion, and paid advertisements.

Your reputation

It is extremely important for you to maintain a good reputation online as an eBay or Amazon seller. The main measure that future customers use to check your reliability and trustworthiness is your feedback score, which is based on actual customer feedback.

To maintain a high rating, you will need to provide excellent customer service and fast delivery at a reasonable price. To prevent your listings showing an item as in stock when it has sold out, ensure that you respond to customer queries promptly, handle returns efficiently, and keep an eye on your stock levels.

It is important to stay on top of packing and shipping orders to ensure that the right items reach the right people on time. You can now schedule and track your deliveries much more easily with the help of many parcel delivery services that integrate with your eBay or Amazon accounts.

The Fulfilment by Amazon service, where Amazon picks, packs, ships, and provides customer service for your Amazon products, might also be a good option if you’re selling on Amazon.

More information

There is a lot of useful advice available on eBay and Amazon’s websites for starters and for expanding your business as demand grows for your products. There are also lively seller communities on both sites where experienced sellers are frequently willing to answer questions.

Price your products

It is up to you to stick to the retail price suggested by most suppliers of new records. Adding value to obscure and hard-to-find titles may be possible but charging more for chart albums will be difficult. Vinyl is likely to be more expensive than CD if you stock both formats.

The price has to be right in order to be successful. Your operating costs, including your own drawings, should be covered by the difference between the cost price and the selling price. Record shops’ average profitability has steadily declined in recent years due to increased competition driving down retail prices of recorded music.

Bargain bins are a great way to clear out stock that has reached the end of its shelf life (for example, an out-of-date single that no longer receives radio play). For items in a bargain bin, you could set extremely low prices since the alternative is to discard them.

You may not need to worry about price competition from mainstream competitors if you specialize in a ‘niche’ market area as they don’t supply the same range as you do. You can then charge what the market is willing to pay if this is the case.

Sell secondhanded titles at a price that will cover your costs but be low enough that people will choose to buy them over new titles. If you sell second-hand titles that are collectibles, their selling prices are likely to be much higher than comparable new titles. Detailed research may be required when setting a price for items such as these.

It is necessary to decide whether to use a reserve or a starting price to set a minimum price for your auction listings on eBay (and similar online marketplaces), or if you would prefer to let the auction run at a low price and let the market decide the final selling price entirely. Use fixed price listings if you want to avoid this uncertainty.

Read more: How to price your products 

Seasonality

Seasonal factors can have a significant impact on the sales of a record shop. Most record shops are busiest during the Christmas season – about half of the year’s takings are generated during this time, with December being the busiest month in the Christmas quarter. However, Record Store Day in April in participating stores has now rivalled this. You should therefore allow for increased sales and stock purchases in your cash flow estimates for these periods. The wages payments may also need to be adjusted upwards if more staff is needed during this period.

Depending on the type of music you carry, TV shows such as The Voice and The X Factor can have a huge effect on music sales and taste in music.

Buy an existing business

The alternative to starting your own record shop might be to buy an existing one. When you buy a goingconcern, you can:

• Stock and premises are already in place
• The shop has established customers who are willing to actively support it
• Income can be generated immediately by the business
• Relationships have been established with suppliers
• In case you are looking for financing, the business has a track record that may help
• A team of employees has already been put in place
• A website with e-commerce features as well as ‘shops’ on eBay and Amazon have already been created

When negotiating a price with a seller, you should look critically at any business that you are interested in. If the owner wants to retire, or for another personal reason, ask why the business is for sale. Due to lack of demand, the existing owner is likely to be selling the record shop due to the long-term decline of the independent record store sector.

You can find out whether the owner is selling because he or she cannot generate enough income from the business by doing your market research into the industry as a whole and the locality in particular. The fact remains that independent record shops have been hard hit by recent developments in music retailing, and many have been forced out of business as a result. While this may not deter you, you should keep in mind that many business owners are confident they can turn around a failing business. Establishing the current position is important so that you do not pay too much for the business.

Among the other considerations are:

• Whether the premises are in good shape, what fixtures and fittings are in place, etc. Refurbishing or replacing assets will cost you money
• Employee rights of those currently working there
• You should always consider the quality and value of any stock you are considering buying. Be sure to review all this before you reach an agreement
• If you’re buying stock, pay attention to the types of music that the previous owner stocked – do they match your tastes?
• When you take over, how do you retain key personnel?
• Does the business owe money that you will be responsible for?
• How much does goodwill depend on the seller’s skills and personality?

Consult your accountant about the selling price based on what the business accounts reveal from the past three years. Budget for legal fees, valuation fees, and survey fees, as well

Useful contacts in the music industry

Entertainment Retailers Association

The Entertainment Retailers Association (ERA) is a trade association representing the interests of retailers who sell recorded music, video games, and other forms of entertainment. The ERA provides a forum for discussion and debate on issues affecting the industry, and works to promote the value of retailing to the public. In addition, the ERA provides training and support for members, and lobbies government on behalf of the industry. The association is open to all retailers who sell entertainment products, and has over 2,000 members in the UK. The ERA is headquartered in London.

Website: www.gera-europe.org

Chain With No Name (CWNN)

CWNN is an alliance of retailers who support the best emergent acts and labels. It’s aided by Vital, which provides key retail support and co-operative marketing initiatives. There are currently 103 shops in the chain, offering exclusive products, specialised sales support and discount initiatives. CWNN members bricks-and-mortar record shops across the country – from London to Glasgow – all of which share a passion for championing new music.

Website: www.vitaluk.com

Performing Rights Society (PRS)

The Performing Rights Society (PRS) is a British organisation that collects royalties on behalf of musicians and composers. It was founded in 1914 by a group of songwriters, including George Gershwin and Cole Porter. The PRS administers public performance licences, ensuring that musicians receive payment when their work is played in public. It also provides funding for new music initiatives, such as the BRIT Award for Best British Album. In addition, the PRS runs an annual Awards ceremony, which recognises the achievements of its members. The organisation has over 100,000 members, making it one of the largest performing rights societies in the world.

Website: www.prsformusic.com

British Phonographic industry

The British Phonographic Industry (BPI) is a trade association that represents the interests of the recorded music industry in the United Kingdom. Its members include record labels, distributors, and other companies that are involved in the business of making and selling music. The BPI also works with the government to promote the interests of the music industry. One of the ways it does this is by lobbying for policies that protect Intellectual Property rights.

Website: www.bpi.co.uk

Conclusion

Starting a record shop can be a rewarding and exciting venture for music enthusiasts. The first step is to research the market and identify a suitable location. It’s important to find a place that is accessible and has a high footfall of music lovers. Once the location is secured, you’ll need to decide on the type of music you’ll be selling and source inventory accordingly.

Building relationships with distributors and collectors is crucial to ensure a diverse selection of vinyl records and CDs. Creating a welcoming and inviting atmosphere in the shop can also help to attract customers and encourage them to stay and browse. Additionally, promoting the store through social media, local events, and partnerships with other businesses can help to increase visibility and draw in a loyal customer base. With a passion for music and a solid business plan, starting a record shop can be a fulfilling and successful endeavor.