Music Products Industry Sees Continuing Sales Growth in 2013, Says New GE Capital Survey
With consumer demand indicators picking up, participants in the music instrument industry are optimistic about higher retail sales this year, according to January survey results released today by GE Capital, Commercial Distribution Finance (CDF), a leading provider of financing to music dealers.
Thirty-eight percent of survey respondents expect their sales to increase five to 10 percent this year, while 43 percent expect increases of 10 percent or more. Last year, 26 percent expected sales growth of five to 10 percent and 54 percent expected growth of 10 percent or more.
Based on survey results, fretted instruments, percussion, keyboards and amplifiers will be the most popular category again — 44 percent this year versus 52 percent last year. Professional audio equipment will again be the second-most popular category — 37 percent versus 30 percent.
Online sales appear to be a growing component of participants' business. More than one-quarter (27 percent) said online sales will comprise between 15 percent and 45 percent of their business this year, up seven percentage points from 2012. Slightly more than a third of respondents (36 percent) said online sales make up 15 percent or less of their business, down from 49 percent in 2012. And 17 percent say they do not offer online sales compared to 21 percent last year.
Despite the expected pick-up in consumer demand, participants in the music instrument industry are concerned about the growing popularity of online equipment sales. Forty percent of survey respondents said online retailer and auction site purchases would have the greatest impact on the music industry in 2013, up from 23 percent one year ago. At the same time, cutbacks in school music programs concern 19 percent of respondents, up from 12 percent in 2012. Concern about the lack of consumer demand has fallen to 18 percent from 43 percent.
“Like others in this industry, we're optimistic about consumer demand this year,” said Dave Wilson, commercial leader of CDF's diversified products group, which provides inventory financing for dealers of music instruments and related products. “Although wholesale purchases were soft heading into 2013, we think that will turn around now that we're seeing positive signs in the U.S. economy. Unemployment rates are declining, consumer confidence is improving and home sales are increasing, — all of which are good news for sales of instruments and related products.”
To help restore and revitalize music education in U.S. public schools, CDF has supported Little Kids Rock, which brings free instruments and instruction to students in underserved schools across the country, since 2008. GE's support for community organizations comes in three forms: financial support, volunteer efforts and intellectual capital.
For nearly 16 years and through all business and economic cycles, CDF has supported the music instrument industry with financing programs that enable dealers to stock a broad selection of products. Inventory financing, also known as floorplan financing, is an important element of a successful manufacturer-dealer business model. Manufacturers benefit from enhanced product flow and increased sales opportunities, while dealers obtain improved terms and credit availability.
GE Capital's survey was conducted Jan. 24-27, 2013. The 104 respondents include a variety of music industry participants, including retailers, manufacturers and distributors.
About GE Capital, Commercial Distribution Finance
GE Capital, Commercial Distribution Finance provided nearly $31 billion in financing for more than 40,000 manufacturers, dealers and distributors across North America in 2012. Programs include inventory and accounts receivable financing, asset-based lending, private label financing, collateral management and related financial products. Customers have access to exclusive online tools and analytics to manage their accounts and inventory. For more information, visit http://www.gecdf.com/ or follow company news via Twitter (https://twitter.com/GEInventoryFin).
GE Capital offers consumers and businesses around the globe an array of financial products and services. For more information, visit www.gecapital.com or follow company news via Twitter (https://twitter.com/GECapital).
GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com.
GE Capital, Americas
Lisa Tibbitts, 203-956-4582