“Back then, the music industry was going through another evolution of change,” says Johnson. “Manufacturers were moving overseas, the big chains were expanding, and NAMM was calling on everyone to get more professional.” Part of that striving for professionalism involved better numbers, key to better decision-making.
They saw an opportunity to use their experience gained at the NPD Group, a top-ten market research firm, and apply it to an industry they had a passion for (Johnson is a semi-pro bass player who still gets out and plays, and Hirschberg a long time guitarist whose first job after college was at Studio Instrument Rentals). “NPD had a wonderful strategy of getting sales data from retailers and packaging it into reports, and they were doing it for industries like consumer electronics, car stereos, cameras, and appliances. We saw a need for that approach in an industry we care about.”
“At this point, the MI industry that we love is too small, too quirky for a major research company, so we took the opportunity to go out on our own and create a boutique business.”
Their launch proved that this industry was hungry for information: Within two years, eight of the top ten brands in the industry became clients. “Another key benchmark was in 2005,” says Hirschberg. “We went to a NAMM Show and walked into several booths, and industry executives were showing us new products that were launched using our data.”
Real Data
“We don’t offer opinions, we offer data,” Johnson says. The first guitar report they ever ran charted monthly sales and inventory units, and held some surprises for them: they realized that unlike the consumer electronics industry, guitars took a lot longer to turn over, leading them to understand that retailers need to stock a lot of SKUs, and they don’t all turn so fast.
“You could argue that there’s too much stuff out there!” says Johnson. “But with our data, a manufacturer can cut through that.”
“The inventory position that is revealed in our reports is helpful in production planning,” Hirschberg says. “The vendors can have the right amount of product out at the right time, and minimize out-of-stock/overstock situations.”
MI SalesTrak methodology takes all the guesswork out of figuring out what is selling and what is not. “We work exclusively with the item-level retail point-of-sale data,” Hirschberg explains. The company has partnered with over 80 retailers representing more than 600 retail outlets throughout the nation. They track brands and models in 18 product categories.
In exchange for their participation, retailers get back a market summary – specific, accurate brand and model-level sales data that they would otherwise not be able to afford. “Retailers use the information to benchmark their performance,” Hirschberg says. “They can compare their product mix with what’s selling nationally, and determine what top sellers they should have.” They stress that all individual retailer information is kept confidential – no data that identifies an individual retailer is reported or released.
Their retail partner pool is diverse and varied, and runs from the smallest independents through to the largest chains, and includes online retailers as well. “And we are always looking for additional retailers to partner with,” says Johnson.
Hirschberg adds that another benefit to MI retailers participating in their program is that it actually helps their vendors to serve them better. “I was a manufacturer’s rep some years ago and retailers had all sorts of comments and suggestions on product features and prices. Those conversations are difficult for a vendor to quantify and act upon, but by participating in MI SalesTrak retailers, help the industry to create products that are better for them to sell. It’s a win/win”
MI manufacturers use the data to spot trends and make more informed decisions. “The product planner can use our data as a tool to find the sweet spot of exactly where their new product should be positioned,” Hirschberg says. “And everybody will take the data and dig into it to the level that they want. Different manufacturers can key in on different market segments depending on where they want to position themselves – it’s that rich.”
MI SalesTrak are members of NAMM and have participated in NAMM tech advisory committees on the developing industry standard categories. “There are sometimes different opinions on how to categorize a particular product and it helps to have industry-wide standard classifications,” Hirschberg says.
From their perch, they get a good view of things. Hirschberg says that lately, “instead of stocking a dozen of a particular SKU, dealers are taking one each of every color/variation of product, so they merchandise a wide assortment rather than a deep backup.”
Johnson adds that during the recession, he was surprised that while product sales took a dip, he saw independent MI retailers were resourceful in other ways, expanding lesson programs, for example. “The Mom and Pop stores have proven to be very resilient, especially compared to the consumer electronics market. The smarter ones were bringing in boutique amps and effect pedals, venturing out and carrying things the big boxes weren’t.”
It’s a journey, not a destination at MI SalesTrak, as they continue to add new products to their database (currently over 88,000 SKUs, with over 500 new items added each month). And they are starting to track new categories – from Groove Production Stations (technology-driven products) to Folk and Traditional Instruments. “My observation is the industry is moving in two opposite directions at the same time – one technology-driven, and one very traditional!” Hirschberg laughs.
Using inaccurate or incomplete data – can actually be worse data than using no data and going with your gut. “I got an email recently that declared a list of products as the hottest-selling Christmas items,” Hirschberg says. “And I was like, ‘Where is the data on that?’”
Johnson adds that when you see a chart that “shows” guitar sales are up three percent … “well, what business decision could you make on that? You need details – brand, models, prices – otherwise there’s not enough information to take action on it.”
The instrument-loving duo admit to the hazards of a job where they spend all day looking at instruments of all kinds. “It can be dangerous if you’re prone to ‘GAS’ – Gear Acquisition Syndrome” Hirschberg says.
Assuming they do more studying of instrument sales than buying said instruments, they will continue to serve the industry as no one else can. “We look forward to the next ten years,” Hirschberg says.
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