Ajay C

On Friday I walked into one of my local FYE locations (on Rte. 4 in Paramus, NJ) and was informed by an associate that it was the first day of their new promotion -- all single-disc (non-used) CDs are only $9.99 each. Pretty cool, huh? I asked another associate about this development and he said that it was something new that TWEC is trying out in 5 of their stores for the next several weeks, to see if the public responds. If it does, he said the plan would be to work with the music labels to try to make this the standard new price for all single-disc CDs going forward, at all TWEC locations. I found the price to be valid on both new and catalog titles, and I didn't leave the store until I'd flipped through the entire rock and movie soundtrack sections, ultimately leaving with 14 great discs (James Bond scores, Pan's Labyrinth soundtrack, new Queensryche album, etc) for a bit less than $150. Best of all, I was able to pay using some store credit I'd saved up, so cost to me was literally $0! I wasn't able to find out where the other test locations are, but maybe this information can be had by contacting their corporate office. Personally, I think this will be a great idea if they can pull it off with their vendors; I know that at $9.99, I'd be inclined to buy a lot more from them than I usually do. And since they are now virtually the ONLY place in the area to get a wide variety of titles (other than new releases and greatest hits comps), I'd like very much for this plan to work out for them in the long term.

Anyway, that's my report. It's not really about DVDs but I figured it's the kind of thing that people around here would like to know about.

bigjim25

Thought I'd ask, does BACKSTAGE PASS apply to this? Even if it doesn't, this would be great since I still buy CDs. By the way, how is the new Queensryche CD? I still like the 80s Hard Rock.

RonG617

Glad to see they are reacting so quickly to that crazy internet music fad that has decimated their music business for ten years now.

DeanoBKN

That's pretty cool, although I bet they are losing $2-4 per disc sold at that "sale" price. I think record studios have enough proof that the CD business is dead at the overpriced MSRP that they put on each album, considering the huge drop in CD sales each year over year.

I wish it was going on in my store, I would clean up on a ton of albums.

Ajay C

That was my first thought, as well. When I asked the associate about this, he didn't seem to have an answer to the question. I would assume that TWEC expects to lose money on this test, to potentially make more later by working with labels to lower their wholesale costs.

The associate also mentioned that this is NOT because the company is going out of business... though I worry when a retailer resorts to extreme measures of this sort, in light of all the recent chain closings.

That's a very good question, though since I don't have it, I didn't think to ask. Having said that, I seem to recall the woman who rang me up asking if I had a Backstage Pass, so my guess is that it is in fact valid for these purchases.

I'm actually not sure yet! The disc is sitting on the floor not 2 feet away from me, but I haven't yet had a moment to give it a spin! I did catch a commercial for the album on VH1 Classic on Saturday night and the sample clip sounded promising...

hindolio

thanks for the info ajay! but $9.99 dvds would be better imho

yrly

Walden Galleria Mall in Buffalo NY is one of these $9.99 locations. This store had always had one of their better music selections locally before they opened the superstores. I must admit I bought a few CDs during this sale. A few things here first off, I've been following this company closely for a potential investment because I think, assuming they make it through the recession, they are in a decent position as one of the last retailers offering what they do, so I've been doing a little local prospecting as to their sales and promotions.

What do I like about this promo? $9.99 is a darn good target price. A CD can't cost more than a few cents to make these days in mass quantities. Assuming an average CD holds 10 tracks that is the same cost as a legitimage download, paid for legally. For the same cost you get a physical high quality copy you can rip yourself if needed. The selection of CDs at this store has always been good and remains so.

What I know. As of now the backstage pass does work on this. Hopefully it continues to do soe.

What I see. Assuming Trans World/FYE still has the retail clout in terms of music sales to swing a deal to do this price if this works, this is a great step for physical music sales. If CDs cost this all the time I'd buy probably twice as many. I personally can't see record companies nixing this one if it goes good, they'll probably gladly try and come to terms with a deal. I'd have a hard time refusing the good numbers if they are presented to me. Anyway the music section at this location seems fairly busy, but around here all the FYEs are always fairly busy as it is. I might get there once a week to the one donig this, so I can't judge exactly. If they locked an exclusive on deal this at this price it would be practically dynamite for them in terms of sales. While CD sales are down I think the price is killing it, and I think the know it too, $17 for a CD is hard to stomach at times. I think just about anyone would spare $10. I can't see how this is bad for anyone if something good comes out of it.

What I wonder. How this will impact their used sales. In terms of bottom line they have to be making a fortune on used CDs and DVDs. They give you $2 for a CD and sell it for $8. That markup is amazing. What I see happening here is if this comes to a longer term situation, unless you've got a rare CD it will have next to no trade in value if they attempt to maintain that large a margin in used CDs. I also wonder why they didn't test this in a superstore locally. The superstores have to be pushing many times the volume of the mall store they are testing it in, and their selection is unquestionably larger. Perhaps they figure this wouldn't be easily translated into a mall scenario. However given the glut of real estate now available, wouldn't it be wise to explore this potential, because assuming you surivive there are plenty of places where expansion potential to the superstore size exists?

This company has lately left me wondering since this bad economy opened up and their stock price tanked. In a solid economy I see no reason why straight DVD sales wouldn't support them. They unquestionably have the largest available local selection, at least around here. They've lost money for a long time, yet don't seem in immediate danger. The glut of stores they ended up with out of the Musicland situation coupled with their huge inventory seems to leave them sustainable for the forseeable future at the very least, especially given their substantial narrowing of the 4th quarter loss this last year, if they stabilize earings to at least a stalemate in terms of small profits and narrow losses they could literally trudge on for years or more, as the bulk of the shares seemingly are held by insiders as it is, nothing would really force a break even company to liquidate so long as they can pay their bills.

All that aside, they seem to be taking what I'd consider the right steps in a recession for a company in no immediate danger. Directionless as though they may be in many respects. This being sale one of them. Agressive marketing. Attempts to win market share. I've seen the $9.99 sale. The free backstage pass to ex Circuit City gamers. Now they are offering a $10 giftcard and 30 days as a Backstage pass memeber in which you can still opt out. Though they may not be Wal-Mart in terms of clout, this all seems like a good plan to me. Make people from other stores that didn't surive into customers. Make new customers with sales. Try and win new repeat customers with rewards programs. Try and sell newer popular products (Wii, Blu-Ray etc.).

IMHO this is their shot to prove themselves or go down with the rest of the scrap heap. With the rumblings that Blockbuster is on the brink, it seems that every single brick that could fall into place for FYE to become a sustainable company for the long term is.

Ajay C

Agreed, hindolio.

Also, here's a number I found for TWEC corporate, if anybody would like to try finding out where the other test locations are. I just tried calling now, but got routed to various voicemail boxes. Maybe somebody else will have better luck.

518-452-1242

reverie

I'd be less hesitant to pick up CDs at this price, that's for sure. I'm a CD guy, I enjoy the physical format, and this would be wonderful news (and it could even get me to go into FYE stores again)!

BuddhaWake

I'll have to check the 2 in philly (Gallery and avenue of the arts) to see if they are doing this. if they are, I would be going there more often and spending some money as I'm a CD guy myself.

Alan Smithee

With Tower and now Virgin gone, the music business is fucked beyond repair. Setting a price limit of $9.99 per CD would do a world of good- the greedy record labels need to learn that part of something is better than all of nothing.

Gizmo

Music comes on CDs still?

Peep

I'd much rather pay FYE $10 and get an actual CD then pay iTunes.

hindolio

im not a cd guy and i dont use itunes either (i like the free npr), so i dont have a side or anything. but... i thought people loved itunes? also, i see amazon freebie and cheap songs/albums from time to time. people seem to dig that too. i just figured the cd market would pretty much shrink in the years to come. no?

DeanoBKN

Perhaps, but if CD's were $9.99 I would only resort to iTunes if it was after store hours and I really needed the album.

If not, I would buy the CD, and unless it was a deep favorite, I would burn a copy for myself, rip the files on my PC at whichever bitrate I want, and sell back the CD to FYE.

hindolio

not to be beat a dead horse, but...

see thats what im talking about

yrly

The problem with ripping, and selling back used, if FYE is only charging $9.99 for the CD how much do you expect to get back for it unless it is rare or out of print? $1? $.40?

I can't imagine that it would be much more than that. Ever see what they sell a trade in for? I recently traded some DVDs in there that I had duplicated on Blu-ray. I think the most I got was $5, some were as low as $1. I saw them selling the $1 ones for $5.99 when I went back a few days later from a buy two get one tray. Pretty hefty markup. Assuming they aim to sell for about 40-60% of a new title that is probably what you're looking at. $1. They seem to like to keep a decent used markup, if for whatever processing and packaging they have to do. I guess if you buy a 12 track CD for $9.99, rip it, sell it back and get $1, you might come out ahead of most legitimate download sites by a bit, but you wasted your gas on a trip to the store.

I buy CDs to own. I do it for a reason. I'm something of an audiophile. I use high quality stereo equipment. You could rip a high bit rate MP3 and played back through my equipment you can hear the difference. Even my "good" mp3 rips off my own CDs offer no comparison.

I guess this depends on your equipment, but to me it is enough of a difference to justify purchasing the physical copy.

Ajay C

Quick update on this test campaign cuz I found another participating location. Despite the fact that there are apparently only 5 such test stores in the entire country, this other location is also in NJ! It's at the Coconuts on Rte. 46 in Wayne, NJ. Same deal as outlined above, all single-disc (non-used) CDs are only $9.99 each. After 90 minutes of thoroughly trawling the rock and soundtrack sections, I found some great new items plus a bunch of catalog titles I'd been putting off buying for years (various "Underworld" and "Blade" soundtracks, Debbie Harry solo material, new Great White album, etc). 19 great discs for a bit under $200, virtually cleaning me out of the last of my store credit. This must be the universe's way of throwing me a bone, in exchange for the several thousand dollars' worth of emergency dental work it recently threw my way. *grumble*

Anyway, have at it, fellow collectors! There's gold in them-thar hills!

SoSpacey

Nice. I was hoping this was still going on and am located right near both stores.

BKenn01

I dont see it working. The big discounters will just work the record lables to lower the prices even further. You may see WM selling them at $6.99 if that is the case. Then everyone will be griping cause FYE is to high at $9.99. The big box stores dont need the revenue so they are content to make a low margin until they run the FYE, etc of the world out of biz.

yrly

Wal-Mart and Target simply do not have a deep enough catalog for it to matter even if they pushed to $6.99. FYE's saving grace is the depth of the catalog, and with the downfall of Circuit City, the next broadest choice falls to who? Best Buy, Borders, Barnes & Noble and FYE. FYE is usually considerably cheaper than Barnes & Noble and Borders. So it leaves Best Buy, squeeze them on their selection simple as that. IMHO FYE can carve their niche and take advantage of this. FYE has to outlast its closest competition, focus on what it can offer that others don't. There are few similar stores left, management must realize this and carve their niche. If they make it through this economy it could be gold. I think they have enough finances to do so even if they shed another 100 stores before all this works itself out. As I said i was researching this place for a cheap investment, and I shop there often, they could potentially turn the corner if they play their cards right, its just a matter if they do.

yrly

Wal-Mart and Target simply do not have a deep enough catalog for it to matter even if they pushed to $6.99. FYE's saving grace is the depth of the catalog, and with the downfall of Circuit City, the next broadest choice falls to who? Best Buy, Borders, Barnes & Noble and FYE. FYE is usually considerably cheaper than Barnes & Noble and Borders. So it leaves Best Buy, squeeze them on their selection simple as that. IMHO FYE can carve their niche and take advantage of this. FYE has to outlast its closest competition, focus on what it can offer that others don't. There are few similar stores left, management must realize this and carve their niche. If they make it through this economy it could be gold. I think they have enough finances to do so even if they shed another 100 stores before all this works itself out. As I said i was researching this place for a cheap investment, and I shop there often, they could potentially turn the corner if they play their cards right, its just a matter if they do.

BKenn01

But is the niche big enough, that is the question. The problem is the big box stores cherry pick by carrying the hot releases. Buyers go there and buy them, then use FYE for the odd stuff. It is hard to survive on the odd stuff with the level of overhead they have.

yrly

I'm not sure about overhead, except in the superstores around here they have maybe 2-3 employees per shift, the superstores being so large I'm guessing they have 8 people on at any given time, though they're obviously much busier stores.

Locally the stores, especially the superstores, are always fairly busy. Now I'm speaking strictly on a CD basis here for the most part but looking beyond that, three of the 4 local stores have huge DVD and Blu-ray selections, which I'm sure contribute to whatever business they get. The two superstores shame any local store for DVDs and Blu-rays, at least 2-3 times the average Best Buy, like a Best Buy with the obscurity of a Barnes and Noble and Borders thrown in but cheaper. The one of the two mall locations has at least as many DVDs and Blus as the average Best Buy, but probably boasts the largest CD selection in the area (and they are the test store running this promo). The 4th store is physically much much smaller.

I can practically guarantee that in many locations the malls give them concessions to retain a retailer, while they have been losing money, their inventory huge (more so than the entire value of the comapany) and much of it doesn't depreciate that greatly, a hard to find CD or DVD is going to be just as expensive one month as it is the next, their balance sheet looks, as I've said, sustainable and fairly strong despite the problems.

I'm not here to promote or trumpet them, I looked at them in a serious eye as a potential investment in a bad economy, simply because despite the trouble they look healthy enough to endure it. When things all shake out aftwards they stand the potential to remain, and Circuit City has been lost. They have pulled no punches when it comes to running promotions such as this, all of which stand to gain the market share given up be expire competitors. Blockbuster is admittedly in much worse position, which stands as a benefit to FYE, why rent when you can buy used?

I have not even drawn video games into this scenario, while from what I understand not all the mall stores carry them, or that big of a selection, but the Superstores again are a model of selection and diversity, the promotions cheap. Target might carry 20 psp titles, the Superstore is stocking at least 100.

The thing I look at here as based on the superstores the supply chain has access to and is capable of providing this selection, which means if the distribution center can supply it to the superstore they can just as soon send it to the mall stores given the demand. I still think catalog depth is where their strength is. In all honesty their sale prices on Blu-rays are the best available on a local level, the used ones even better, of the 80 or so movies I on on Blu-ray I probably bought 70 of them at FYE.

Now I may hold a biased eye in some repsects, the Superstores are so far above and beyond any normal store since Media Play, and one of the two stores we have in malls is a test store, it might skew my findings on this chain, but around here they do very well, and have an exellent opportunity to improve upon it. This promo will likely turn out good numbers around here, but I don't know the health of other malls around the country, only around here, where the economy was dismal long before it was eleswhere.

Ajay C

Well, it looks like this experiment is still going strong some four months later.

In addition to the two NJ stores mentioned above (Paramus and Wayne), they've now added a third on Rte. 22 in Union. For a program that was supposed to be somewhat limited in scope, my home state is benefiting in spades! Not that I'm complaining, mind you.

Conversion of this latest FYE location must have occurred fairly recently, since I pass through the area about once a week and yesterday was the first I'd noticed it. There's a big banner draped across the front of the building, alerting drivers-by to the new pricing, which is how I became aware of it. Personally, I'm a bit surprised that this market test has lasted so long. I know the Wayne location is still running the promotion and Paramus was still doing so when last I drove by sometime last month. For them to be adding yet a third store in the same general area would seem to indicate that they are having some success with it. As ever, it's tough to predict how this will play out but it's interesting to watch, nonetheless. Plus, consumers get to take advantage of some really great deals in the process! In my case, I was on my way to a job when I noticed this most recent location (and as such didn't have time to give the store a thorough trawl) but I'll likely return sometime this week to hopefully fill in some more holes in my back catalog collection.

Anyway, just passing along the news...