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G47.591 Musical Instrument Retailers in The UK Industry Report
G47.591 Musical Instrument Retailers in The UK Industry Report
Industry Definition Operators in the industry sell musical This industry includes the sale of musical
instruments, including guitars, amplifiers, instruments via the internet if the seller
keyboards and associated accessories. also operates bricks-and-mortar stores.
Industry at a Glance
Musical Instrument Retailers in 2016-17
% change
-5 2
-10 0
-15 -2
Year 09 11 13 15 17 19 21 23 Year 10 12 14 16 18 20 22
Revenue Employment
SOURCE: WWW.IBISWORLD.CO.UK
p. 22
Products and services segmentation (2016-17)
13.8%
Keyboards, pianos and organs
15%
Orchestral stringed instruments
p. 4
14.3% SOURCE: WWW.IBISWORLD.COM
Guitars SOURCE: WWW.IBISWORLD.CO.UK
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 29
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 4
Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive The Musical Instrument Retailers increase by 2.9% in the current year.
Summary industry endured tough conditions at the Musical instrument retailers have
start of the five years through 2016-17. faced increasing external competition
Subdued economic performance during over the past five years, particularly from
this time resulted in uncertainty among online-only retailers. These businesses
consumers, who subsequently reduced typically offer a wider range of products
their expenditure on discretionary goods. at heavily discounted prices because they
This consumer behaviour affected a do not have the operational costs that
number of retail industries including the come with running bricks-and-mortar
Musical Instrument Retailers industry, stores. As a result, industry operators
which was already declining. However, have been forced to reduce their prices to
this negative tone changed in 2013-14 remain competitive and maintain the
thanks to rapidly improving economic flow of demand. Profit margins were low
at the start of the period, forcing several
operators to exit the industry.
Operatorshave been forced to reduce their Economic conditions are forecast to
improve further over the next five years,
prices to compete with online-only retailers however external competition is likely to
restrain industry growth. Technological
conditions. Retail activity increased as a advances are anticipated to lead to new
result of the strengthening economy, leisure-time activities and online retailing
rising real disposable income and higher is projected to become even more of a
consumer confidence. Over the five years threat as consumers’ lives become more
through 2016-17, industry revenue is internet-based. Those instrument
estimated to increase at a compound retailers that can afford to invest in
annual rate of 3.8% to reach £438.2 multichannel retailing may be able to
million. The EU referendum result is survive the squeeze, but it is likely that
expected to dampen consumer spending more enterprises will be forced out of the
in the final quarter of 2016-17. However, industry. IBISWorld forecasts that
so far consumer spending has remained industry revenue will increase at a
resilient despite the fall in consumer compound annual rate of 1.6% over the
confidence following the referendum. five years through 2021-22, reaching
Total industry revenue is expected to £473.5 million.
Key External Drivers Real household disposable income associated with maintaining a bricks-
Trends in disposable income affect and-mortar store limit their ability to
demand for musical instruments. A rise compete with online-only retailers. Total
in income levels enables consumers to online expenditure is expected to
purchase new musical goods and increase in 2016-17, which is a potential
consumers with heightened disposable threat to the industry.
income are more likely to choose a more
expensive option. Real household Population aged 11 to 19 years
disposable income is expected to increase Musicians often play instruments during
slightly over 2016-17. adolescence. An opportunity exists to
offer more school music programmes as
Total online expenditure this younger demographic expands.
Specialist retailers in the industry face Schools typically increase their spending
heavy competition from online retailers, on musical equipment as the student
which are appropriating industry population rises. The population aged
revenue. Although many industry between 11 and 19 is forecast to continue
retailers also operate online, the costs increasing steadily in 2016-17.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 5
Industry Performance
Key External Drivers Average weekly hours of work practice. Having more leisure time could
continued The more time consumers spend working, encourage more people to take up an
the less time they have available for instrument, which would benefit retailers.
leisure activities. Fluctuations in Over 2016-17, the average number of
consumers’ available leisure time hours worked per week is anticipated to
influences demand for musical decline slightly. However, a large
instruments because those that choose to proportion of the consumer base for
learn a musical instrument must dedicate musical instruments consists of students
some of their spare time to lessons and or schoolchildren below working age.
8 200
6
150
4
% change
£ billion
100
2
50
0
-2 0
Year 10 12 14 16 18 20 22 Year 07 09 11 13 15 17 19 21
SOURCE: WWW.IBISWORLD.CO.UK
Industry Performance
Drumming up support The industry has traditionally been costs and wider consumer base. The
composed of retailers that cater to a number of enterprises is estimated to
specific product area. However, the decline at a compound annual rate of
prevalence of the internet and internet- 0.2% over the five years through 2016-17,
enabled devices has led to the emergence with employment figures projected to
of a new type of competition. The boom in stagnate over the same period.
e-commerce has resulted in a wide variety As consumers have become more
of products being sold over the internet. technologically aware, mobile commerce
Over the five years through 2016-17, total has grown rapidly. Consumers have
online expenditure is estimated to become more impulsive in their
increase rapidly. Online-only retailers can purchasing decisions, which drives
circumvent some of the overhead costs revenue away from traditional bricks-
that traditional retailers with bricks-and- and-mortar retailers. Many larger
mortar stores face and are therefore able companies in the industry have handled
to engage in aggressive price competition. this by beginning to offer their stock
Intense pressure has led to the exit of online. Some instrument retailers have
several retailers, while others have moved been able to leverage their experience
their operations completely online, and knowledge of the market to become
hoping to take advantage of the lower successful online.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 7
Industry Performance
School of rock One key market for musical of £18 million to the Arts Council to
instrument retailers is school deliver music education. This increase
children. The spending habits of brought the total amount available to
musical instrument buyers are linked music education hubs to over £75
to the changing musical tastes of the million in 2015-16. A further £225
population and the evolution of the million of funding over the next four
school curriculum. Demand is also years was announced in November
determined by the importance 2016. However, the proportion of this
parents place on their children funding that will be allocated to the
learning a musical instrument. In purchase of new instruments is
January 2015 the UK government expected to be relatively low. Despite
announced additional funding for this, an increase in music tuition is
music and arts education expected to have the secondary effect
programmes. Part of this of increasing household purchases of
announcement included an increase musical instruments.
Highly strung One area in which traditional alternative investment because they
bricks-and-mortar stores’ revenue generally appreciate in value and are
remained robust during the difficult relatively immune to the effects of
start to the five-year period through inflation. As a result, products in this
2016-17 is in the sale of high-value category performed strongly at the
antique instruments, particularly start of the period, when the effects
stringed instruments. This is because of the economic downturn were still
stringed orchestral instruments are being felt. As economic conditions
expensive, so dealers do not have to began to improve from 2013-14
sell very many to generate a high onwards, demand for antique
level of revenue. Additionally, in an instruments declined slightly despite
unstable economic climate, antiques demand for products as a form of
are often considered to be a good alternative investment.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 8
Industry Performance
% change
support consumer expenditure. This
is expected to result in consumers -5
Technological timbre The popularity of alternative recreational instruments there are likely to be fewer
activities affects demand for musical lifelong players. As such, the general
instruments. Sport, hobbies, the internet tenor of the industry is expected to shift
and video games all compete with music slightly, towards more technological
for a share of consumers’ free time. offerings. Enterprises specialising in
Online entertainment is expected to product categories such as home
continue performing strongly. This trend recording and computer-based
has long-term consequences for equipment are expected to be in a better
instrument retailers because as children position to prosper in the five years
become less interested in musical through 2021-22.
Orchestrating online Competition from online-only traders, even more difficult to match the prices of
operations which is already strong, is likely to online traders and will need to focus on
increase over the next five years as UK improving their customers’ loyalty,
consumers continue to purchase more promoting the benefits of expert advice
over the internet. Total online expenditure and hands-on retailing where customers
is expected to continue to rise sharply over can try before they buy. Retailers are likely
the five years through 2021-22, presenting to face more showrooming, a practice in
both an opportunity and threat to which consumers visit bricks-and-mortar
retailers. As consumers increasingly look stores to decide which piece of musical
online for purchases, the number of equipment to purchase and then look
high-street shops is falling. Online-only online for a cheap online-only to buy it
musical instrument traders are expected from. It is anticipated that consumers will
to flourish and the influx of new players in also continue using online auction sites to
this industry sector will intensify purchase used musical equipment
competition and further drive down online cheaply, further weighing on the
prices. Many traditional musical performance of traditional bricks-and-
instrument retailers are likely to find it mortar retailers.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 9
Industry Performance
Striking a chord Despite strong external competition, convenient way for musicians to
there are several advantages that purchase products quickly. Items such
bricks-and-mortar stores can offer as replacement strings, reeds and
musicians over online-only retailers. For drumsticks are often purchased in a
example, bricks-and-mortar stores offer hurry. As a result, ordering online can
consumers the opportunity to test an be impractical. Another important area
instrument prior to purchase to see that bricks-and-mortar stores can excel
whether it meets their needs. It is also in is repair services. Instrument repair
easier for staff to give personalised or modification services are expected to
advice to customers. Furthermore, support a steady stream of custom over
physical stores are usually the most the five years through 2021-22.
Industry Performance
Life Cycle Stage Online sales mean consumers are not buying
as many of the industry’s products
Industry enterprise numbers are declining
Technological change is driving limited
growth in some product categories
10
Quantity Growth
Many new companies;
Sound Recording minor growth in economic
& Music Publishing importance; substantial
5 technology change
0 Toy Retailing
Primary Education
-5 Decline
Audio & Video Equipment Retailers Shrinking economic
importance
Consumer Electronics Manufacturing
-10
-10 -5 0 5 10 15 20
% Growth in number of establishments
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 11
Industry Performance
Industry Life Cycle The Musical Instrument Retailers customers the benefits of personalised
industry is in the mature stage of its life advice and services, or seek niches in the
cycle. Over the 10 years through 2021-22, market. Alternatively, those that can offer
Thisindustry the industry’s contribution to GDP is multichannel services may survive. Some
is M
ature expected to decrease. The compound potential for growth does exist in the
annual rate of industry value added industry. Home recording equipment is a
growth is expected to be 0.2%, compared rapidly growing product category as this
to the 2.3% forecast for GDP over the type of technology becomes more
same period. Consumers who would have advanced, cheaper and easier to use, and
once considered taking up a musical is being increasingly marketed at
instrument are being offered a greater hobbyists and amateur musicians.
array of options when it comes to Retailers able to market these products
spending their leisure time. are likely to succeed. Retailers will find it
Competition from alternative outlets is increasingly difficult to attract new
a strong contributing factor to the customers to traditional orchestral
industry’s flagging fortunes. Online instruments like violins, oboes and
retailers are undercutting traditional trombones as these product types fall out
retailers’ prices and many industry of favour with the overall market and
operators are not able to compete on this businesses concentrate on a small
basis. Operators must show potential number of specialist retail areas.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 12
Products & Services like the violin over instruments commonly Keyboards, pianos and organs
continued used in popular music. However, this Keyboards, pianos and organs are
product segment generates a significant estimated to generate 13.8% of industry
proportion of revenue because orchestral- revenue. The majority of this comes from
grade instruments, many of which are electric pianos and synthesisers. Acoustic
considered antiques and works of art in pianos represent a significant cost for most
their own right, sell for a large amount of consumers, as they start from around
money. For example, some violins sell for £2,000 and can often cost more than
more than £1 million. The Lady Blunt £10,000. The percentage of revenue
Stradivarius violin dating from 1721 sold contributed by acoustic pianos has been
for £9.8 million in 2011. Although this falling for some time because they are so
violin was sold through an auction, these expensive and relatively inexpensive
high prices demonstrate that businesses substitutes are easily available. Digital
can generate large amounts of revenue pianos, electric pianos, synthesisers and
even if their sales volumes are low. The MIDI keyboards make up an expanding
percentage of revenue derived from the share of this product segment. This reflects
sale of orchestral stringed instruments is changing trends in musicians’ preferences
expected to remain relatively constant and in popular music in general. The
over 2016-17. proportion of revenue derived from the
sale of keyboards, pianos and organs is
Guitars expected to decrease over 2016-17.
Electric and acoustic guitars generate an
estimated 14.3% of industry revenue. Other products
Despite becoming slightly less popular in Percussion instruments account for 9.2%
recent years, guitars are still the most of industry revenue. The majority of this
popular musical instrument among segment’s revenue comes from selling
Britons. They can be bought for as little drum kits. Other products included in the
as £30, but high-end models can cost segment are shakers, gongs, zithers,
over £3,000. Affordable guitars are triangles and orchestral percussion
mass-produced offshore in places like instruments such as timpani and
Korea, Mexico and China. More marimba. Traditional brass and
expensive models tend to be produced woodwind instruments like trumpets,
locally, or in the United States, Canada or trombones, oboes and clarinets are
Europe. The proportion of revenue declining as a share of sales. These
derived from the sale of guitars is currently make up approximately 7% of
expected to decline slightly in 2016-17. overall industry revenue.
9.2%
Percussion instruments
15.5%
Amplification and DJ equipment
13.8%
Keyboards, pianos and organs
15%
Orchestral stringed instruments
14.3%
Total £438.2m Guitars SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 14
Products & Services A 6% share of industry revenue comes 3% of revenue comes from selling sheet
continued from expendables and accessories, music and other products. Sheet music
including strings, rosin, tuners, music has become a less lucrative product
stands, straps, reeds, cables and plectra. because musicians are increasingly
The segment’s share of industry revenue accessing sheet music cheaply or for free
has increased over recent years. A further via the internet.
Major Markets Hobbyists and students emerging market for industry retailers is
Hobbyists are the largest market for the the retired. Those in the baby-boomer age
industry and are estimated to generate group who are approaching retirement age
61.5% of revenue. Students, parents of are buying more instruments as they
students, recreational players and aspiring develop new hobbies. Demand from the
professionals are included in this category. hobbyists market is expected to increase
Many children learn musical instruments over 2016-17.
either as part of their school curriculum or
as an extracurricular activity; they often Professionals
then develop into lifelong players and Professional and semi-professional
consumers of the industry’s products. musicians account for approximately
Long-term amateur players are more likely 21.2% of the market. This segment
to own multiple instruments or more includes band and orchestra members,
expensive instruments than beginners. It is soloists and other music professionals,
estimated that half of all households own and businesses that require the industry’s
at least one musical instrument. An products, for instance recording studios.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 15
Major Markets Professionals demand the highest-quality tuition providers are included in this
continued products, upgrade their equipment market segment. Schools often
regularly and are more likely to own purchase instruments and other
more than one instrument. They are also industry products for students to use
less sensitive to price than other as part of their curriculum or in
consumer groups because owning a extracurricular activities, such as
quality musical instrument is central to orchestra or choir performances. In
their livelihood. Demand from this November 2016 the UK government
category is expected to remain strong announced an additional £225
during 2016-17. million funding for music education
over the next four years. This follows
Education sector funding increases over 2015-16.
The education sector makes up Consequently the amount of demand
approximately 17.3% of the market from the educational sector is
for musical instruments at the retail expected to increase over the
level. Schools and private music current year.
17.3%
Education sector 61.5%
Hobbyists and students
21.2%
Professionals
International Trade The Musical Instrument Retailers involved in getting these items to
industry is not highly globalised market is accounted for at the
because it is a retail industry that sells manufacturing level. Musical
primarily to local residents. The instrument retailers have no significant
majority of products sold are operations outside the United Kingdom,
manufactured outside the United although agents operate on behalf of J
Kingdom, but the international trade & A Beare Limited in South Korea.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 16
SCOTLAND
6.6
NORTH
EAST
3.1
NORTHERN NORTH
IRELAND WEST
3.2 11.1
YORKSHIRE
8.8
EAST
MIDLANDS
7.1
WEST
MIDLANDS EAST OF
9.0 ENGLAND
9.5
WALES
4.1
LONDON
13.9
SOUTH
SOUTH EAST
Establishments (%) WEST 14.9
Cold Zone (<10) 8.7
<25
<50
Hot Zone (<100)
Not applicable
SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 17
Percentage
instruments and supplies. However, a
few other trends are notable and 10
specific to certain regions.
5
The South East and London
The South East accounts for 13.7% of 0
the UK population and 14.9% of
East Midlands
East of England
London
North East
North West
N. Ireland
Scotland
South East
South West
Wales
West Midlands
Yorkshire
industry establishments. This region is
just outside London so retailers have
good access to consumers that earn
higher wages but are paying less rent
Establishments
or other overheads. The higher levels of
Population
disposable income make establishment SOURCE: WWW.IBISWORLD.CO.UK
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalisation
Market Share The Musical Instrument Retailers instrument stores. This can partly be
Concentration industry is highly fragmented, as attributed to consumer preference for
demonstrated by the large proportion of local music shops that can deliver
small players. The four largest companies personalised and knowledgeable services.
Level
are estimated to contribute just 26.9% of Customer loyalty can be an important
Concentration in total industry revenue in 2016-17. Only factor in the performance of musical
this industry is L ow two companies generate 5% or more of instrument retailers because many have
industry revenue and most enterprises been operating in the same place for
only operate one establishment. Some decades. Tight margins mean few
consolidation has taken place over the operators are absorbing their competitors
past five years but there is still no and larger firms have been reluctant to
dominant nationwide chain of musical invest in developing bigger chains.
Competitive Landscape
Cost Structure Thailand and Vietnam, makes up a especially when selling audio recording
Benchmarks significant proportion of purchases. and computing products, where
Low-cost musical instrument producers customers require technical expertise.
continued
are beginning to manufacture a wider Industry operators often seek out
range of products. However, the employees who are musicians
depreciation of the pound that followed themselves. Wages have fallen as a
the EU referendum is expected to result percentage of revenue over the past five
in rising purchase costs over the second years because wage costs improved
half of 2016-17. This is expected to labour efficiency of stores. In 2016-17
affect smaller operators to a greater wages are expected to account for 15.6%
extent than their larger competitors, of industry revenue.
which are more likely to have long-term
purchasing contracts with suppliers or Rent, depreciation and utilities
utilise currency-hedging strategies to Rent is estimated to account for 3.9%
defend themselves from volatility in the of industry revenue in 2016-17 as
value of the pound. retailers rely on leases. To keep costs
low, industry operators seek out
Wages cheaper properties, such as stores just
Musical instrument retailing is a labour- outside shopping centres rather than
intensive industry that often relies on inside. Depreciation costs are estimated
one-on-one selling techniques. Labour at just 1.2% of industry revenue.
tasks include general shopkeeping duties Retailers lease stores instead of owning
and answering customer queries. Staff them, which keeps costs low.
need some specialised knowledge, Depreciable assets include computer
Average Costs of
all Industries in Industry Costs
sector (2016-17) (2016-17)
100
2.2 5.0 3.9 n Profit
1.1 3.9 1.0 n Rent
1.4 6.9 1.2 5.5 n Utilities
n Depreciation
80 8.5 15.6 n Other
n Wages
n Purchases
Percentage of revenue
60
40
74.9 68.9
20
0
SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 20
Competitive Landscape
Competitive Landscape
Level & Trend entry, which is common in the retail Competition Medium
sector. The major expense new Concentration Low
arriers to Entry
B entrants face is acquiring stock and Life Cycle Stage Mature
in this industry are retail space near consumers. Capital Intensity Low
Mediumand S teady Established players in the industry Technology Change Medium
have access to economies of scale, Regulation & Policy Light
meaning they can offer large discounts. Industry Assistance None
They typically have strong
relationships with their suppliers, SOURCE: WWW.IBISWORLD.CO.UK
Major Companies
Gear4music Ltd | S&T Audio Ltd | Other Companies
Major players
S&T Audio Ltd 7.6%
(Market share)
82.4%
Other
Player Performance Previously known as Red Submarine Ltd, manufacturers. In recent years the
the company renamed itself Gear4music company has expanded its online presence
Ltd in 2014-15 to match the name of its in Europe, and now delivers to 21
Gear4music Ltd website Gear4music.com. Founded in countries, with its website translated into a
Market share: 10% 1995, the company sells musical range of languages.
instruments and equipment in the United
Kingdom. It offers a range of electric, Financial performance
acoustic and bass guitars, percussion Over the five years through 2016-17, the
instruments and recording equipment, company’s industry-related revenue is
alongside traditional orchestral forecast to increase at a compound
instruments, pianos, studio gear, home annual rate of 33.8% to reach £43.8
audio and DJ equipment. Although million, far exceeding expected growth in
Gear4music conducts the majority of its the wider industry. Strong growth has
business through its website, it also has a been driven by rapidly increasing online
bricks-and-mortar store in York. sales. The company’s operating profit is
The company generates the majority of projected to increase over the same
its revenue through its online store, period, despite some fluctuation, due to a
Gear4music.com. The website stocks over recent increase in the volume of sales of
36,000 products from more than 700 high-value products.
Player Performance S&T Audio Ltd, founded in 1999, Kingdom, including outlets in
operates musical instrument shops Manchester, Liverpool and Birmingham.
under several names. One of these is PMT also operates an online store. Based
S&T Audio Ltd Professional Music Technology (PMT), a in Southend-on-Sea, the company
Market share: 7.6% chain of 15 stores throughout the United employs over 150 in-store experts, who
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKFebruary 2017 23
Major Companies
Player Performance work alongside administrative staff have struggled. This is the result of a
continued who support the company’s online strong expansionary strategy and the fact
endeavours and its brick-and-mortar it has kept its products competitively
stores. To complement PMT, S&T priced. A simultaneous expansion in
Audio Ltd also runs an extensive online online retailing has allowed the business
retailing operation under the Dolphin to thrive. The group’s products tend to be
Music brand. musical instruments used in
contemporary music, though it does also
Financial performance hold a small amount of more traditional
Over the five years through 2016-17, S&T stock. It often sells in large volumes and
Audio Ltd’s revenue is expected to grow caters extensively to beginner and
at a compound annual rate of 11.8% to intermediate ability levels. Operating
£33.5 million. The company has profit is estimated to increase over the
performed strongly in an environment current year due to greater sales volumes
where many musical instrument retailers and higher demand.
Major Companies
Other Companies online and through a mail-order service. Due to the high level of skill required to
continued Dawsons offers a full range of musical deal in this area of the industry, wages are
instruments and related products, from comparatively high. Unlike many
orchestral instruments, guitars, drums, operators in this sector, J & A Beare’s key
pianos and keyboards, to audio recording competitors are not online retailers but
equipment, computers, public address auction houses and global specialist violin
systems and DJ equipment. stores. As a result, the effect of the
Dawsons’ revenue has performed recession has been somewhat different for
better than the industry as a whole. The the company. It has been able to capitalise
company has remained profitable over on the fact that high-end violins are a good
the past five years. Company revenue is store of value. This phenomenon does not
forecast to increase at a compound translate to the rest of the industry.
annual rate of 7.6% to £21.3 million over Due to the high value of the company’s
the five years through 2016-17. goods, J & A Beare can generate a
significant level of revenue, especially
J & A Beare Ltd relative to the wider industry. Nonetheless,
Estimated market share: 4.4% its profit margin has remained slim. J & A
Founded in 1892, J & A Beare Ltd merged Beare has partly benefited from the boom
with Morris and Smith in 1998. A retailer in alternative investments following the
of high-end violins, violas and cellos, as financial crisis. Art, precious jewellery and
well as a selection of bows ranging in antiques provided a safe haven from
price from £2,000 upwards, J & A Beare inflationary central bank monetary policy
also restores violins for sale and, on rare and volatile exchange rates. Revenue more
occasions, manufactures violins in-house than doubled in 2011-12 due to several
at its Marylebone shop. In addition to sales of extremely high-value instruments.
domestic operations, the company also Despite remaining high in 2012-13,
operates in Seoul, South Korea, through revenue regressed closer to historical levels
an agent. Apart from instruments, the in the following year, totalling
company also sells a selection of bows and approximately £20 million due to reduced
related equipment. J & A Beare’s product sales volumes of high-value items.
portfolio is heavily weighted towards Revenue has remained around £20 million
antique stringed instruments. Like most in the years since. Over the five years
high-quality antiques, these instruments through 2016-17, the company’s revenue is
tend to appreciate in value. They are expected to decrease at a compound
often purchased on behalf of a annual rate of 17.8% to £19.4 million. The
particular performer by an orchestra, company’s operating profit margin is also
musical institution, or by a single or expected to decrease over the five years
group of investors as a form of through 2016-17 due to a reduced number
alternative investment. of sales after 2012-13.
Major Companies
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Sound
Recording
& Music
Musical Publishing
Instrument Toy Retailing
Retailers
Traditional Service Economy
Primary Old Economy
Education
Wholesale and Retail. Reliant Audio Consumer Agriculture and Manufacturing.
on labour rather than capital & Video Electronics Traded goods can be produced
to sell goods. Functions cannot Equipment Manufacturing using cheap labour abroad.
Retailers
be outsourced therefore firms To expand firms must merge
must use new technology or acquire others to exploit
or improve staff training to economies of scale, or specialise
increase revenue growth. in niche, high-value products.
Operating Conditions
Revenue Volatility Revenue volatility in this industry is low Revenue is also affected by the
and is affected by several factors. expansion of industry product offerings
Demand is influenced by variations in at external competitors, such as large
Level
disposable income and consumer online-only retailers. In recent years,
The level of confidence. Consumers are price these external players have placed
Volatility is L ow conscious, so the purchase of musical increasing pressure on the industry by
instruments depends on the level of offering consumers a broad range of
income at their disposal. Demand is also products at competitive prices. This
affected by fluctuations in the level of has offset revenue growth somewhat
consumer confidence. Retail spending during times of strong sales, and
generally rises when consumers are more exacerbated declines during periods of
confident about their financial position. low demand.
Operating Conditions
Regulation & Policy The industry has a light and steady Additionally, industry operators must
level of regulation. Companies must comply with the provisions of the 2010
comply with the National Minimum Equality Act, which generally requires
Wage Act and labour laws governing that stores be accessible to customers
matters such as working conditions. with disabilities.
Key Statistics
Industry Data Industry
Revenue Value Added Wages Domestic
(£ million) (£ million) Establishments Enterprises Employment Exports Imports (£ million) Demand
2007-08 433.9 98.5 1,773 1,712 4,480 -- -- 79.8 N/A
2008-09 387.5 86.5 1,754 1,703 3,920 -- -- 72.5 N/A
2009-10 366.4 83.9 1,751 1,705 3,960 -- -- 70.6 N/A
2010-11 371.3 89.5 1,752 1,707 3,980 -- -- 72.7 N/A
2011-12 364.2 90.1 1,749 1,702 3,912 -- -- 71.8 N/A
2012-13 357.3 90.5 1,744 1,698 3,802 -- -- 70.3 N/A
2013-14 380.4 87.6 1,742 1,695 3,760 -- -- 67.4 N/A
2014-15 403.5 88.1 1,741 1,693 3,794 -- -- 67.0 N/A
2015-16 426.0 90.9 1,742 1,690 3,864 -- -- 68.4 N/A
2016-17 438.2 90.7 1,743 1,688 3,914 -- -- 68.2 N/A
2017-18 449.4 91.3 1,739 1,686 3,866 -- -- 67.4 N/A
2018-19 458.4 91.2 1,737 1,684 3,894 -- -- 68.4 N/A
2019-20 463.4 91.3 1,739 1,680 3,904 -- -- 69.8 N/A
2020-21 469.2 91.8 1,738 1,678 3,954 -- -- 70.8 N/A
2021-22 473.5 92.2 1,737 1,679 3,998 -- -- 73.4 N/A
Industry Jargon MULTICHANNEL RETAILINGUsing multiple different MUSICAL INSTRUMENT DIGITAL INTERFACE (MIDI)
channels to interact with potential customers. These A way of allowing different instruments to interact with
could include the internet, mobile phones and each other electronically.
bricks-and-mortar outlets. SYNTHESISERAn electronic instrument that
generates sound by using filters and tone generators
to create waveforms.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY REVENUEThe total sales of industry goods
new companies struggle to enter an industry, while low and services (exclusive of excise and sales tax); subsidies
barriers mean it is easy for new companies to enter an on production; all other operating income from outside
industry. the firm (such as commission income, repair and service
CAPITAL INTENSITY Compares the amount of money income, and rent, leasing and hiring income); and
spent on capital (plant, machinery and equipment) with capital work done by rental or lease. Receipts from
that spent on labour. IBISWorld uses the ratio of interest royalties, dividends and the sale of fixed
depreciation to wages as a proxy for capital intensity. tangible assets are excluded.
High capital intensity is more than £0.333 of capital to INDUSTRY VALUE ADDED (IVA)The market value of
£1 of labour; medium is £0.125 to £0.333 of capital to goods and services produced by the industry minus the
£1 of labour; low is less than £0.125 of capital for every cost of goods and services used in production. IVA is
£1 of labour. also described as the industry’s contribution to GDP, or
CONSTANT PRICESThe pound figures in the Key profit plus wages and depreciation.
Statistics table, including forecasts, are adjusted for INTERNATIONAL TRADE The level of international
inflation using the current year (i.e. year published) as trade is determined by ratios of exports to revenue and
the base year. This removes the impact of changes in imports to domestic demand. For exports/revenue: low is
the purchasing power of the pound, leaving only the less than 5%; medium is 5% to 20%; and high is more
‘real’ growth or decline in industry metrics. The inflation than 20%. Imports/domestic demand: low is less than
adjustments in IBISWorld’s reports are made using the 5%; medium is 5% to 35%; and high is more than
Office for National Statistics’ implicit GDP price deflator. 35%.
DOMESTIC DEMAND Spending on industry goods and LIFE CYCLEAll industries go through periods of growth,
services within the UK, regardless of their country of maturity and decline. IBISWorld determines an
origin. It is derived by adding imports to industry industry’s life cycle by considering its growth rate
revenue, and then subtracting exports. (measured by IVA) compared with GDP; the growth rate
EMPLOYMENTThe number of permanent, part-time, of the number of establishments; the amount of change
temporary and casual employees, working proprietors, the industry’s products are undergoing; the rate of
partners, managers and executives within the industry. technological change; and the level of customer
acceptance of industry products and services.
ENTERPRISE A division that is separately managed
and keeps management accounts. Each enterprise NONEMPLOYING ESTABLISHMENTBusinesses with
consists of one or more establishments that are under no paid employment or payroll, also known as
common ownership or control. nonemployers. These are mostly set up by self-employed
individuals.
ESTABLISHMENT The smallest type of accounting unit
within an enterprise, an establishment is a single PROFIT IBISWorld uses earnings before interest and
physical location where business is conducted or where tax (EBIT) as an indicator of a company’s profitability.
services or industrial operations are performed. Multiple It is calculated as revenue minus expenses, excluding
establishments under common control make up an interest and tax.
enterprise. VOLATILITY The level of volatility is determined by
EXPORTSTotal value of industry goods and services sold averaging the absolute change in revenue in each of the
by UK companies to customers abroad. past five years. Volatility levels: very high is more than
±20%; high volatility is ±10% to ±20%; moderate
IMPORTSTotal value of industry goods and services
volatility is ±3% to ±10%; and low volatility is less than
brought in from foreign countries to be sold in the UK.
±3%.
INDUSTRY CONCENTRATIONAn indicator of the
WAGESThe gross total wages and salaries of all
dominance of the top four players in an industry.
employees in the industry. Benefits and on-costs are
Concentration is considered high if the top players
included in this figure.
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
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