Off key: Industry profitability has come under

pressure due to the depreciation of the pound

IBISWorld Industry Report G47.591

Musical Instrument Retailers
in the UK
March 2019 Raajan Rai

2 About this Industry 15 Major Markets 27 Operating Conditions

2 Industry Definition 16 International Trade 27 Capital Intensity
2 Main Activities 17 Business Locations 28 Technology and Systems
2 Similar Industries 28 Revenue Volatility
2 Additional Resources 19 Competitive Landscape 29 Regulation and Policy
19 Market Share Concentration 29 Industry Assistance
3 Industry at a Glance 19 Key Success Factors
19 Cost Structure Benchmarks 30 Key Statistics
4 Industry Performance 21 Basis of Competition 30 Industry Data
4 Executive Summary 22 Barriers to Entry 30 Annual Change
4 Key External Drivers 22 Industry Globalization 30 Key Ratios
5 Current Performance
8 Industry Outlook 23 Major Companies 31 Jargon & Glossary
10 Industry Life Cycle 23 J & A Beare Ltd
24 Gear4music (Holdings) plc
12 Products and Markets 25 Dawsons Music Ltd
12 Supply Chain 25 S&T Audio Ltd
12 Products and Services 26 Music in Print Ltd
14 Demand Determinants

www.ibisworld.co.uk | 020 3008 6568 | info@ibisworld.co.uk

WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   2

About this Industry

Industry Definition Operators in the industry sell musical instruments via the internet if the seller
instruments, including guitars, amplifiers, also operates bricks-and-mortar stores.
keyboards and associated accessories. The industry also includes instrument
This industry includes the sale of musical repair and modification services.

Main Activities The primary activities of this industry are

Musical instrument retailing
Recording equipment retailing
Sheet music retailing

The major products and services in this industry are

Amplification and DJ equipment
Audio recording equipment
Brass and woodwind instruments
Guitars and ukuleles
Keyboards, pianos and organs
Orchestral stringed instruments
Percussion instruments

Similar Industries G47.430 Audio & Video Equipment Retailers in the UK

Firms in this industry sell audio and video playing and recording equipment.

G47.650 Toy Retailing in the UK

Companies in this industry sell toys, which sometimes include musical instruments targeted at beginners.

G47.790 Second-Hand Goods Stores in the UK

Operators in this industry sell second-hand goods, including musical instruments.

G47.910 E-Commerce & Online Auctions in the UK

Businesses in this industry sell products online, including musical instruments, sheet music and related products.

Additional Resources For additional information on this industry

www.ons.gov.uk
Office for National Statistics
www.psneurope.com
PSN Europe
www.retail-week.com
Retail Week
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   3

Industry at a Glance
Musical Instrument Retailers in 2018-19

Key Statistics Revenue Annual Growth 14–19 Annual Growth 19–24

Snapshot
£440.6m 2% 0.7%
Profit Wages Businesses

£16.3m £69m 1,684

Revenue vs. employment growth Real household disposable income
Market Share
J & A Beare Ltd 8 5
12.8% 6 4

Gear4music 4
3

(Holdings) plc
% change

% change
2
2
12.7% 1
0
0
S&T Audio Ltd
-2
9.6% -1

-4 -2
Dawsons Music Year 11 13 15 17 19 21 23 25 Year 12 14 16 18 20 22 24
Ltd 5.2% Revenue Employment
SOURCE: WWW.IBISWORLD.CO.UK
p. 23
Products and services segmentation (2018-19)
5.9%
Key External Drivers
16%
Brass and woodwind
instruments
Real household 8.2% Audio recording equipment
disposable income Percussion instruments
Total online expenditure
Population aged
11 to 19 years 12.5%
Orchestral stringed instruments
Average weekly 14.9%
Amplification and
hours of work DJ equipment

13.4%
Keyboards, pianos and organs

14.8%
Other products and services
p. 4
14.3%
Guitars and ukuleles SOURCE: WWW.IBISWORLD.COM

Industry Structure Life Cycle Stage Mature Regulation Level Light

Revenue Volatility Low Technology Change Medium
Capital Intensity Low Barriers to Entry Medium
Industry Assistance Low Industry Globalisation Low
Concentration Level Medium Competition Level Medium

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30
WWW.IBISWORLD.CO.UK
Industry Performance
Executive Summary   |   Key External Drivers   |   Current Performance
Industry Outlook   |   Life Cycle Stage
Executive Summary Operators in the Musical Instrument
Retailers industry sell musical
instruments, audio recording equipment,
amplifiers, keyboards and associated
accessories. Improving economic
conditions over the start of the five-year
period through 2018-19 bolstered the
performance of musical instrument
retailers. With consumer confidence
levels returning to growth and disposable
incomes improving, consumers became
Online-only
retailers have become a growing
source of competition over the past five years
more comfortable with buying expensive
industry products. Increased uncertainty
since the EU referendum, however, has
negatively affected industry revenue over
recent years. As musical instruments are
generally discretionary purchases, demand
is highly price sensitive. Weak consumer
confidence, alongside inflationary pressure
decreasing the real value of disposable
incomes, has led to consumers purchasing
fewer or cheaper instruments.
Over the five years through 2018-19,
industry revenue is expected to increase by
2%, to reach £440.6 million. This includes
Key External Drivers Real household disposable income
Trends in disposable income affect
demand for musical instruments. A
rise in disposable income enables
consumers to purchase more musical
instruments, while more consumers
may be encouraged to purchase the
more expensive option. Real household
disposable income is expected to
marginally increase in 2018-19, although
it has remained relatively subdued since
the EU referendum result.
Total online expenditure
Specialist retailers in the industry face
heavy competition from online retailers,
which are increasingly gaining custom
at the expense of industry demand.
Although many industry retailers also
Musical Instrument Retailers in the UKMarch 2019   4
a decline of 0.8% in the current year, as
increased spending pressures negatively
affect industry demand and benefit
external competitors that offer lower
prices. Online-only retailers have become
a growing source of competition over
the past five years due to their low-cost
operations allowing them to offer prices at
a discount. In response, industry retailers
have been forced to offer goods at lower
prices in order to maintain demand, which
has constrained profit margins. Industry
profitability has come under further
pressure over recent years due to the
depreciation of the pound following the
EU referendum increasing purchase costs.
External competition is expected to
limit industry growth over the next five
years. Technological advances are
anticipated to lead to new leisure-time
activities and online retailing is projected
to become even more of a threat as
consumers’ lives become more internet
based. Those instrument retailers that can
afford to invest in multichannel retailing
may be able to sustain demand, but more
enterprises are expected to be forced out of
the industry. Industry revenue is expected
to increase at a compound annual rate of
0.7% over the five years through 2023-24,
reaching £456.7 million.
operate online, the costs associated with
maintaining a bricks-and-mortar store
limit their ability to compete effectively
with online-only retailers. Total online
expenditure is expected to increase in
2018-19, which is a potential threat to
the industry.
Population aged 11 to 19 years
Musicians typically learn how to play
instruments during adolescence.
Schools typically increase their
spending on musical equipment as
the student population rises. The
population aged between 11 and 19 is
forecast to continue increasing steadily
in 2018-19, and an opportunity exists
to offer more school music programmes
as this younger demographic expands.
WWW.IBISWORLD.CO.UK
Industry Performance
Key External Drivers Average weekly hours of work
continued The more time consumers spend
working, the less time they have
available for leisure activities.
Fluctuations in consumers’ available
leisure time influences demand for
musical instruments because those
that choose to learn a musical
instrument must dedicate some
of their spare time to lessons and
Real household disposable income
5 120
4 100
3
% change
1
0
-1
-2
Year 12 14 16 18 20
Current The Music Instrument Retailers
industry has performed relatively
Performance well over the past five years, despite
consumers shifting their interests from
traditional hobbies, such as learning
to play an instrument, to those more
aligned with the digital age. Industry
revenue is anticipated to increase at
a compound annual rate of 2% over
the five years through 2018-19, to
reach £440.6 million. Musical
instrument retailers have faced
increased competition from external
competitors, particularly online-only
retailers. Due to their low overhead
costs, online-only retailers typically
offer lower prices than bricks-and-
mortar establishments. Industry
retailers have been forced to cut
prices and constrain profit in order
to maintain demand.
Musical Instrument Retailers in the UKMarch 2019   5
practice. Having more leisure time
could encourage more people to take
up an instrument, which would benefit
retailers. Over 2018-19, the average
number of hours worked per week
is anticipated to increase slightly.
However, a large proportion of the
consumer base for musical instruments
consists of students or schoolchildren
below working age.
Total online expenditure
80
£ billion
60
40
20
0
22 24 Year 10 12 14 16 18 20 22 24
SOURCE: WWW.IBISWORLD.CO.UK
Industry revenue is estimated to
have fallen over the two years through
2018-19, primarily due to the effects
of the EU referendum result. As the
majority of the products sold by
retailers are imported from abroad,
the weakness of the pound since the
EU referendum has increased purchase
costs. Musical instruments are relatively
discretionary purchases, which means
that demand is sensitive to price.
Demand is expected to fall for retailers
that pass increased import costs on
to consumers in the form of higher
prices. Decreased demand due to
price sensitivity is exacerbated by
high uncertainty and weak consumer
confidence; more consumers are
budgeting and limiting discretionary
purchases. In the current year, industry
revenue is estimated to fall by 0.8%.
WWW.IBISWORLD.CO.UK
Industry Performance
EU referendum Concerns surrounding future
effects employment and economic conditions
since the EU referendum have led to
consumers becoming more cautious
with their spending. Rising inflationary
pressures have also weighed on the
real value of disposable income levels.
These factors are expected to have been
responsible for the decline in industry
revenue in 2017-18, and are expected
to continue weighing on revenue in
the current year. Weak confidence
and relatively constrained household
disposable incomes have led to
consumers purchasing fewer
instruments or buying cheaper options.
A growing number of consumers are
also expected to have opted to buy
instruments from the industry’s
primary source of competition, online-
only retailers, further intensifying
competitive threats. Demand from
hobbyists is expected to be particularly
constrained by weak consumer
confidence, but demand from those that
require musical instruments for their
career, such as musicians, is expected to
be more stable. Musicians are also more
likely to have established relationships
with their retailers, making them less
likely to purchase from competitors.
Additionally, demand for repair and
Online orchestration The industry has traditionally been
composed of retailers that cater to a
specific product area. However, the
growing penetration of smart phones
and online shopping has led to the
emergence of a new type of competition.
Online-only retailers face lower
overhead costs than bricks-and-mortar
stores, which means they are able to
offer lower prices. Intense competition
has forced a number of operators to exit
the industry, while others have altered
their business models and moved their
operations online in attempt to benefit
from lower costs and a wider consumer
Musical Instrument Retailers in the UKMarch 2019   6
The
weak pound has
increased purchase
costs, as the majority of
products sold are imported
maintenance services is expected to have
increased over recent years, with more
consumers opting to have instruments
repaired rather than replaced.
The majority of products sold by the
industry are imported, so the weakness
of the pound since the EU referendum
has increased purchase costs. Large
external competitors, such as online-
only retailers, have kept prices low in
an effort win market share from bricks-
and-mortar stores. A number of
operators that operate solely through
physical establishments are expected
to have absorbed cost increases to the
detriment of profit margins. Companies
that have already slim margins may
have been forced to pass on cost
increases to consumers. Retailers
that operate through physical
establishments while also having
online operations may be better able
to absorb cost increases due to their
already relatively low cost-base.
base. The number of enterprises
operating in the industry is expected to
decline at a compound annual rate of
0.1% over the five years through 2018-
19. In response to increased price-based
competition, industry retailers have
aimed to differentiate their services
through entering more niche markets,
such as repair and maintenance
services, and by placing greater
emphasis on customer service. This
has allowed the number of people
employed in the industry to increase
at a compound annual rate of 0.8%
over the five years through 2018-19.
WWW.IBISWORLD.CO.UK
Industry Performance
Online orchestration As consumers have become
continued more technologically aware, mobile
commerce has grown rapidly. The ease of
m-commerce encourages consumers to be
more impulsive in their purchases, which
diverts demand from bricks-and-mortar
School of rock One key market for musical instrument
retailers is school children. The spending
habits of musical instrument buyers are
linked to the changing musical tastes of
the population and the evolution of the
school curriculum. Demand is also
determined by the importance parents
place on their children learning a musical
instrument. In January 2015 the UK
government announced additional
funding for music and arts education
programmes. Part of this announcement
included an increase of £18 million to the
Arts Council to deliver music education.
This increase brought the total amount
available to music education hubs to £75
Traditional operations The Musical Instrument Retailers
transposed industry is in the process of changing.
The penetration and sophistication of
electronic instruments has allowed
individuals to purchase advanced
studio equipment and music technology
relatively inexpensively. The greater
availability and price competitiveness
of musical instrument digital interface
(MIDI) controllers and digital
instruments, such as electronic
Highly strung One area in which traditional bricks-
and-mortar stores have performed
relatively well is in the sale of high-
value antique instruments, particularly
stringed instruments. This is because
stringed orchestral instruments are
expensive, so dealers do not have to
sell very many to generate a high level
of revenue. Additionally, antiques are
Musical Instrument Retailers in the UKMarch 2019   7
stores to online retailers. Many larger
companies in the industry have adapted
to this by offering their stock online. Some
instrument retailers have been able to
leverage their experience and knowledge
of the market to become successful online.
Anincrease in music
tuition has boosted
household purchases
of musical instruments
million per year between 2015-16 and
2018-19. However, the proportion of this
funding allocated to the purchase of new
instruments is expected to be relatively
low. Despite this, an increase in music
tuition is expected to have the secondary
effect of increasing household purchases
of musical instruments.
drums, have also spurred demand for
new instruments. Musical instruments
are also increasingly being used in
conjunction with software, which makes
purchasing online even more convenient
because the software can be downloaded
immediately. Retailers that have been
able to keep up with digital enhancements
are faring better. Those that can afford to
offer multichannel retailing options also
tend do better than traditional retailers.
often considered to be a good
alternative investment because they
generally appreciate in value and are
relatively immune to the effects of
inflation. Products in this category
performed relatively well over the
beginning of the period, when the
effects of the economic downturn
were still being felt.
WWW.IBISWORLD.CO.UK
Industry Performance
Industry Over the five years through 2023-24,
industry revenue is expected to increase at
Outlook a compound annual rate of 0.7%, to reach
£456.7 million. Online-only retailers are
likely to remain a prominent competitive
threat to musical instrument retailers.
The growing popularity of online shopping
and increasing total online expenditure is
expected to drive external competition
over the coming years, although it is also
likely to present opportunities for industry
retailers to expand their online operations.
Nonetheless, the proliferation of cheaper
products and price reductions from larger
players is expected to weigh on profit
margins over the period. Constrained
disposable incomes at the beginning of the
period are also likely to limit expenditure
on high-margin products. The United
Kingdom leaving the European Union is
Ringing the changes Increasing IT adoption, digital
proficiency and online shopping is likely
to intensify competitive pressures from
online-only retailers over the next five
years. IBISWorld projects total online
expenditure to increase at a compound
annual rate of 10% over the five years
through 2023-24; strong growth in online
expenditure is likely to pose both an
opportunity and a threat to retailers. With
online shopping becoming an increasingly
popular avenue for consumers to make
their purchases, UK high street sales have
been faltering. In comparison, online-only
retailers are expected to flourish and the
influx of new players will intensify
Striking a chord Despite strong external competition,
there are several advantages that bricks-
and-mortar stores can offer musicians
over online-only retailers. For example,
consumers shopping at bricks-and-mortar
stores have the opportunity to test an
instrument and determine if it meets their
needs before making a purchase. It is also
easier for staff to give personalised advice
to customers. Furthermore, physical
stores are usually the most convenient
Musical Instrument Retailers in the UKMarch 2019   8
Industry revenue
8
6
4
% change
2
0
-2
-4
Year 11 13 15 17 19 21 23 25
SOURCE: WWW.IBISWORLD.CO.UK
likely to severely affect the market for
second-hand instruments, with potential
trading restrictions particularly affecting
private individuals.
competition and further drive down
prices. Many traditional retailers are likely
to find it more difficult to match the prices
of online traders and will need to focus on
gaining customers’ loyalty by promoting
the benefits of expert advice and hands-
on retailing. However, retailers are also
likely to face more showrooming, a
practice in which consumers visit bricks-
and-mortar stores to decide which
product to purchase and then look online
for lower prices. Consumers will also
continue using online auction sites to
purchase used equipment cheaply,
further weighing on the performance of
traditional bricks-and-mortar retailers.
way for musicians to purchase products
quickly. Items such as replacement
strings, reeds and drumsticks are often
purchased in a hurry. As a result, ordering
online can be impractical due to delivery
waiting hours. Another important area
that bricks-and-mortar stores can excel
in is repair services. Instrument repair
or modification services are expected to
support a steady stream of custom over
the five years through 2023-24.
WWW.IBISWORLD.CO.UK
Industry Performance
Exit from the The UK’s exit from the European Union
European Union is expected to affect musical instrument
retailers, especially in regards to sales of
second-hand instruments. The majority
of new instruments are imported from
countries outside the European Union
so are unlikely to be greatly affected
by the UK’s exit from the European
single market. However, the market
for second-hand instruments is likely
to be more greatly affected, as retailers
and individuals import a large number
of second-hand instruments from the
European Union. Following the UK’s
exit from the European Union, trade
barriers will likely make it more
expensive for retailers to import
second-hand instruments from
European countries.
Banding together Industry consolidation is anticipated to
continue over the next five years through
2023-24, and enterprise numbers are
forecast to decline at a compound
annual rate of 0.1%. Meanwhile, profit
margins are anticipated to slim over
the period. The proliferation of cheaper
products online and price reductions
from larger players are expected to
squeeze margins even more in the
future. The cost of doing business in
such a competitive environment is high,
and some smaller players are likely to
Price-fixing On 17 April 2018, the Competition
and Markets Authority (CMA) launched
an investigation on the allegations
against the use of aggressive price-
fixing strategies among a number
of leading musical instrument
manufacturers. The allegations are
based on the assumptions that these
instrument manufacturers have used
pricing algorithms as a method of
offering different prices in different
markets. The list included Fender,
Yamaha, Roland and Casio. Although
the CMA is in the early-stages of the
investigation, if details emerge that
Musical Instrument Retailers in the UKMarch 2019   9
Trade barriers are also expected to
make it harder for private individuals to
trade second-hand instruments with
people outside the United Kingdom.
European single market rules have enabled
private individuals to easily trade second-
hand instruments between EU countries.
However, added complexity after the
United Kingdom leaves the European
Union is expected to result in increased
difficulty when trading across European
borders. This could enable musical
instrument retailers to gain more of the
second-hand instrument market, as they
are likely to be better equipped to navigate
trade legislation. However, the degree to
which this occurs is highly uncertain until
the UK’s future trading relationship with
European Union is finalised.
fall by the wayside. However,
technological advances in audio
recording mean demand for recording
equipment will continue to grow.
Retailers that offer a superior service
and in-depth advice will be partly
insulated from competing cheaper
online sellers that cannot offer the same
level of customer service. The number
of people employed by the industry is
expected to increase over the five years
through 2018-19 as businesses increase
their focus on customer service.
Price-fixing
allegations
could expose the industry
to increased regulation
instrument manufacturers are
infringing competition law, this is likely
to significantly affect the industry. This
would likely alter the pricing structure
of industry retailers depending on if
they sourced their goods from those
manufacturers, and would expose
the industry to increased regulatory
supervision over the coming period.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   10

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
WWW.IBISWORLD.CO.UK
Industry Performance
Industry Life Cycle The Musical Instrument Retailers
industry is in the mature stage of its life
cycle. Industry value added, a measure
Thisindustry of the industry’s contribution to the
is M
 ature wider economy, is expected to decline
at a compound annual rate of 0.1%
over the decade through 2023-24. In
comparison, UK GDP is expected to
increase at a compound annual rate of
1.7% over the same period. Although this
indicates the industry is declining, the
industry exhibits a number of traits
characteristic of a mature industry.
Consumers who would have once
considered taking up a musical
instrument are being offered a greater
array of options when it comes to
spending their leisure time. Competition
from alternative outlets is a strong
contributing factor to the industry’s
flagging fortunes. Online retailers are
undercutting traditional retailers’ prices
Musical Instrument Retailers in the UKMarch 2019   11
and many industry operators are not able
to compete on this basis. Operators must
show potential customers the benefits of
personalised advice and services, or seek
niches in the market. Alternatively, those
that can offer multichannel services may
survive. Some potential for growth does
exist in the industry. Home recording
equipment is a rapidly growing product
category as this type of technology
becomes more advanced, cheaper and
easier to use, and is being increasingly
marketed at hobbyists and amateur
musicians. Retailers able to market these
products are likely to succeed. Retailers
will find it increasingly difficult to attract
new customers to traditional orchestral
instruments like violins, oboes and
trombones as these product types fall
out of favour with the overall market
and businesses concentrate on a small
number of specialist retail areas.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   12

Products and Markets

Supply Chain  |   Products and Services  |   Demand Determinants
Major Markets  |   International Trade  |   Business Locations

Supply Chain KEY BUYING INDUSTRIES

J59.200 Sound Recording & Music Publishing in the UK
Audio recording studios purchase specialist recording equipment from music retailers, including
computers and peripherals, studio outboard gear, musical instruments and amplifiers.
P85.200 Primary Education in the UK
Primary schools purchase musical instruments, sheet music and related products to provide
students with as part of their music curriculum.
P85.310 General Secondary Education in the UK
Secondary schools purchase musical instruments, sheet music and related products to provide
students with as part of music tuition.
Z99 Consumers in the UK
Consumers, particularly amateur musicians and the parents of children taking up a musical
instrument, purchase musical instruments, sheet music and accessories from retailers.

KEY SELLING INDUSTRIES

C26.400 Consumer Electronics Manufacturing in the UK
Manufacturers of amplifiers, public address systems and specialised audio recording
equipment are key suppliers to this industry.
C32.200 Musical Instrument Manufacturing in the UK
Manufacturers of musical instruments, including string, woodwind, brass, percussion and
electronic instruments supply this industry.

Products and Services Audio recording equipment
Products in this category include tape
machines, audio processing devices, and
computer hardware and software for audio
recording. Once solely used by specialist
recording studios, this equipment is
becoming more advanced, cheaper and
easier to use, and therefore increasingly
marketed to everyday consumers. Most
musical instrument retailers stock some
kind of audio recording equipment, which
can range from basic handheld recording
devices to dedicated digital recording
workstations and specialised processing
components like preamplifiers, effects
units and compressors. Demand for these
products is being driven by the expanding
home recording market, which is making
up for lagging demand from the studio
recording industry. Revenue generated
from this segment is estimated to have
increased over the period, and is
anticipated to account for 16% of
industry revenue in 2018-19.
Amplification and DJ equipment
Amplification and DJ equipment is
another significant product segment. It
includes dedicated guitar and bass guitar
amplifiers, speaker cabinets, public
address speakers and related equipment,
turntables, mixers and other equipment
designed for DJs. DJ equipment has been
the fastest growing product type in this
category, since the professional and
amateur DJ market has embraced digital
media. Revenue derived from this segment
is anticipated to reach 14.9% in 2018-19.
Guitars and ukuleles
Despite slow growth in guitar sales in
recent years, guitars are still the most
popular musical instrument among
Britons. They can be bought for as little
as £30, but high-end models can cost
over £3,000. Affordable guitars are
mass-produced offshore in places like
Korea, Mexico and China. More
expensive models tend to be produced
locally, or in the United States, Canada
or Continental Europe.
In recent years some forms of popular
music that traditionally feature guitars
have fallen out of favour with audiences.
However, growing popularity for country
music is expected to have driven sales of
acoustic guitars over the past five years.
In addition, several prominent female
WWW.IBISWORLD.CO.UK
Products and Markets
Products and Services guitarists, such as Taylor Swift, Haim,
continued Courtney Barnett and St Vincent have
driven popularity among women. The
product segment has a large resale
market that operates both through
auction platforms such as eBay, which
are excluded from this industry, and
music retailers. In addition, this product
category has been supported by fast
growth in ukulele sales over the past five
years. However, ukuleles still account for
a very small share of revenue from this
product category. Nonetheless, overall
revenue derived from this segment is
estimated to have remained relatively
steady over the five years through
2018-19, and is estimated to account for
14.3% of industry revenue in 2018-19.
Keyboards, pianos and organs
Keyboards, pianos and organs are
estimated to generate 13.4% of industry
revenue. The majority of this comes
from electric pianos and synthesisers.
Acoustic pianos represent a significant
cost for most consumers, as they start from
approximately £2,000 and can often cost
more than £10,000. The percentage of
revenue contributed by acoustic pianos
has been falling for some time because
they are so expensive and relatively
inexpensive substitutes are easily available.
Digital pianos, electric pianos, synthesisers
and MIDI keyboards make up an
Products and services segmentation (2018-19)
5.9%
Brass and woodwind
8.2%
Percussion instruments
instruments
12.5%
Orchestral stringed instruments
13.4%
Keyboards, pianos and organs
14.3%
Total £440.6m Guitars and ukuleles
Musical Instrument Retailers in the UKMarch 2019   13
expanding share of this product segment.
This reflects changing trends in musicians’
preferences and in popular music in
general. The proportion of revenue derived
from keyboards, pianos and organs is
anticipated to have marginally increased
over the five-year period.
Orchestral stringed instruments
Orchestral stringed instruments, such
as violins, violas, cellos and double
basses, are estimated to contribute 12.5%
of industry revenue. Cheaper items in
this product segment are generating a
declining proportion of revenue due to
the fact that fewer British children are
taking up instruments and only a small
share of those are favouring traditional
instruments like the violin over
instruments commonly used in popular
music. However, this product segment
generates a significant proportion of
revenue because orchestral-grade
instruments, many of which are
considered antiques and works of art in
their own right, sell for a large amount
of money. For example, some violins sell
for more than £1 million. The Lady Blunt
Stradivarius violin dating from 1721 sold
for £9.8 million in 2011. Although this
violin was sold through an auction, these
high prices demonstrate that businesses
can generate large amounts of revenue
even if their sales volumes are low.
16%
Audio recording equipment
14.9%
Amplification and DJ equipment
14.8%
Other products and services
SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK
Products and Markets
Products and Services Percussion instruments
continued Percussion instruments account for an
estimated 8.2% of industry revenue. The
majority of this segment’s revenue comes
from selling drum kits. Other products
included in the segment are shakers,
gongs, zithers, triangles and orchestral
percussion instruments such as timpani
and marimba. The proportion of revenue
derived from percussion instruments is
estimated to have marginally increased
over the past five years.
Brass and woodwind instruments
Traditional brass and woodwind
instruments like trumpets, trombones,
oboes and clarinets are declining as a
share of sales, with consumer preferences
trending more towards other industry
products over recent years. As a result,
revenue derived from this segment is
also expected to have decreased, and is
expected to reach 5.9% of industry
revenue in 2018-19.
Other products and services
An estimated 8.5% of industry revenue
comes from expendables and accessories,
including strings, rosin, tuners, music
stands, straps, reeds, cables and plectra.
This segment’s share of industry revenue
has increased over recent years. Further
revenue comes from selling sheet music
and other products. Sheet music has
Demand Musical instruments are considered to
Determinants be discretionary purchases, meaning
that overall demand for industry
products is sensitive to changes in
consumer confidence and household
disposable income. Growth in income
enables consumers to purchase a
broader range of goods, including rare
instruments or ones of higher quality,
and allows them to replace existing
musical instruments. Furthermore,
demand for musical instruments is
responsive to price changes.
The amount of available leisure
Musical Instrument Retailers in the UKMarch 2019   14
become a less lucrative product however,
because musicians are increasingly
accessing sheet music cheaply or for free
via the internet.
Some musical instrument retailers also
offer repair and maintenance services. The
range and variety of instruments that can
be repaired may differ among industry
retailers. For example, some may only
specialise in the repair and maintenance
of guitars, and can provide services
ranging from guitar setups, fretwork and
bracing modification, to refinishing and
neck resets. In order to retain custom
in an increasingly competitive retail
environment, more retailers have aimed to
differentiate themselves through offering
niche services such as instrument repairs.
Some retailers have instead decided to
operate solely as instrument repair firms.
Nonetheless, repair and maintenance
services have served as an increasingly
attractive avenue for industry retailers
to advance customer loyalty and repeat
purchases. However, in order to carry out a
comprehensive repair service, retailers are
required to have experienced employees
with a high degree of technical competency
in the functioning and components of
the products offered. Revenue generated
from repair and maintenance services is
estimated to have increased over recent
years, accounting for 6.3% of industry
revenue in 2018-19.
time also affects demand for musical
instruments, as it determines the amount
of time consumers have to spend on their
hobbies. In turn, consumer interest in
sports and other leisure activities
determines demand. The relative cost,
attractiveness and availability of
competing leisure activities can influence
a consumers decision to play a musical
instrument as a hobby. Meanwhile,
demand can be positively affected by
technological advances in recording
equipment, sound reinforcement
equipment and other musical electronics.
WWW.IBISWORLD.CO.UK
Products and Markets
Demand Uptake of a musical instrument
Determinants usually happens at a young age. As a
result, growth in the population aged
continued
between 11 and 19 benefits sales. Children
exposed to music at a young age are more
Major Markets Hobbyists and students
Hobbyists are the largest market for the
industry and are estimated to generate
60.7% of revenue in 2018-19. Students,
parents of students, recreational players
and aspiring professionals are included
in this category. Many children learn
musical instruments either as part of
their school curriculum or as an
extracurricular activity and they often
then develop into lifelong players and
consumers of the industry’s products.
Long-term amateur players are more
likely to own multiple instruments or
more expensive instruments than
beginners. It is estimated that half of
all households own at least one musical
instrument. An emerging market for
industry retailers is the retired. Those
in the baby-boomer age group who are
approaching retirement age are buying
more instruments as they develop new
hobbies. Demand from the hobbyists
market is expected to increase in the
current year.
Major market segmentation (2018-19)
17.9%
Education sector
21.4%
Professionals
Total £440.6m
Musical Instrument Retailers in the UKMarch 2019   15
likely to continue playing into adulthood,
providing a long-term opportunity to
sustain demand. The population aged
between 11 and 19 is expected to increase
steadily over the next five years.
Professionals
Professional and semi-professional
musicians are estimated to account for
approximately 21.4% of the market. This
segment includes band and orchestra
members, soloists and other music
professionals. This segment also includes
businesses that require the industry’s
products, such as recording studios.
Professionals demand the highest quality
products, upgrade their equipment
regularly and are more likely to own more
than one instrument. They are also less
sensitive to price than other consumer
groups because owning a quality musical
instrument is central to their livelihood.
Demand from this category is expected
to remain strong during 2018-19.
Education sector
The education sector makes up
approximately 17.9% of the market for
musical instruments at the retail level.
Schools and private music tuition
providers are included in this market
60.7%
Hobbyists and students
SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK
Products and Markets
Major Markets segment. Schools often purchase
continued instruments and other industry
products for students to use as part of
their curriculum or in extracurricular
activities, such as orchestra or choir
performances. In November 2016 the
International Trade The Musical Instrument Retailers
industry sells primarily to local
residents. The majority of products
sold are manufactured outside the
United Kingdom, but the international
trade involved in getting these items
to market is accounted for at the
Musical Instrument Retailers in the UKMarch 2019   16
UK government announced an
additional £225 million funding for
music education over the four years
through 2020. Consequently, demand
from the educational sector is expected
to increase in the current year.
manufacturing level. Musical
instrument retailers have few
significant operations outside the
United Kingdom, although Gear4music
sells to European customers and
agents operate on behalf of J & A
Beare Ltd in South Korea.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   17

Products and Markets

Business Locations 2018-19

SCOTLAND
6.4

NORTH
EAST
3.2
NORTHERN NORTH
IRELAND WEST
3.4 11.3

YORKSHIRE
8.8

EAST
MIDLANDS
6.9
WEST
MIDLANDS EAST OF
9.0 ENGLAND
9.2
WALES
4.0
LONDON
14.1
SOUTH
SOUTH EAST
Establishments (%) WEST 14.9
Cold Zone (<10) 8.8

<25
<50
Hot Zone (<100)
Not applicable

SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   18

Products and Markets

Business Locations The location of establishments in

Distribution of establishments vs. population
the Musical Instrument Retailers
industry is dispersed on the basis of
20
population, disposable income and
consumer demand. Generally, the
15
more residents in a particular area,

Percentage
the stronger the demand for musical
instruments and supplies. 10

The South East and London 5

The South East accounts for
the largest share of industry 0
establishments, estimated at 14.9%,

East Midlands
East of England
London
North East
North West
N. Ireland
Scotland
South East
South West
Wales
West Midlands
Yorkshire
and also has a high population
density, accounting for 13.8% of the
UK population. This region is just
outside of London so retailers have
Establishments
good access to consumers that earn
Population
higher wages but are paying less rent SOURCE: WWW.IBISWORLD.CO.UK

or other overheads. London is also a

significant region for the industry
due to its relatively affluent
population, as well as it being a
major metropolitan area. London
is a popular destination for those
looking to purchase musical
instruments, and it has a higher
concentration of professional and
aspiring musicians than other parts
of the country. London is home to
14.1% of industry establishments.
Other regions
The North West region of England, which
includes major cities such as Manchester
and Liverpool, accounts for 11.3% of
industry establishments and is home to
11% of the UK population. At the other
end of the scale, the North East and
Northern Ireland have the lowest number
of industry establishments due to lower
population numbers and lower average
income, particularly in the North East.
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 industry
Concentration is highly fragmented, as demonstrated by
the large proportion of small players. The
industry traditionally displays a low level
Level
of market concentration. However, in the
Concentration in this current year, concentration is expected to
industry is M
 edium transition from low to moderate, largely
due to a jump in J & A Beare Ltd’s revenue
in 2017-18. The four largest companies
are estimated to contribute 40.3% of
total industry revenue in 2018-19. Most
enterprises in the industry operate
through just one establishment. Some
consolidation has taken place over the
past five years but there is still no
dominant nationwide chain of musical
instrument stores. This can partly be
attributed to consumer preference for
local music shops that can deliver
personalised and knowledgeable services.
Customer loyalty can be an important
factor in the performance of musical
instrument retailers because many have
been operating in the same place for
Key Success Factors Attractive product presentation
Attractive promotions and displays
encourage browsing customers to
IBISWorld identifies buy smaller items on impulse.
250 Key Success
Factors for a Having a good reputation
business. The most A reputation for stocking quality
products and offering expert
important for this
advice can contribute greatly to
industry are: an industry retailer’s success.
Provision of goods currently
favoured by the market
Supplying musical instrument
brands and products that consumers
Cost Structure Profit
Benchmarks Operators in the Musical Instrument
Retailers industry have faced intense
external competition over the past
five years. One of the major threats to
traditional industry retailers has been
the prevalence of online shopping. Online
retailers are not subject to the higher
Musical Instrument Retailers in the UKMarch 2019   19
Enterprises by employment size, 2018
Employees Share of total (%)
0-4 71.8
5-9 18.0
10-19 6.7
20-49 2.5
50-99 0.5
100-249 0.3
250+ 0.2
SOURCE: OFFICE FOR NATIONAL STATISTICS
decades. Tight margins mean few
operators are absorbing their competitors
and larger firms have been reluctant to
invest in developing bigger chains.
The fragmented nature of the industry
can be demonstrated through the size of
employment across industry enterprises.
According to statistics from the Office for
National Statistics, approximately 89.8%
of industry enterprises employ fewer
than 10 people.
demand benefits retailers because
customers often seek out a
specific product.
Proximity to key markets
Although customers often shop around
for musical instruments, outlets need
to be located in high-traffic and high-
visibility areas close to customers.
Experienced work force
Music instrument retailers need capable
and knowledgeable staff to provide
customers with detailed and specialised
information about the products on sale.
operating costs of bricks-and-mortar
retailers, so can often charge lower prices.
Since the referendum result, the weak
pound and increased consumer spending
pressures are expected to have weighed
on industry margins over recent years.
Larger players have been in a better
position, however, to respond to the
WWW.IBISWORLD.CO.UK
Competitive Landscape
Cost Structure changing trading landscape and higher
Benchmarks penetration by external players. In the
current year, average industry profit
continued
margins are estimated at 3.7%.
Purchases
As is characteristic of a retail industry,
the major cost faced by operators is
purchases, which are estimated to absorb
72.5% of revenue. The cost of purchases
has decreased over the past five years as
the range of imported merchandise has
widened and become less expensive.
Cheaper merchandise imported from
countries with low labour costs, like
South Korea, China, Thailand and
Vietnam, makes up a significant
proportion of purchases. Low-cost
musical instrument producers are
beginning to manufacture a wider range
of products. However, the sharp fall in
the value of the pound following the EU
referendum result is expected to have
resulted in purchase costs increasing
over recent years. Increased purchase
costs are estimated to have affected
smaller operators more than their larger
Sector vs. Industry Costs
Average Costs of
all Industries in
sector (2018-19)
100
5.0
2.3
1.6 6.3
80
8.7
Percentage of revenue
60
40
74.0
20
0
Musical Instrument Retailers in the UKMarch 2019   20
competitors, which are more likely to
have long-term purchasing contracts with
suppliers or be able to utilise currency-
hedging strategies to defend themselves
from fluctuations in the pound.
Wages
Musical instrument retailing is a labour-
intensive industry that often relies on
one-on-one selling techniques. Labour
tasks include general shopkeeping
duties and answering customer queries.
Staff need some specialised knowledge,
especially when selling audio recording
and computing products, where
customers require technical expertise.
Operators offering repair and
maintenance services also require staff
competent in the functions and dynamics
of the products offered in order to carry
out a comprehensive repair on goods.
Industry operators often seek out
employees who are musicians themselves.
Wages have fallen as a percentage of
revenue over the past five years despite
employment increasing, which is
expected to have been due to industry
Industry Costs
(2018-19)
3.7 n Profit
1.1 1.2 3.9 1.0 n Rent
1.5 0.5 n Utilities
1.0 15.7 n Depreciation
n Other
n Marketing
n Wages
n Purchases
72.5
SOURCE: WWW.IBISWORLD.CO.UK
WWW.IBISWORLD.CO.UK
Competitive Landscape
Cost Structure retailers placing greater emphasis on
Benchmarks increasing the number of employees per
establishment to better customer service.
continued
In 2018-19 wages are expected to account
for 15.7% of industry revenue.
Rent, depreciation and utilities
Rent is estimated to account for 3.9% of
industry revenue in 2018-19 as retailers
rely on leases. To keep costs low, industry
operators seek out cheaper properties,
such as stores just outside shopping
centres rather than inside. Depreciation
costs are estimated at just 1.2% of
industry revenue. Retailers lease stores
instead of owning them, which keeps
Basis of Competition Internal competition
Musical instrument retailers compete
with each other on the basis of price,
Level & Trend product range, customer service,
 ompetition
C in location and store promotions.
this industry is Consumers are relatively price
Mediumand the conscious, especially when purchasing
more expensive products, and will
trend is I ncreasing
compare prices in different shops to
find the lowest price possible. Given
the high cost of some products,
operators aim to ensure that prices are
in line with industry averages and that
any reductions in purchase prices from
suppliers are passed on to consumers.
They also aim to offer a high standard of
customer service and expert experience
to recommend and demonstrate
products to customers, which
consumers would not get if they
purchased online.
To reach most of the consumer
market, operators compete on the
basis of the brand, quality and range of
products offered. Players try to appeal
to consumers who are in the market for
high-end items such as high specification
musical instruments, but they also want
to attract consumers looking to purchase
smaller accessories, such as replacement
strings, reeds and parts.
Musical Instrument Retailers in the UKMarch 2019   21
costs low. Depreciable assets include
computer inventory systems, cash
registers and point-of-sale systems.
Costs tend to differ significantly between
operators, depending on their size and the
extent of their capital investment. Utilities
are also considered minor to the industry
and absorb an estimated 1% of revenue.
Other costs
Other costs include insurance, security
and marketing. Marketing costs make up
an estimated 1.5% of industry revenue.
Most of these costs remain constant
but marketing costs are increasing as
retailers compete with external operators.
Customer service is important and
retail staff must be well versed in the
technical functions of the products
offered. Furthermore, it is important
that stores offer repair services. A good
customer service experience helps to
ensure return business and offers an
advantage over online-only retailers.
Location and store promotions also
affect internal competition. A store’s
location influences the number and
type of potential consumers it can reach.
Musical instrument retailers often aim
to situate their stores near town centres,
close to schools and universities, and
areas with a high level of footfall such
as shopping districts. Retailers also
balance these benefits with rental
overheads and space requirements.
External competition
Online-only stores have emerged as a
serious threat to musical instrument
retailers. Consumers may be tempted
to utilize bricks-and-mortar stores to try
out instruments and equipment before
shopping around online to get the best
price. Furthermore, online retailers
compete with online-only retailers such
as Amazon that offer a wide selection
of products, low prices and the added
WWW.IBISWORLD.CO.UK
Competitive Landscape
Basis of Competition convenience of shopping from home.
continued Due to the large amount of buying
power and relatively low overheads
compared with bricks-and-mortar
stores, online-only retailers can often
Barriers to Entry The Musical Instrument Retailers
industry exhibits moderate barriers
Level & Trend to entry, which is common in the
retail sector. The major expense
 arriers to Entry
B new entrants face is acquiring stock
in this industry are and retail space near consumers.
Mediumand S  teady Established players in the industry have
access to economies of scale, meaning
they can offer large discounts. They
typically have strong relationships with
their suppliers, which makes acquiring
stock easier. Employees must be
adequately trained because good
knowledge of the product is necessary
when selling to customers.
Once in the industry, new entrants
face a number of barriers to success.
Retailers have established relationships
with customers, particularly those in the
music industry, and new entrants are
likely to struggle to attract customers
away from established operators.
Industry Globalisation measures the extent of
Globalisation foreign activity by domestic operators
in the industry and the presence of
Level & Trend foreign operators in the domestic
market. The majority of establishments
 lobalisation
G in this in the Musical Instruments Retailers
industry is L owand industry are UK-owned companies.
the trend is S  teady Similarly, the share of UK companies
Musical Instrument Retailers in the UKMarch 2019   22
sell products at cheaper prices. The
industry also competes with online
auction websites such as eBay that
sell a wide selection of second-hand
musical instruments and equipment.
Barriers to Entry checklist
Competition Medium
Concentration Medium
Life Cycle Stage Mature
Capital Intensity Low
Technology Change Medium
Regulation and Policy Light
Industry Assistance Low
SOURCE: WWW.IBISWORLD.CO.UK
Prospective entrants will have to
dedicate a large share of their budget
to advertising and marketing to become
better known. However, new entrants
may work in niche markets and offer a
particular product type, especially at the
higher end of the market. Competition
is high for more affordable instruments
and existing, larger retailers will find it
easier to price out smaller operators.
that operate globally is small. although
Gear4music has operations in Europe.
However, the manufacturing process
for musical instruments is highly
globalised. The final stages of the
manufacturing process tend to take
place in the United States, Asia or
mainland Europe.
WWW.IBISWORLD.CO.UK
Major Companies
J & A Beare Ltd | Gear4music (Holdings) plc
S&T Audio Ltd | Dawsons Music Ltd | Other Companies
Major Players Dawsons Music Ltd 5.2%
Gear4music (Holdings) plc 12.7%
(Market Share)
S&T Audio Ltd 9.6%
J & A Beare Ltd 12.8%
Player Performance Founded in 1892, J & A Beare Ltd
merged with Morris and Smith in 1998.
The company is an upper-end retailer of
J & A Beare Ltd high-end violins, violas and cellos, as
Market Share: 12.8% well as a selection of bows ranging in
price from £2,000 upwards. J & A Beare
also restores violins for sale and, on rare
occasions, manufactures violins in-house
at its Marylebone shop. In addition to
domestic operations, the company also
operates in Seoul, South Korea, through
an agent. Apart from instruments, the
company also sells a selection of bows
and related equipment. J & A Beare’s
product portfolio is heavily weighted
towards antique stringed instruments.
Like most high-quality antiques, these
instruments tend to appreciate in value.
They are often purchased on behalf of a
particular performer by an orchestra,
musical institution, or by a single or
group of investors as a form of
alternative investment.
Due to the high level of skill required
to deal in this area of the industry,
wages are comparatively high. Unlike
many operators in this sector, J & A
J & A Beare Ltd - financial performance
Revenue
Year* (£ million)
2013-14 23.4
2014-15 19.5
2015-16 19.3
2016-17 27.9
2017-18 43.5
2018-19** 56.3
*Year end March **Estimate
Musical Instrument Retailers in the UKMarch 2019   23
59.7%
Other
SOURCE: WWW.IBISWORLD.CO.UK
Beare’s key competitors are not online
retailers but auction houses and global
specialist violin stores.
Financial performance
J & A Beare Ltd’s revenue is expected to
increase at a compound annual rate of
19.2% over the five years through 2018-
19, reaching £56.3 million. Due to the
high value of the company’s goods, J &
A Beare has generated strong revenue
growth over the period, especially relative
to the wider industry. Nonetheless, its
profit margin has remained slim. The
company has particularly reported
strong revenue performance over recent
years, despite high uncertainty and a
competitive retail environment. Revenue
surged over 2016-17 and 2017-18 due
to the rapid depreciation of the pound
increasing the value of inventory and
increasing export sales. The weak
pound is therefore expected to continue
supporting revenue growth over 2018-19.
To some extent, strong revenue growth
has supported company operating profit
over recent years.
Operating Profit
(% change) (£ million) (% change)
N/C 1.1 N/C
-16.7 0.4 -63.6
-1.0 0.5 25.0
44.6 0.8 60.0
55.9 1.2 50.0
29.4 1.4 16.7
SOURCE: COMPANIES HOUSE AND IBISWORLD
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   24

Major Companies

Player Performance Gears4music is one of the largest

musical retailers in the United Kingdom. Gear4music (Holdings) plc -
Founded in 1995, the company offers a
Gear4music industry-related performance*
range of electric, acoustic and bass
(Holdings) plc guitars, percussion instruments and Revenue
Market Share: 12.7% recording equipment, alongside Year** (£ million) (% change)
traditional orchestral instruments, 2013-14 13.4 N/C
pianos, studio gear, home audio and 2014-15 18.7 39.6
DJ equipment. Although Gear4music 2015-16 26.0 39.0
conducts the majority of its business
2016-17 34.8 33.8
through its website, it also has a bricks-
and-mortar store in York. Previously 2017-18 44.3 27.3
known as Red Submarine Ltd, the 2018-19 55.9 26.2
company renamed itself Gear4music
Ltd in 2014-15 to match the name of its *Estimate **Year end February through 2017-18, year end March
thereafter
website. In June 2015, the group listed SOURCE: IBISWORLD
on the Alternative Investment Market
(AIM) of the London Stock Exchange,
becoming Gear4music (Holdings) plc. to increase at a compound annual rate
The company generates the majority of 33.1% to reach £55.9 million, far
of its revenue through its online store. exceeding expected revenue growth
The website stocks over 44,700 products in the wider industry. The company’s
from more than 790 manufacturers. The strong performance has been driven
company has significantly expanded its by rapidly increasing online sales. The
online presence over the past decade, and company has reported considerable
now delivers to more than 190 countries, growth in operating profit over the
with its website translated into a range period, with the jump in 2016-17
of languages. The company also operates accounting for the majority of this
distribution centres Sweden and increase. In the beginning of the
Germany, although the operations of period, investments in the company’s
these two distribution centres are infrastructure as well as associated
excluded from the UK industry. costs with its public offering weighed on
operating profit. Nonetheless, increased
Financial performance operating profit over the period has
Over the five-year period through been thanks to an increase in the
2018-19, Gear4music (Holdings) plc’s volume of sales of high-value products
industry-related revenue is anticipated and greater economies of scale.

Gear4music (Holdings) plc - financial performance

Revenue Operating Profit
Year* (£ million) (% change) (£ million)
2013-14 17.7 N/C 0.1
2014-15 24.2 36.7 0.2
2015-16 35.5 46.7 0.3
2016-17 56.1 58.0 2.6
2017-18 80.1 42.8 2.0
2018-19** 104.6 30.6 2.4

*Year end February through 2017-18, year end March thereafter **Estimate
SOURCE: COMPANIES HOUSE AND IBISWORLD
WWW.IBISWORLD.CO.UK
Major Companies
Player Performance S&T Audio Ltd, which was founded in
1999, operates musical instrument
shops under several different names.
S&T Audio Ltd One of these is Professional Music
Market Share: 9.6% Technology, a chain of 16 stores
Industry Brand Names throughout the United Kingdom,
Professional Music including outlets in Manchester,
Technology Liverpool and Birmingham. Professional
Dolphin Music Music Technology also operates an
online store. Based in Southend-on-
Sea, the company employs over 150
in-store experts who work alongside
administrative staff supporting the
company’s online endeavours and
its brick-and-mortar stores. To
complement Professional Music
Technology, S&T Audio Ltd also runs
an extensive online retailing operation
under the Dolphin Music brand.
S&T Audio Ltd - financial performance
Revenue
Year* (£ million)
2013-14 24.7
2014-15 26.3
2015-16 29.9
2016-17 33.8
2017-18 37.9
2018-19** 42.3
*Year end April **Estimate
Player Performance Dawsons Music began trading in
Warrington in 1898. The company is still
based in the North West and operates
Dawsons Music Ltd nine outlets in cities such as Manchester,
Market Share: 5.2% Liverpool, Leeds and Reading, as well as
an Education Department in Northern
Ireland. The company also retails online
and through a mail-order service.
Dawsons offers a full range of musical
instruments and related products, from
orchestral instruments, guitars, drums,
pianos and keyboards, to audio recording
Musical Instrument Retailers in the UKMarch 2019   25
Financial performance
Over the five years through 2018-19, S&T
Audio Ltd’s revenue is expected to grow at
a compound annual rate of 11.4% to £42.3
million. The company has performed
strongly in an environment where
many musical instrument retailers have
struggled. This is the result of a strong
expansionary strategy and competitively
priced products. A simultaneous expansion
in online retailing has spurred growth in
its online business, which has further
supported revenue growth. The group’s
products tend to be musical instruments
used in contemporary music, though it
does also hold a small amount of more
traditional stock. It often sells in large
volumes and caters extensively to beginner
and intermediate ability levels.
Operating Profit
(% change) (£ million) (% change)
N/C 1.4 N/C
6.5 1.3 -7.1
13.7 1.5 15.4
13.0 2.3 53.3
12.1 2.6 13.0
11.6 3.0 15.4
SOURCE: COMPANIES HOUSE AND IBISWORLD
equipment, computers, public address
systems and DJ equipment. On 13
December 2018, Dawsons was acquired
by private equity firm SKG Capital
Nominees through majority ownership.
Financial performance
Dawsons has recorded relatively strong
revenue growth over the past five-year
period. Increased investment into its
e-commerce technology and its growing
online retailing business has driven
WWW.IBISWORLD.CO.UK
Major Companies
Player Performance company growth over the period,
continued allowing it to capture greater market
share. Although the company has
remained profitable, margins remain
relatively slim, which the company
Dawsons Music Ltd - financial performance
Revenue
Year* (£ million)
2013-14 18.1
2014-15 18.9
2015-16 20.8
2016-17 21.0
2017-18** 22.1
2018-19** 23.0
*Year end May **Estimate
Other Companies Music in Print Ltd, which trades as
Musicroom.com, was established in
Player Performance 1995 by the Music Sales Group, a London-
based sheet music publisher that has been
in operation for over 200 years. Music in
Music in Print Ltd Print Ltd operates 11 bricks-and-mortar
Market Share: 2.8% stores under the Musicroom brand,
retailing an extensive range of sheet
music, tutor material, instruments and
related accessories. Musicroom stocks an
extensive range of educational resources
and child-size instruments. Music in
Print Ltd was quick to establish an online
presence. This has proven to be an
important driver of growth for the
company, as online retailing has boomed
and allowed the company to reach a wider
Musical Instrument Retailers in the UKMarch 2019   26
attributes to operating in a competitive
market. Dawsons Music Ltd’s revenue
is expected to increase at a compound
annual rate of 4.9% over the five years
through 2018-19, reaching £23 million.
Operating Profit
(% change) (£ million)
N/C 0.3
4.4 0.4
10.1 0.2
1.0 0.2
5.2 0.3
4.1 0.4
SOURCE: COMPANIES HOUSE AND IBISWORLD
customer base. Integration between its
online and traditional retailing operations
through services such as click and collect
has supported revenue for the majority
of the period. However, the company
has reported declining rates of revenue
growth over recent years, which it has
attributed to a competitive retail
environment. The company last reported
revenue of £11.9 million in December
2017. However, in January 2017, the
company filed for exemption accounts,
and has not released operating profit
figures from December 2015 onwards.
IBISWorld estimates the company to
generate revenue of £9.8 million for the
year through December 2018.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UKMarch 2019   27

Operating Conditions
Capital Intensity   |   Technology and Systems   |   Revenue Volatility
Regulation and Policy   |   Industry Assistance

Capital Intensity IBISWorld determines the capital

intensity of an industry by comparing Capital Intensity
Capital units per labour unit
labour costs with capital costs, using
Level
wages as a proxy for labour and 0.5
The levelof capital depreciation as a proxy for capital. Like
intensity is L ow most retail industries, musical instrument 0.4

retailing is more labour intensive than 0.3

capital intensive. Labour is necessary to
provide efficient customer service, 0.2

manage inventory levels, restock shelves, 0.1

arrange promotional activities and carry
out general administrative duties. Some 0.0
Economy Wholesale and Musical
operators offer music lessons and provide Retail Trade Instrument
Retailers
instrument repairs; tasks which require Dotted line shows a high level of capital intensity
the right qualifications and training. SOURCE: WWW.IBISWORLD.CO.UK

Wage costs are estimated to account for

15.7% of industry revenue in 2018-19 and
wages are typically higher than those
offered by online-only retailers. The low
operating costs of online retailers are the
key reasons as to why they can offer such
low prices. Depreciation, including on
items such as cash registers, scanners and
radio-frequency technology, is estimated
to account for 1.2% of industry revenue.
For every £1.00 spent on capital, industry
operators are expected to spend £13.05 on
wages, demonstrating a low level of capital
intensity. Capital expenses vary between
players but are generally low.
WWW.IBISWORLD.CO.UK
Operating Conditions
Technology and Technological advances in upstream
Systems manufacturing industries have resulted
in the introduction of higher quality
Level products that can be sold at lower
prices. For example, technological
The level
of advances in sound reinforcement
technology change systems, recording equipment and
is M
 edium musical instrument digital interface
products have occurred over the past
five years. Consumers can now
affordably create an in-home recording
studio, which has improved store sales.
Additional technological advances in
the industry include mobile payment
systems and automated inventory
equipment. The introduction of these
technologies has assisted retailers
with more efficient management and
distribution chains. Inventory can be
Revenue Volatility The Musical Instrument Retailers
industry exhibits a low level of revenue
volatility. Industry revenue is influenced
Level
by changes in consumer confidence and
The level of real household disposable income. As
volatility is L ow musical instruments are considered to
be discretionary purchases, demand
is price sensitive. When consumer
confidence is low and disposable
incomes are constrained, consumers
are less likely to purchase instruments,
Musical Instrument Retailers in the UKMarch 2019   28
kept low while popular products can
be ordered easily during peak periods.
Mobile payment applications and
systems have made the purchase
process faster and more efficient for
both retailers and consumers.
The industry is also increasingly
utilising online retailing, this is
particularly with regards to larger
musical instrument retailers. More
operators in the industry are expected
to invest in websites to sell their
products to a wider range of consumers.
Over the next five years more companies
in the industry are expected to invest
in websites or apps designed with
mobile devices in mind, with the aim
of benefiting from the rising popularity
of mobile-commerce.
or will opt for the less expensive
options. Revenue is also influenced by
competition. Due to online-only retailers
lacking physical establishments, their
overhead costs are typically lower
than those of bricks-and-mortar
establishments. Increased competition
and consumer spending pressures have
constrained industry revenue over
recent years, contributing to the low
level of revenue volatility.
WWW.IBISWORLD.CO.UK
Operating Conditions
Regulation and Policy The industry has a light and steady
level of regulation. Companies must
comply with the National Minimum
Wage Act and labour laws governing
matters such as working conditions.
Industry Assistance The industry does not receive any
industry assistance. However, the
industry benefits indirectly from
Level & Trend government policies to boost music
 he level of
T education. One example is the
Industry Assistance introduction of music education hubs by
is L owand the the Arts Council in 2012. Music education
hubs are intended to work with local
trend is S teady
authorities, schools, art organisations,
in addition to community and voluntary
Musical Instrument Retailers in the UKMarch 2019   29
Additionally, industry operators must
comply with the provisions of the 2010
Equality Act, which generally requires
that stores be accessible to customers
with disabilities.
organisations to improve access to music
education. In 2015 the government
announced more funding for music and
arts education programmes. Part of this
announcement included an increase of
£18 million to the Arts Council to deliver
music education. This increase brought
the total amount available to music
education hubs to £75 million per year
between 2015-16 and 2018-19.
WWW.IBISWORLD.CO.UK Musical Instrument Retailers in the UK March 2019   30

Key Statistics
Industry Data Industry
Revenue Value Added Wages Domestic
(£ million) (£ million) Establishments Enterprises Employment Exports Imports (£ million) Demand
2009-10 379.0 86.8 1,751 1,705 3,960 -- -- 73.0 N/A
2010-11 388.5 93.7 1,752 1,707 3,980 -- -- 76.0 N/A
2011-12 381.5 94.4 1,749 1,702 3,912 -- -- 75.2 N/A
2012-13 373.3 94.5 1,744 1,698 3,802 -- -- 73.4 N/A
2013-14 399.0 91.9 1,742 1,695 3,760 -- -- 70.7 N/A
2014-15 423.6 92.5 1,741 1,693 3,794 -- -- 70.3 N/A
2015-16 446.9 95.3 1,742 1,690 3,864 -- -- 71.7 N/A
2016-17 453.7 93.9 1,743 1,688 3,914 -- -- 70.6 N/A
2017-18 444.3 91.9 1,739 1,687 3,882 -- -- 69.3 N/A
2018-19 440.6 90.5 1,733 1,684 3,916 -- -- 69.0 N/A
2019-20 441.9 90.6 1,730 1,681 3,939 -- -- 69.3 N/A
2020-21 444.1 90.8 1,728 1,679 3,971 -- -- 69.8 N/A
2021-22 446.8 90.0 1,724 1,677 4,015 -- -- 70.4 N/A
2022-23 452.2 90.9 1,723 1,674 4,043 -- -- 71.1 N/A
2023-24 456.7 91.0 1,721 1,672 4,091 -- -- 71.9 N/A

Annual Change Industry Domestic

Revenue Value Added Establishments Enterprises Employment Exports Imports Wages Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2010-11 2.5 7.9 0.1 0.1 0.5 N/A N/A 4.1 N/A
2011-12 -1.8 0.7 -0.2 -0.3 -1.7 N/A N/A -1.1 N/A
2012-13 -2.1 0.1 -0.3 -0.2 -2.8 N/A N/A -2.4 N/A
2013-14 6.9 -2.8 -0.1 -0.2 -1.1 N/A N/A -3.7 N/A
2014-15 6.2 0.7 -0.1 -0.1 0.9 N/A N/A -0.6 N/A
2015-16 5.5 3.0 0.1 -0.2 1.8 N/A N/A 2.0 N/A
2016-17 1.5 -1.5 0.1 -0.1 1.3 N/A N/A -1.5 N/A
2017-18 -2.1 -2.1 -0.2 -0.1 -0.8 N/A N/A -1.8 N/A
2018-19 -0.8 -1.5 -0.3 -0.2 0.9 N/A N/A -0.4 N/A
2019-20 0.3 0.1 -0.2 -0.2 0.6 N/A N/A 0.4 N/A
2020-21 0.5 0.2 -0.1 -0.1 0.8 N/A N/A 0.7 N/A
2021-22 0.6 -0.9 -0.2 -0.1 1.1 N/A N/A 0.9 N/A
2022-23 1.2 1.0 -0.1 -0.2 0.7 N/A N/A 1.0 N/A
2023-24 1.0 0.1 -0.1 -0.1 1.2 N/A N/A 1.1 N/A

Key Ratios Revenue per Share of the

IVA/Revenue Imports/Demand Exports/Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) (£’000) (%) per Est. (£) (%)
2009-10 22.90 N/A N/A 95.71 19.26 2.26 18,434.34 0.01
2010-11 24.12 N/A N/A 97.61 19.56 2.27 19,095.48 0.01
2011-12 24.74 N/A N/A 97.52 19.71 2.24 19,222.90 0.01
2012-13 25.31 N/A N/A 98.19 19.66 2.18 19,305.63 0.01
2013-14 23.03 N/A N/A 106.12 17.72 2.16 18,803.19 0.01
2014-15 21.84 N/A N/A 111.65 16.60 2.18 18,529.26 0.00
2015-16 21.32 N/A N/A 115.66 16.04 2.22 18,555.90 0.01
2016-17 20.70 N/A N/A 115.92 15.56 2.25 18,037.81 0.00
2017-18 20.68 N/A N/A 114.45 15.60 2.23 17,851.62 0.00
2018-19 20.54 N/A N/A 112.51 15.66 2.26 17,620.02 0.00
2019-20 20.50 N/A N/A 112.19 15.68 2.28 17,593.30 0.00
2020-21 20.45 N/A N/A 111.84 15.72 2.30 17,577.44 0.00
2021-22 20.14 N/A N/A 111.28 15.76 2.33 17,534.25 0.00
2022-23 20.10 N/A N/A 111.85 15.72 2.35 17,585.95 0.00
2023-24 19.93 N/A N/A 111.64 15.74 2.38 17,575.16 0.00

Figures are inflation-adjusted to 2018-19. SOURCE: WWW.IBISWORLD.CO.UK

WWW.IBISWORLD.CO.UK
Jargon & Glossary
Industry Jargon MULTICHANNEL RETAILINGUsing multiple channels
to interact with potential customers. These could include
the internet, mobile phones and bricks-and-mortar outlets.
MUSICAL INSTRUMENT DIGITAL INTERFACE (MIDI)
A way of allowing different instruments to interact with
each other electronically.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that
new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITYCompares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than £0.333 of capital to
£1 of labour; medium is £0.125 to £0.333 of capital to
£1 of labour; low is less than £0.125 of capital for every
£1 of labour.
CONSTANT PRICESThe pound figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the pound, leaving only the
‘real’ growth or decline in industry metrics. The inflation
adjustments in IBISWorld’s reports are made using the
Office for National Statistics’ implicit GDP price deflator.
DOMESTIC DEMANDSpending on industry goods and
services within the UK, regardless of their country of
origin. It is derived by adding imports to industry
revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists
of one or more establishments that are under common
ownership or control.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by UK companies to customers abroad.
IMPORTSTotal value of industry goods and services
brought in from foreign countries to be sold in the UK.
INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
Musical Instrument Retailers in the UKMarch 2019   31
SYNTHESISERAn electronic instrument that
generates sound by using filters and tone generators
to create waveforms.
INDUSTRY REVENUEThe total sales of industry goods
and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is
also described as the industry’s contribution to GDP, or
profit plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%; medium is 5% to 20%; and high is more
than 20%. Imports/domestic demand: low is less than
5%; medium is 5% to 35%; and high is more than
35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industry’s life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industry’s products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENTBusinesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a company’s profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.
VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
±3%.
WAGESThe gross total wages and salaries of all
employees in the industry. Benefits and on-costs are
included in this figure.
www.ibisworld.co.uk | 020 3008 6568 | info@ibisworld.co.uk

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