Since GFK backed out of the market a few years agao, the lack of any authorative statistics for the MI market has made it very difficult to get an accurate handle on market performance other than a generally accepted view that things are ‘a bit slow’. But could all that be about to change and what would it mean for the market if it does? Gary Cooper found out…
There's an old business saying, 'If you can't count it, you can't manage it'.
Unlike a lot of received wisdom, this one is palpably true and it raises an issue about the UK's MI industry that has long been a problem: we don't really know a lot about it - not in terms of hard facts.
True, the government collates figures but they are less of a precise portrait than the sort of result you would expect from a whitewash brush dipped in a bucket. If a toy company imports half a million plastic kazoos, it's quite possible they will be logged as musical instruments.
In the past, the MIA has been a source of industry statistics, as most trade associations are - perhaps not perfect ones, but invaluable when planning a business strategy or trying to assess performance. Unfortunately, the previous scheme more or less fizzled out three years ago but now a plan is afoot to start again - and this time using the only really reliable source of raw data: returns from retailers' EPOS systems.
Paul McManus explains the plan. "The MIA, for many years, used to produce industry statistics but they were of debatable use because we were taking information from the distributors, who were telling us what they were shipping to retailers. From that we were making an educated guess as to what that meant in terms of sales. But it wasn't actually sales driven data. In later years, when EPOS systems started arriving, shops were able to push a button and know what the had sold and it was then that we teamed-up with GFK, a global company, which set up a database of shops, I think it reached about 70 by the end. They gave their data to GFK ,who were collating that information.
"The intention was that manufacturers would purchase this data, as manufacturers did in the other leisure sectors that GFK operated in. The problem was that data from 70 or so shops had to be extrapolated to estimate the total market and that is where subjectivity comes into it. I recall that there was always some debate about data from the percussion sector and it was also significant that there were some larger retailers that didn't contribute their data. If key retailers aren't involved, extrapolating on their behalf becomes a hugely subjective thing. None the less, for three or four years, GFK were able to produce, if nothing else, a trend year on year and that was certainly useful."
The last data published by GFK for the UK MI industry was in 2010, however, since when it has been impossible even to be sure that widely held beliefs about the industry (one thinks of the boom in Folk instrument sales, or the decline or percussion and amplification backline sales as examples) are actually true, or just the trade equivalent of urban myths.
"As for why having the data matters, why wouldn't we want to know, for example, the trends of sales of acoustic versus electric guitars?" McManus asks. "If I were a retailer in that sector, I would also want to know what percentage of sales guitars represented. If it was 25 per cent, have I got 25 per cent of my floor space devoted to guitars? These are all things anyone in business is going to want to know, providing the data is reliable and accurate and not subject to too many vagaries of extrapolation.
"We have recently had four key retailers voluntarily give us their data, quarter by quarter, grouped into agreed formats, which include all genres including classical and orchestral, and we have the last two years of that data, having gone back through their records. This means we have accurate figures from them for quarter by quarter and year on year performance.
"The plan is that on 19th September we are going to show the MIA board what we have got and if they agree, we then want to offer the invitation to the other retailers in the UK that if they will offer us their data, we can then start building up an accurate picture of the whole industry. Needless to say, neither I nor anyone else in the MIA will see the data, it will be handled in total confidence."
Confidentiality is the key to whether retailers are likely to want to share their data and McManus says that if the scheme is accepted by the MIA's board and rolled-out industry wide, a firm of accountants could be retained to handle and compile the data, removing any lurking fears of prying eyes into extremely sensitive data.
But then there is the elephant in the room - Amazon.
"Well, yes. Or eBay." McManus says. "A lot of people sell on eBay who aren't what we would consider proper musical instrument retailers and that needs thinking about. In America, for example, eBay is the seventh most trafficked site and in 2012 the global sales of musical instruments was $1.4 billion - which, of course, includes secondhand, entry-level and so on. So, yes, how do you estimate that? How do you estimate Amazon? How do you include even Cash Converters, charity shops and so on? Going back to that eBay figure, if you say the UK is between five and eight per cent of the total figure, that suggests that a heck of a lot of instruments are being sold in the UK via eBay, some by our guys, but a heck of a lot, not. This is what makes extrapolation so difficult."
And what is in it for the retailer who might be asked to contribute data? Quite a lot actually - he will get the resulting data for free, the financing of the operation being covered by charging companies who don't contribute the data for access to it. Which, as a matter of record, is where the GFK effort ran aground - the data was expensive and too few companies were willing to purchase it. McManus hopes that the method he and his team are proposing will result in not just accurate data, but data UK companies can afford to buy.
But what about the data the MIA has already collated in its experimental stage? Can we glean anything useful from it? McManus is cautious but says: "Well, the one thing I would say is that the bottoming-out of the industry has happened. I hesitate to use the 'green shoots' expression, but yes there are some indicators that things are picking up. We have to be careful when working from such a small selection but here would generally appear to be some upward movement going on."
If the preliminary findings are right and the industry is starting to claw its way out of the recession, perhaps now is finally the time to get a grip on the numbers. They may not help it avoid any future recession - but they will certainly help!