We’re kicking off a new series of interviews this month that sees you, the MI Pro readers, ask the questions. First to take the spotlight is the MIA’s chief executive, Paul McManus…
Rupert Bradbury, JG Windows: In the States, fixed pricing is legal. What’s your opinion of this? Do you think it would benefit or hinder the UK Music industry and is there anything that the MIA can do – if you/the industry think it’s a good idea?
PM: "Excellent question, Rupert and a subject that tests the full breadth of our industry on a regular basis. MAP in the States (applies to advertised price, not final sale) is seen as highly desirable by many, but even this has its detractors. Certain suppliers do not support it and certain retailers will find creative ways around it. Funnily enough the issue of (lack of) sales tax on Internet retailers is often seen as an even bigger issue. Imagine competing with an etailer in the UK who did not have to pay VAT?
"But, back to the matter of MAP. The EU is of the strong view that it wishes to support all possible measures that get the consumer the best possible deal. We have an equally strong view that this only works if the business can make enough money to keep a business viable. If there truly is no ‘floor’ for prices, how on earth do we expect a thriving retail community, especially for smaller, independent shops? Suffice to say that we raise and lobby on the matter with MPs and lawyers on a regular basis. But, the EU remains resolute in its thinking...be interesting to see what can be done post EU Referendum?"
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Simon Gilson, PMT: With the recent demise of Drumwright there is a whole new tier of questions to be answered. We now have to face facts that even a good specialist MI retailer can no longer meet the costs of running a viable business in an ecommerce world. If this is the case, what place is there for the MIA in five years from now?
PM: "Simon, I think the challenge of running a profitable independent retail outlet is faced by shopkeepers throughout the UK, be they music instrument shops, record shops, book shops etc. The pattern is the same, with a combination of out of date (and touch) business rates and rents, coupled with a continual squeeze on selling prices/margins that are responding to the pressures brought by the Internet and the growth of the major retailers.
"That said, there are many examples of thriving independent retailers who have created a niche for themselves without going ‘toe-to-toe’ with the competition. Our particular industry, as with all the others mentioned, nonetheless, must accept that the current number of retail bricks and mortar outlets may not be fully sustainable in years to come as the breadth of retailing ‘opportunities to buy’ becomes ever bigger with online growth and other new channels.
"In addition, our industry faces a unique looming situation in the next few years with a population of business leaders that are all of a similar age and may all want to retire at a similar point in time!
"I am in no doubt that our best retailers will continue to find a way to create a living from running their shops, but a constant reinvention is required in order to meet the ever-increasing demands and expectations of a modern punter. I expand on some other aspects of your question in response to the one from Richard at Sheehans, later in the article.
As for the comment about the MIA, the trade body is simply here to promote, protect and support the UK MI industry and we will have to adapt and respond to that changing landscape as much as the businesses we represent."
Brian Cleary, Barnes & Mullins: As you know, I believe our industry is unfairly disadvantaged by the WEEE legislation. In my view it is an unfair tax which penetrates its way right through to the price all of our customers pay for any product which has an electrical component. I know you are trying to fight for our industry’s interests in this matter, but what progress has been made and what can the industry do to support you in this fight?
PM: "This issue has been a thorn in the side of the industry for many years and is costing many of our companies tens of thousands of pounds each year to be ‘compliant’. These costs vary wildly and are seen as disproportionate in the extreme.
"We lobbied early on to have musical instruments in their own category, but this was not allowed. We also tried to reason that the actual weight of electrical components in relation to the total weight of the product was often negligible. Finally, we all know that the vast majority of our products do not end up in a landfill but instead are recycled in the musical community for continued use.
"An MIA director (they are all volunteers) recently took up the case with their local MP and his team of civil servants. Everyone was very sympathetic and understanding, but the ability to make a special case for MI remains highly unlikely. The MIA will continue to lobby on the matter and to try and ensure that our members are with the most advantageous partner in terms of costs and on declaration of the lowest possible chargeable volumes.
On an associated note, there is also the issue of the growing number of retailers who need to be compliant (but who are not), due to what they are importing directly into the shops which requires them to ‘sign up’…
In summary, an ongoing matter that we will continue to fight. As in an earlier answer, post EU Referendum may provide a fresh opportunity."
Richard Thompson, Sheehans: How do you see the global landscape of music retail changing over the next five years?
PM: "Hi Richard, I think my answer will tread a similar path to the one I gave to Simon Gilson in the earlier question. I think the global landscape will see more and more channels through which to buy our products and some degree of consolidation will take place (with both suppliers and retailers).
"In the UK, there is a future for creative music retail outlets and, in my view, the ones that will take us forward on the UK high streets will offer more than ‘just’ a wall of instruments. I think modern consumers expect and demand a full package of services to justify them making the effort to go physical shopping (instead of simply clicking a mouse). Certainly they expect to find a shop that is open all hours in terms of an e-commerce website when the shop is closed. The shop itself should naturally offer a range of products that reflects the target customer and the services that are complementary to that target customer.
"Teaching services and extensive links into the music community are essential. The shop can’t operate in a vacuum and should be embracing and promoting a range of activities with the local live scene, local schools, ageing community musical opportunities, local generic events, gig opportunities for customers, links to the nearby shopping centre or mega supermarket. Plus, of course, the shop needs to offer a constant stream of in-house events to draw both new and existing consumers onto the premises. Balancing such a list against the challenge of simply running the business day-to-day is never easy and the ‘speculate to accumulate’ mindset needs both determination and vision."
Dave Bamford, Symphony Music: What do you think is the primary advantage and primary disadvantage to our industry of an EU exit for the UK?
PM: "David, no surprise, a range of pros and cons. My answer to Rupert earlier about MAP covered some of this and it may be that we would have a real opportunity to look at something similar if we were ‘out’. But… the shops still in the EU would continue to be constrained by the EU rules and that could, therefore, mean that we were seen as far more expensive in comparison.
"One area that one would hope would improve if we were out is that of reduced compliance legislation and the red tape that all businesses seem to have to adhere to simply to operate (see WEEE answer earlier). CITES legislation across Europe and the world is a legislative nightmare to comply with and vastly misunderstood. Employment Law and Human Rights are other areas that seem to have the double effect of UK and EU levels of legislation and compliance.
"But, the case for staying is compelling on other levels and the ‘harmonisation’ that some brands are now bringing to managing the various EU territories would not be able to include UK if we were out. Go figure if that is a help or a hinder!
"Would an isolated UK find it easier or harder to do business in the EU? We had a similar debate when Scotland nearly left the UK and the costs to English/Welsh/Irish businesses of doing business with Scotland were expected to increase. The killer in all of this will be what happens to the exchange rate and I wish I could predict that one, as it could be the real game-changer for better or worse. Sorry, no easy and clear answer!"
Betty Heywood, NAMM: From one association staffer to the other: what do you find most rewarding and, on the other hand, what do you find most challenging dealing with the variety of members you have?
PM: "Hi Betty, easy one to answer! The most rewarding thing is that we are fortunate enough to work in an industry where we all believe in what we sell and know that we genuinely change people’s lives for the better. We have the most aspirational products on the face of the planet and we all live and breathe them every day. You could hardly say that about working in the double-glazing industry!
"The downside is equally easy to answer. We are rarely ‘all on the same page’ and all our positive energy can often dissipate because we all have so many different views on how to convert the world into a planet of music makers. Industry consensus across the board is so hard to achieve, which is a shame, given how we all basically want the same thing, which is to create more and more music makers… I call it a dynamic tension (Mr Glass Half Full)!"
Betty Heywood, NAMM: What do you think is the single most valuable thing association membership can provide to a business? If not a single one, then the top 3?
PM: "Well, I think any trade body, regardless of the industry, has to deliver on a similar mission, namely:
1) To present and represent the industry (and the members) in a professional, pro-active and dynamic manne
2) To undertake specific activities to promote and grow the industry
3) To safeguard, support and protect the member companies
"Or as we put it, ‘to promote, protect and support the UK music making industry’."
If you would like to feature in our Open To Question series, please email firstname.lastname@example.org.