CD sales singing in supermarkets

By SIMON HENDERY

Music retailers already feeling the pinch from discounters such as The Warehouse now face further competition from supermarkets.

And if supermarket CD sales are not enough to put small retailers in a spin, Australia's largest music chain, Sanity, also has its sights on the local market.

Auckland company Sound Rack is testing the sale of top 30 CD titles in 30 supermarkets nationwide.

Director Chris Hood said 20 per cent of CDs in Britain were now sold at supermarkets and he expected a similar trend would develop within New Zealand's $200 million retail music market.

If sales were encouraging over the next few months, Sound Rack's display stands would probably appear in more than 200 supermarkets from March.

The owner of one of the stores to test the sale of CDs, Paul Blackwell of Pak'N Save Albany, said he was always looking for ways to attract new customers.

He expected the convenience of being able to pick up a CD with the groceries would appeal to shoppers.

At $29.95, supermarket CDs will be $3 more expensive than most top-20 titles sold by The Warehouse.

The managing director of the 37-store Sounds music chain, Sean Coleman, said he did not expect supermarket sales to have much impact on his business.

He said Sounds attracted its customers by carrying a wide range of titles and offering specialist service.

Rod Kroon, owner of rival chain ECM, said supermarket sales would most likely affect The Warehouse's sales.

Sanity said it was just a matter of time before it expanded across the Tasman to launch in New Zealand.

It is part of the Brazin group and has 270 stores in Australia.

Managing director Brett Blundy said New Zealand was a market Sanity "ought to be in and will be in at some stage.

"I can't say whether that means by acquisition or by growth centre-by-centre.

"We're running out of room to grow in Australia and New Zealand is a fairly logical and easy step [for expansion]."

Mr Blundy would not comment on industry speculation that the chain could take over either ECM or Sounds.

"If a business opportunity should present itself we'll take it," he said.

Meanwhile, e-tailer CDStar said its online music sales were growing.

Matthew Darby, chief executive of CDStar's parent company EStarOnline, would not give figures but said sales had been increasing steadily over the past year.

The secret to surviving online was to keep overheads low and prices competitive, Mr Darby said.

The use of innovative e-commerce software, developed by its parent company, meant that CDStar needed only two people to run its New Zealand and Australian websites, although it contracted out packaging of its sales.