Music Zone: stores are now “smarter, faster and easier for customers to use”

In the zone

Published:  01 May, 2005

Music Zone plans to expand its portfolio from 54 to 100 stores

The UK’s largest independent music and film retailer, Music Zone, has been transformed into many consumers’ entertainment retailer of choice over the last seven years.

And the company, which has a strong presence in north-west England, is embarking on a major expansion programme, aiming to increase its current number of stores from 54 to 100 in the next three years.

Music Zone has just been the subject of a management buyout. Founder Russ Grainger sold the company to the management team, led by managing director Steve Oliver and supported by equity backers LDC and debt facilities from Bank of Ireland.

Oliver hopes the expansion, at a rate of 15 stores every year for three years, will double sales to £150m.

One of his focuses in the last 18 months, since becoming md, has been on store formatting and merchandise display. He has increased stores’ DVD display by condensing the CD racks, and like-for-like sales have risen. He has also put in more tills and formatted a queuing system so that their stores are now “smarter, faster and easier for customers to use”.

“We have seen some really good like-for-like results, driven by DVDs,” he says. “The market has increased in the last 12 months by 30 per cent, while our like-for-like sales are 50 per cent up, so we have out-performed the market place.

“But what’s nice – and it’s something the investors have looked at favourably – is that sales of CDs, despite being condensed, have increased like-for-like by two per cent.” That may not sound a lot, but Music Zone is operating in a challenging market place, he adds.

Oliver is confident of the retailer’s position in the entertainment market, and says that while HMV remains the market leader, Music Zone is the leading value retailer, with MVC and Virgin nestling between the two.

“We are the value offer in entertainment products,” he says, adding that he sees the company eventually occupying a position where it is challenging HMV.

The business has been expanding since Oliver joined in 2000. “We have now focused on exactly the kind of store model that works for us.

“We are now after primary sites in secondary towns or secondary sites in primary towns. We are looking across the country but as our heartland is the north-west our brand will have a strong recognition there, while it’s not the same education process elsewhere. We are interested in filling the missing gaps.”

Oliver says the company’s focus is on its core products but adds: “If the right acquisition opportunity came along at the right time, we would consider it.”

From a market stall to 54 stores:

Music Zone has grown enormously, particularly in the north-west of England, over the last seven years.

Founder Russ Grainger started the business 20 years ago on a Manchester street market before opening his first shop in Stockport.

He then opened and closed branches within the region but maintained the business at around two or three stores until the late 1990s, when he started opening more units.

Store number five opened in 1998 at Manchester’s Trafford Centre, and since then the company has put in place a rapid expansion programme. In 2002 alone, it opened 16 stores.

Over the last two years, Music Zone has put in a lot of work to get its infrastructure and resources right, in order to replicate the recent level of growth but in a more controlled and scientific manner.

Music Zone - Factfile

Turnover, year to 31 May 2004: £70m

Pre-tax profit, year to 31 May 2004: £1m to £2m

Like-for-like sales growth: 17.4%

Number of stores: 54

Average store size: 1,800 sq ft

Total selling space: about 100,000 sq ft

Percentage of units in shopping centres: approximately 33%

Letting agent: Morgan Martin

Managing director: Steve Oliver

Commercial director: Eren Ozagir

Investor director: Carl Wormald

Address: MZ House, Heapriding Business Park, Ford Street, Chestergate, Stockport, SK3 0BT

Phone: 0161 477 5088

Website: www.musiczone.co.uk

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