Spinning a tale of success
The Nations First Music Store Chain Hits New Targets
National Record Mart
by Janet Heller
In 1937 the record industry was just beginning to blossom. America was listening and dancing to the Andrews Sisters and the Mills Brothers, while a young Frank Sinatra launched his crooning career with the Tommy Dorsey Orchestra. It was during this musical heyday that Hyman Shapiro and his three sons, Howard, Jason and Sam, recognized the need for a store that dealt exclusively with selling music recorded on phonographic discs.
That year, the Shapiros opened Jitterbug Records at the corner of Diamond (now Forbes) and Wood Streets in downtown Pittsburgh. The store started out selling used 78s at three for a quarter and soon graduated to offering new records that ranged in price from thirty-seven to fifty-three cents per disc. Listening booths were provided so that customers could preview the music before they made their record selections.
By 1941, the Shapiros had opened two more locations in the Pittsburgh area and changed the name of their stores to National Record Mart. It was during this time that Hyman Shapiro retired and his three sons took over the company. Under their leadership the business grew to a 38-store chain by 1975. Oasis Records and Tapes, the first entertainment superstore, opened in Pittsburgh during 1978, featuring a wide music selection and eventually introducing one-dollar-per-night movie video rentals to the area.
NRM has diversified its holdings and locations with
a number of new concepts, each targeted to
a specific segment of the music-buying public
When they reached their decision to retire after a lifetime in the music business, Sam, Jason and Howard Shapiro sold National Record Mart in April 1986 to William A. Teitelbaum and a group of investors. The transaction was the key to preparing the company for its success in the 90s and beyond.
With the advent of new technologies in music and video, such as the compact disc and laserdisc, the need for an upscale entertainment store developed. Waves Music, which introduced Tomorrows Sights and Sounds Today, opened in Columbus, Ohio during 1987. The Waves Music concept has grown to encompass over thirty stores, including Waves Music and Gifts stores located in resort areas along the Atlantic Coast. These stores are positioned to capitalize on the dense seasonal population of families on summer vacation.
Waves Music beckons shoppers with an open and airy entrance
National Record Mart launched Music Oasis, a membership concept featuring more than 30,000 CD titles with The Coolest Prices in Town to compete with deep-discount big box retailers. The first Music Oasis store opened in Canton, Ohio during June 1994.
To target the most active music consumer, NRM developed a concept geared toward college students and alternative music. The first Vibes Music stores opened in September, 1994 on the campuses of Princeton University, the University of Pennsylvania, Boston University, and Indiana University of Pennsylvania. Currently, Vibes Music stores operate on college campuses across the country.
Typical of all National Record Mart's concept chains
is a simple orderly display of products
National Record Mart is a publicly held company trading on the NASDAQ under the symbol NRMI. Billing itself as The Nations Original Music Source, National Record Mart was the first music retail chain in the United States and is still growing after all these years. Still under the leadership of Teitelbaum, National Record Mart, Inc. recently reported sales of $47.7 million for the fiscal quarter ended December 26, 1998, an increase of 14.4 percent over the previous year. Gross profit was $17.2 million, an increase of 11.8 percent.
The chain is the nations fifth largest specialty retailer of prerecorded music and entertainment products. It currently operates 174 stores in 30 states. Last year the company invested $8.3 million in capital expenditures for 31 new stores, four expansions and eight relocations. Future expansion plans call for up to 40 new stores in the next fiscal year and the continuing development of an Internet marketing plan.
NRM seeks up to 40 new locations in 1999, focusing on the Waves chain and the Music X stores, two of its newest concepts
As it continues to scramble to maintain its industry position by investing in physical and technological expansion, National Record Mart also must deal with an industry-wide drop in profit margins as consumers continue to switch from higher-profit cassettes to compact discs. Part of its strategy is the continued diversification of its holdings and locations in order to target a variety of markets.
Expansion needs by concept:
Waves Music: major/regional malls preferred, 4,000 to 6,000 square feet. Demographic profile: 36% are ages 18-24; 51% male; 76% single. Preferred locations are in proximity to entertainment-oriented and/or food-court areas.
NRM Music National Record Mart: strip centers in excess of 100,000 square feet GLA, with traffic count of 30,000+ vehicles daily, strong national retail presence, 3,500 to 6,000 square feet. Profile of demographics: 35% are ages 18-24; 52% males; 75% single.
Vibes Music: major college campus locations adjacent to other
strong college-oriented retailers, 2,500 to
4,000 square feet. Demographic summary: 67% are ages 18-24; 65% male; 93% single. Downtown storefront locations are extremely
Music Oasis: power/neighborhood strip centers, low-price-oriented destination music store (club members save even more), 6,000 to 10,000 square feet.
Music X: major/regional malls, youth-oriented alternative music store, a good companion to Waves Music where two music uses are warranted, 2,000 to 4,000 square feet. Demographic profile: 57% are ages 18-24; 63% males; 91% single. Preferred co-tenants are Hot Topics (type apparel), entertainment and food court locations.
Expansion will focus on the Waves and Music X concepts at approximately 20 new stores for each during the course of 1999.
Locations are sought nationally: Typical leases are 5 years with a 5-year option or a flat 10 years. In strip locations, a vanilla shell is required; the company looks for $25 psf for tenant improvement allowances in mall locations.
For information regarding real estate, contact:
National Record Mart, 507 Forest Avenue, PO Box 2003, Carnegie, PA 15106: Scott Bargerstock, vice president of business development, 412-276-6200, or Chris Connors, director of real estate, 412-276-6201. Visit National Record Marts Websites at: www.NRMMusic.com or www.WavesMusic.com.