Walmart Shrinks CD Section

Largest physical retailer "becoming more like Target"; cuts stock by 40 percent

Walmart, the largest retailer of CDs in the United States, plans to downsize the amount of space it devotes to discs by 40 percent and could reduce selection proportionately, say label sources. The company hopes to offset the potential sales loss by prominently displaying hit titles at the front of the entertainment department.

This strategy reflects a reversal of the chain's approach to selling music. Previously, Walmart, which Billboard estimates sold $600 million worth of CDs in 2013, relied on an assortment of hot titles, new releases from established artists, Latin music, and rock, R&B and country catalog albums to satisfy its customers.

With the 40 percent cutback scheduled to take place in May and June, developing artists, already scarcely represented by the chain, will have a harder time getting carried, and a senior label executive says that even new releases might not make the cut "if your title does not have the strength to place [at the front of an aisle]. You might need a radio hit."

"Walmart's message is, 'Our customer wants new hits, recent hits and catalog at lower prices, $5 or $7,' " says another. (Walmart was unavailable to comment.)

If CD selection declines as much as the space, label sources estimate that Walmart's average inventory will drop from around 3,500 titles to about 2,100. The chain will compensate by unveiling the new displays, now in 2,400 stores, in all 3,600 that sell CDs. Billboard estimates Walmart's U.S. market share for recorded music at 9 percent to 10 percent, making it the second-largest music account by dollar volume in the country. (iTunes, at an estimated 42 percent, is first.)

"It sounds like Walmart is going to become more like Target," says one label president. Target stores carry the smallest CD selection of any big-box chain -- 1,000 to 1,500 titles -- with a concentration on hits.