While Urban Outfitters may be telling the world that it is the world's premier seller of vinyl, record label executives tell Billboard that Amazon is the largest retailer selling the format.
Reportedly, Urban Outfitters chief administrative officer Calvin Hollinger made that claim to Wall Street analysts. But after reading widespread reports repeating the claim, Billboard surveyed music labels, their distributors, and wholesalers, accounting for about 80% of the U.S. music market. The end result: Urban Outfitters is like Avis, and has to try harder.
A Billboard analysis shows that Amazon is the largest seller of vinyl in the U.S., with about 12.3% market share, followed by Urban Outfitters with 8.1% market share. Rounding out the top five retail accounts selling vinyl, the next-largest is Hastings Entertainment with 2.8% of the market; Hot Topic with 2.4%; and Trans World Entertainment with 2.2%. Accounts like Audiophile, Acoustic Sounds and Newbury Comics each have market shares between 1.5% and 2%.
While Billboard's survey covered the U.S. market, label sales and distribution executives point out that Amazon has a much larger music presence internationally than does Urban Outfitters, which has about 50 stores outside the U.S. compared to the 300 or so they have in this country.
Beyond retail, the largest vinyl account, by far, is Alliance Entertainment, a wholesaler which sells vinyl to accounts like Best Buy, Barnes & Noble and Trans World Entertainment, among other chains, as well as indie store owners. In the U.S., the latter group is even bigger than Alliance and collectively accounts for about 50% of all vinyl sales.
"Independent retailers are still the backbone of vinyl's growth, and they are still selling tons of it," says one major label distribution executive. "Indies are driving the format's growth and everyone else is picking up on what they do."
In addition to accounts like Urban Outfitters, who appear to be riding the wave created by indie retailers, other accounts are looking to get into the act, according to distribution executives. Those accounts include the Guitar Center chain, which has been carrying turntables for eight years but began testing vinyl records last year, now carries a mix of classic and new titles in all 266 of its stores; and Whole Foods, which already has it in 19 stores but plans to add vinyl to another 80 stores, bringing the format to 100 of its 350 locations by November. Moreover, major label distribution executives also say that Barnes & Noble is entering the vinyl marketplace once again, plannind to add the format to many of its music locations.
"Our plan is to build on our vinyl strategy in 2015 to really capitalize on the resurgence of vinyl -- this is definitely an area of music that consumers are telling us they’re more and more interested in," says Guitar Center's vp of corporate affairs Christopher Bennett, who says the chain is also seeing an uptick in vinyl turntables as well."We’re going to be offering a host of different vinyl record players as well in 2015 for the traditional music audiophile, and also for music producers and DJs."
Meanwhile, among large chains, the Hastings Entertainment chain gets the nod for having the deepest selection of vinyl carrying anywhere from 800 to 1,000 titles. Label executives say that Hastings was the first chain retailer to jump on the vinyl phenomenon started by indie retailers. But smaller chains like Newbury Comics have been in on vinyl from the get-go too; and its vinyl selection ranges from 2,500 to 6,000 SKUs in its larger stores, which comprise about one-third of the chain's 27 outlets.
Hastings also sells used vinyl, as do practically all indie retailers, and those sales don't show up in Nielsen SoundScan; nor do the record labels have a handle on the size of that market .
Moreover, Record Store Day co-founder and Secretary of the Department of Record Stores coalition Michael Kurtz points out that indies have extensive selection for their vinyl. For example, Rasputin in San Francisco has vinyl departments for specific genres of music like folk, jazz, and classical "so large you could fit an entire Urban Outfitters inside just one of these departments," Kurtz tells Billboard.
Meanwhile, label and distribution executives contracted for this story denied reports that Urban Outfitters gets favorable terms from them. All vinyl is sold one-way, with no return privileges. Since vinyl is sold one-way -- unlike CDs, which can be returned -- a lot of chains didn't want to carry it. But consistent year-over-year growth is waking them up.
"The chains are realizing that they don't want to miss out on a product category that is growing thirty to forty pecent a year," says one wholesale executive. "Even non-traditional retailers that didn't want to touch any music up until now are saying this is something we should investigate." That executive also says that Urban Outfitter's success with vinyl is contributing to the attention of retailers.
But Kurtz worries about the expansion of vinyl offerings. "The music industry has a history of using record stores to determine direction," says Kurtz. "The most recent examples are Record Store Day’s relaunching of the vinyl format. The most tragic example was utilizing indie record CD sales info to help the big boxes gain an understanding of how they could use CDs to drive traffic, much to the detriment of [record] stores. The adoption of vinyl by a big corporation to drive traffic is not a surprise, nor will the outcome be, if our distribution partners make the same mistakes they’ve made in the past.”
In the first half of this year, vinyl shipments jumped nearly 41%, to 6.5 million units, up from 4.6 million units counted in the first six months of 2013. Likewise, Nielsen SoundScan counts 5.9 million albums scanned year-to-date for the week ending Sept. 21, up 47% from the nearly 4.2 million scanned in the corresponding period last year. Vinyl now comprises nearly 3.5% of album sales -- ten years ago, vinyl was 0.2%.
"The vinyl numbers are extraordinary," says one senior distribution executive. "Up until about a year ago, I though it was a cool contemporary fad -- but now it is an established business and continuing to grow. Vinyl is part of the sales and marketing mix of almost everybody I am in business with."
Urban Outfitters couldn't be reached for comment for this story. Its head of investor relations didn't respond to an e-mail and the company's telephone operator refused to put Billboard's phone call through to any of the company's executives, saying they don't take calls from the press.