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Tower Japan boss says biggest challenge facing record stores is attracting young customers

by Steve McClure

Special To The Japan Times

A few weeks ago I was preparing to do a guest slot on InterFM’s “The Selector” program, which features music mavens sharing their favorite tracks.

While I had a few tunes from the not-so-recent past in mind, I needed some newer stuff to round out the playlist. I went to Tower Records Japan’s flagship store in Tokyo’s Shibuya district to pick the brains of the staff there and the clerks came up with the goods.

That kind of informed service is a big reason why Tower Records Japan has survived. Many other music-retail chains have either disappeared (Virgin Megastores) or have become online operations (HMV Japan). Many smaller, niche music retailers have also gone to the wall as more and more people have stopped patronizing what music fans of a certain age still quaintly call “record stores.”

Tower Japan’s former American parent company, which entered the Japanese market in 1979, went belly-up a few years back, leaving the Japanese chain to preserve the proud legacy of a brand that once spanned the globe. Tower Records Japan is now jointly owned by NTT DoCoMo and Seven & I Holdings.

“Tower is proud to have staff who are very knowledgeable about music,” says Tower Records Japan President Ikuo Minewaki.

He explains that each Tower store decides which music to stock based on local market tastes. “We are a store made by music lovers for music lovers.”

Tower recently revamped its Shibuya store “to raise the entertainment level,” as Minewaki puts it. “Every day we hold some kind of in-store event,” he notes. And for a die-hard music lover like myself, Tower Shibuya is like a giant, wallet-draining candy store.

However, Minewaki knows Tower faces an uphill battle in getting people to buy CDs and DVDs at its stores.

“Music fans’ attitudes are changing,” he says. “Many of them now think music is not something they need to pay for, because (services such as) YouTube allow them to listen to music for free. More and more people in their teens and 20s don’t buy music. That’s our biggest challenge.”

Which makes it all the more impressive that Tower has no fewer than 85 stores nationwide. Minewaki says the chain racked up sales of ¥55.5 billion in the year to February 2013 (the company doesn’t disclose profit figures).

One factor working in Tower’s favor is that unlike other major music markets, people still buy CDs in Japan — which is now the world’s biggest market for “physical” product.

Online retail CD sales are another big challenge for the chain.

“Amazon Japan and other online shops are the toughest competitors for us,” Minewaki notes. “We’re also placing emphasis on our online business, Tower Records Online, as a major source of growth. Our online sales grew 180 percent from the previous year. (Minewaki wouldn’t divulge exact figures.)

“In a few years, our share of e-commerce will probably overtake that of ‘real’ stores,” Minewaki admits. But Tower’s music-savvy staff and in-store live shows will always be its ace in the hole.

Digital music sales — which account for just 15 percent of the Japanese market — are yet another challenge facing Tower. Back in 2006, the retailer launched the Napster Japan joint venture. It folded in 2010 after local labels proved reluctant to make their repertoire available online.

Now that digital sales look poised to take off thanks to smartphones and music-streaming services, Minewaki doesn’t rule out the possibility that Tower will test the digital waters again.

“If we have another chance, I’d still like to consider it,” he says cautiously.

In my experience, though, there’s still nothing like browsing through CD and record bins.

  • http://getironic.blogspot.com/ getironic

    “Music fans’ attitudes are changing,” he says. “Many of them now think music is not something they need to pay for, because (services such as) YouTube allow them to listen to music for free.”

    This is incorrect. It is an evasion created to avoid addressing the truth, that young people are willing to buy music, and they do, in MP3 form or from importing directly from outside of Japan. But they are too internet-educated to want to buy Japan’s saihan seido price-fixed CDs.

    If Tower Records wants to exist in the future, they should be on the attack to abolish the saihan system, which if it continues, will guarantee their demise.

  • inqualia

    Like the author, I often visit the Shibuya store to quickly get an overview of what was released in the past week or two in my genres of choice (usually avant-garde/ambient/electronic music). I never cease to be impressed by the curatorial thought put into the music they choose to feature. I usually buy one or two things, but I also leave with a much longer list of things to track down elsewhere. It may be a business, but it’s also a huge resource for the local musical community.

    It’s frustrating that the choice between disc and digital streaming also has to be a choice between this kind of in-store experience and the more anonymous and impersonal drudgery of shopping online. Is there no way to bring some of the proceeds from online downloads/streaming back to the store itself? There is so much an actual 3-dimensional space like Tower provides that simply cannot be replicated on a small two-dimensional screen.