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NEWS: Musicland to Ask for Financial Relief from Vendors


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nightmarelord



Joined: 15 Dec 2005
Posts: 10
Location: Somewhere between heaven and hell.

PostPosted: Fri Dec 16, 2005 12:09 am Reply with quote
Why? So Musicland can have 40-50% more profit? Why should vendors have to do this? If they end up doing this, the vindors will have to ask their dealers for a 40-50% rate reduction and they will have to ask for a reduction from their dealers and so on.

What do you do when your 1972 Ford Pinto needs a new motor? You throw it out. You don't ask a mechanic for 50% off because you don't make much at Pizza Hut. Why can't companies fold gracefully instead of bowing and scraping and begging for hand outs.
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Tempest
ANN Publisher & CEO


Joined: 29 Dec 2001
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PostPosted: Fri Dec 16, 2005 12:23 am Reply with quote
nightmarelord wrote:
Why? So Musicland can have 40-50% more profit? Why should vendors have to do this? If they end up doing this, the vindors will have to ask their dealers for a 40-50% rate reduction and they will have to ask for a reduction from their dealers and so on.


Musicland has no profit.

It doesn't have the money to pay vendors, if they refuse it will file for bankruptcy, and they will be paid out of the liquidation proceeds. They'd be lucky to get 50% if that happens.

So it might be worth it for them to wait three years for the second half of their payment.

Quote:
You don't ask a mechanic for 50% off because you don't make much at Pizza Hut.


Actually, if you're going bankrupt and the mechanic faces the possibility of not getting a penny for his work, he'll probably settle for 50%.

Quote:
Why can't companies fold gracefully


Because people have millions, maybe even billions of dollars invested in the companies. If you have a significant portion of your life's savings tied up in a company, would you want them to try their hardest to return to profitability instead of declaring bankruptcy ? When a company goes bankrupt the shareholders are last to get any money.

-t
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nightmarelord



Joined: 15 Dec 2005
Posts: 10
Location: Somewhere between heaven and hell.

PostPosted: Fri Dec 16, 2005 12:35 am Reply with quote
tempest wrote:

It doesn't have the money to pay vendors, if they refuse it will file for bankruptcy, and they will be paid out of the liquidation proceeds. They'd be lucky to get 50% if that happens.

So it might be worth it for them to wait three years for the second hald of their payment.

-t


That maybe true, but what if the company never gets out of the hole. A promisary note is almost worthless if the company no longer exists. If this happens, the parent company would most likely have to make good on the note. IMO, it would be best just to fold the company instead of diging a deeper grave.
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Colonel Wolfe



Joined: 05 Aug 2004
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PostPosted: Fri Dec 16, 2005 6:33 am Reply with quote
What does this have to do with the anime industry or anime news? All they are is a music and DVD retailer that happens to sell anime DVD's, and before anyone argues the point, all they sell in regards to the anime industry is anime DVD's, they sell mostly Music CD's.

I'm sure that there are more important news that ANN could cover rather than store chains in the midst of bankuptcy. This is information that should be covered by USA Today not an Anime news site that is respected like ANN.

Maybe next we'll hear from ANN about how the war effort in Iraq and Afganistan is going or about the rise in Mobile Gas ands Oil Prices. Crying or Very sad
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LordRobin



Joined: 25 Feb 2003
Posts: 354
Location: Akron, OH

PostPosted: Fri Dec 16, 2005 7:36 am Reply with quote
Colonel Wolfe wrote:
What does this have to do with the anime industry or anime news? All they are is a music and DVD retailer that happens to sell anime DVD's, and before anyone argues the point, all they sell in regards to the anime industry is anime DVD's, they sell mostly Music CD's.

Dude, it's Suncoast. For a good portion of the country, Suncoast has been The Place to Go to buy anime for a long time. In the Cleveland area, Suncoast was the first major retailer to fully stock anime. Only when they proved it was profitable, quickly becoming their best-selling category, did the other stores follow suit.

It's interesting that the chain used to be owned by Best Buy, since BB is one of the reasons for Suncoast's woes. Best Buy carries just as much anime as Suncoast these days, and you really can't compete with them. Best Buy sells videos and CDs for low margin or a loss to get people into the stores to buy expensive electronics.

I prefer the experience of shopping at Suncoast, but financially it makes more sense to shop at Best Buy. The prices are cheaper and there's no interest on the credit card if you pay the purchase off in 90 days. Most of my friends buy all their videos from BB too. I figured it was only a matter of time before outfits like Suncoast had trouble.

------RM
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Colonel Wolfe



Joined: 05 Aug 2004
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PostPosted: Fri Dec 16, 2005 9:01 am Reply with quote
Whatever the case, if the news item was related to an anime production company I could see the point but a business that sells more Hollywood type DVD's and music CD's just doesn't warrant the type of explosure that is more relagated to the Wall Street Journal.
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tekwych



Joined: 18 Mar 2005
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Location: New Mexico

PostPosted: Fri Dec 16, 2005 9:35 am Reply with quote
It does warrant this type of exposure from ANN because Purchase Orders from Musicland Group account for a significant percentage of most Anime Distributers sales. If one distributer losses 15% of its orders that's one thing but if every distributer of Anime suddenly losses a double digit percentage of its orders you start to see a domino effect take place and a distributer goes out of business as well. Then you lose a Manufacture or two and suddenly the Anime DVD industry is in a hole as well. Musicland in general and Suncoast in particular are a HUGE part of the reason Anime is successful in mainstream America. The loss of Musicland Group would be very painful to most if not all the companies in the Anime industry
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adam_omega



Joined: 29 Aug 2005
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Location: Seven Seas

PostPosted: Sat Dec 17, 2005 3:49 pm Reply with quote
It's interesting that you mention Best Buy being the source of Musicland's woes. That is true, but there is a big reason why Best Buy bought Musicland in the first place...to gain access to Musicland's venders and distributors so they could expand their stores further. It was a brillaint strategy. They made the Musicland stores unprofitable, loaded them up with electronic products that they never needed, retooled Musicland's Replay card program for themselves and then dumped them on another company. It was absolutely brillaint!

I remember the Best Buy changeover well. I was working at a Sam Goody when that happened and the store changed so much and we were forced to sell so much crap at the register that it stopped being a fun place to work at...then, they closed my store at Christmas. To make matters worse, I was writing for Request Magazine when the company got sold in 2003 and lost a very nice reviewer position because Request was the first casualty of the company being sold.
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Nabeshin



Joined: 15 Apr 2005
Posts: 94

PostPosted: Sun Dec 18, 2005 8:30 pm Reply with quote
LordRobin wrote:
Colonel Wolfe wrote:
What does this have to do with the anime industry or anime news? All they are is a music and DVD retailer that happens to sell anime DVD's, and before anyone argues the point, all they sell in regards to the anime industry is anime DVD's, they sell mostly Music CD's.

Dude, it's Suncoast. For a good portion of the country, Suncoast has been The Place to Go to buy anime for a long time. In the Cleveland area, Suncoast was the first major retailer to fully stock anime. Only when they proved it was profitable, quickly becoming their best-selling category, did the other stores follow suit.

It's interesting that the chain used to be owned by Best Buy, since BB is one of the reasons for Suncoast's woes. Best Buy carries just as much anime as Suncoast these days, and you really can't compete with them. Best Buy sells videos and CDs for low margin or a loss to get people into the stores to buy expensive electronics.

I prefer the experience of shopping at Suncoast, but financially it makes more sense to shop at Best Buy. The prices are cheaper and there's no interest on the credit card if you pay the purchase off in 90 days. Most of my friends buy all their videos from BB too. I figured it was only a matter of time before outfits like Suncoast had trouble.

------RM


Yes, exactly. Suncoast has been the biggest mainstream seller of anime over the past decade. They struggled in the past few years, closing quite a few Musiclands (which carried a limited number of anime as well) in addition to Suncoasts. They rely heavily on customer "loyalty", achieved through their Replay card, which isnt much of a value unless you continually shop there. They put more of a focus on selling magazine subscriptions and membership cards than they do on the product because the cost-to-profit ratio of your average DVD is minimal-- 86 cents on average, as I was told when I worked there as a manager.
Best Buy can offer lower prices on DVD's because they're loss leaders, but they get people to come in and buy more and more. Like widescreen TV's and cel phones. It's like going into the grocery store to get milk and getting a shopping cart's worth when you walk out.
Suncoast/Musicland doesn't have that. They already once in 2003 did something similar to this, asking vendors to send product "on their honor". Needless to say, the quanity didn't come in as bountiful as before. Suncoast tried to make up for this by including more and more knick-knacks and collectables, as the profit as well on these was far greater than the cost.
When a company has to offer stock trade as a way of bargaining, its a last-ditch effort before declaring bankruptcy. More of a matter of saving face.

In all honesty, I give them no more than two years, one really before they shut down entirely. Rolling Eyes
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Kaliope



Joined: 19 Dec 2005
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PostPosted: Mon Dec 19, 2005 4:19 am Reply with quote
I work at Media Play and we really did try to cater to our Anime Fans.. it was big profit for us (just apparently not enough.) I ran the Anime Club and set up the anime events for our Replay members at my store. To me we are/were not JUST a dvd and music retail store.. we were there for the people and we ordered what they wanted, when they wanted it, if we did not have it.

I understand that some of you think this article has nothing to do with the Anime News Network or anything of the sort but Suncoast, Sam Goody, Media Play, Musicland Inc... they did try.. they set us up at a booth at AWA this year and we sold a lot of merchandise..I know because I worked at it. But that's ok because we're just another dorky retail store going out of business.

They also sponsored the Yoko Ishida tour that happened this summer... does anyone remember that? But no no that's ok because we've got nothing to do with anime at all...she's just a singer, nothing to do with anime at all...

(I am sorry for my first post to sound rude but I have worked for this company for 4 years and those people are my family and now my family is losing their jobs.)
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Nabeshin



Joined: 15 Apr 2005
Posts: 94

PostPosted: Mon Dec 19, 2005 3:11 pm Reply with quote
Kaliope wrote:
I work at Media Play and we really did try to cater to our Anime Fans.. it was big profit for us (just apparently not enough.) I ran the Anime Club and set up the anime events for our Replay members at my store. To me we are/were not JUST a dvd and music retail store.. we were there for the people and we ordered what they wanted, when they wanted it, if we did not have it.

I understand that some of you think this article has nothing to do with the Anime News Network or anything of the sort but Suncoast, Sam Goody, Media Play, Musicland Inc... they did try.. they set us up at a booth at AWA this year and we sold a lot of merchandise..I know because I worked at it. But that's ok because we're just another dorky retail store going out of business.
(I am sorry for my first post to sound rude but I have worked for this company for 4 years and those people are my family and now my family is losing their jobs.)


They also set up booths frequently partnered with ADV at various conventions, Anime Central being one of the bigger examples.

I feel your pain, Kali. I worked there too. I met a lot of like-minded, rational and fun people working there. My store I had so many loyal customers it became more of a clubhouse than a store. Granted, it was retail-- and retail is hell, undoubtedly.

But between mismanagement and trying to re-invent the wheel for a mall-based chain when big-box stores are filling up mall parking lots these days is too little too late. They need to focus on what works, and run with that. Media Play was a good idea, but suffered the first blow.
Ultimately, I argue its the full retail prices they offer. The only reason I even shopped there was because of my discount, and even sometimes that wasn't much and I was known to buy titles at other stores that actually had it cheaper.

That said, I also contend that this thread is extremely relevant to anime fans. Best Buys are not as bountiful as they may seem outside of big cities, and not everyone has a credit card to buy online. Musicland group filled that gap... but at quite a price to fans, to be sure.
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lantis



Joined: 21 Jul 2005
Posts: 23

PostPosted: Tue Dec 20, 2005 6:35 pm Reply with quote
Nabeshin wrote:

They also set up booths frequently partnered with ADV at various conventions, Anime Central being one of the bigger examples.

Actually this stopped last year. They did Anime Expo for Funimation instead of ADV last year. There seemed to have been a short term falling out between the two companies when Suncoast returned so much ADV goods after last Christmas season. In fairness they returned a lot of everyone's goods but ADV being the largest at that time got hit worse than most others.

I think they are on better footing now but I don't think the booths were very profitable anyway.

Doug
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dmanjdb



Joined: 22 Jul 2003
Posts: 111

PostPosted: Thu Jan 12, 2006 10:12 pm Reply with quote
I don't know if this is related but the manga section in the local Suncoast desapared. Which is weird since a dude that works there told me that manga sell really good.

Is this is part of the bankrupcy progress?
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nxprime



Joined: 25 Jan 2003
Posts: 10

PostPosted: Thu Jan 12, 2006 10:15 pm Reply with quote
This weekend I'm headed to Suncoast and buy Yoko Ishida's 'all of me' CD. Maybe Jpop 1 & 2 CD's as well.

Only retailer I know that sells Jpop and I only recently found out about them when I browsed through thier store. I bought some Giant Robo figs for my friend and he couldn't believe it that they sold that stuff there.
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Kiyoko



Joined: 27 Jul 2003
Posts: 124
Location: Pennsylvania

PostPosted: Thu Jan 12, 2006 10:31 pm Reply with quote
dmanjdb wrote:
I don't know if this is related but the manga section in the local Suncoast desapared. Which is weird since a dude that works there told me that manga sell really good.

Is this is part of the bankrupcy progress?


There was a thread about the manga issue over on AnimeonDVD. Someone who worked at a Suncoast said the manga distributor, Ingram, was displeased with Musicland closing Media Play stores. Since Ingram decided that Suncoast and Sam Goody alone would not provide good profits, they requested all Suncoast and Sam Goody stores to pack up and return their manga as they no longer wanted to do business with them. I heard that they will get a new manga distrubutor, but with who and when is still unknown.
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