Bye-Bye, Vinyl, Bye-Bye : Music Plus and Other Stores Stop Selling LP Records, Cite Slow Sales and Rise of CDs

The long-playing record is about to go the way of the 5-cent Coke, the Saturday afternoon double feature and the free-service gas station.

The longtime undisputed heavyweight champion of the record business, the vinyl LP, is on the ropes.

Fourteen Music Plus record stores in Southern California this week stopped carrying vinyl albums, while selected outlets in the 223-store Wherehouse chain will probably follow suit in the next few months. Both moves reflect a nationwide trend among record stores to abandon the LP, which was introduced 40 years ago and quickly became the most popular medium for recorded music.

LPs are being pulled out of the Music Plus locations on a store-by-store basis, according to Mitch Perliss, director of purchasing for Show Industries, the 59-store chain’s parent company.

“The consumer, in a general way, has told us that he or she is interested in having their audio experience either on cassette or CD format,� Perliss said this week.

As the much-conjectured demise of the LP shifts from rumor to reality, Music Plus’ move exemplifies the swift infiltration of the compact disc into the marketplace since its introduction in 1983. At that time, it appeared unlikely that the new format would supplant the vinyl LP before the year 2000--if ever.

Equally evident is the continuing strength of the audio cassette, which maintains an average 40%-50% share of retail sales in the face of mushrooming popularity of the CD, which now accounts for as much as 50% of music sales in some stores.

“My feeling is that a year or year-and-a-half from now, there will be very few stores that are in the vinyl business--not just Music Plus, but most of the major record chains,� Perliss said. He added that all Music Plus stores will continue to stock vinyl 12- and 7-inch singles.

As if to prove the point, a Wherehouse official said this week: “I envision that (elimination of LPs from some stores) will happen very soon, probably within the next three or four months. . . . For us, LPs are less than 10% of our music (sales), and they are heading toward 5%. Four years ago they were about 40%.�

While all Wherehouse stores currently carry LPs, newer locations such as the Beverly Center store in Los Angeles stock fewer than 300 LPs, “which isn’t very

much considering some of our stores have 15,000 to 20,000 LPs,� said Jim Dobbe, who oversees buying of music merchandise for the chain.

Most major record companies have recently adopted policies that pay stores less for unsold LPs they return to the companies than for unsold cassettes or CDs that are sent back.

Perliss, however, said Music Plus’ decision to remove vinyl albums from some stores is unrelated to those “return� policy changes.

“In terms of the entire Music Plus chain, vinyl LPs have gone from 10% of total music sales a year ago in January to somewhat less than 4% now,� Perliss said.

“We are just looking at our sales figures and asking whether there are locations that no longer need the configuration. We have other stores that are doing 10% to 12% to 15% sales in vinyl and in those locations we’ll continue our commitment to LPs as strong as we have in the past.�

While video sales and rentals have come to take over as much as half the floor space in some Music Plus stores, the phase-out of vinyl LPs “has nothing to do with some other product taking up available floor space. It comes back to what the consumer wants--if they told us they still wanted to buy vinyl, we’d find the floor space for it.�

Instead, the compact disc is largely responsible for the public’s disenchantment with the LP.

Figures from the Washington-based Electronic Industries Assn. show that sales of CD players have jumped from 1 million units in 1985 to 5 million last year. The association estimates that 6 million players will be sold this year. The association does not break out individual figures for turntable sales, but Pfanstiehl, one of the largest manufacturers of replacement needles, reports that 4.5 million turntables were sold in 1988 and that there are 60 million currently in use.

Perliss said LPs that stores are returning to the company’s headquarters may end up at a Music Plus “outlet store� in Long Beach, where most of the chain’s overstock, cutouts and other miscellaneous products are sent.

Employees at several Music Plus stores that are shipping LPs back to the chain’s headquarters this week reported that vinyl albums constitute only 1% or 2% of their sales.

“My God, it’s ridiculous,� said Christopher Lopez, manager of the Santa Ana Music Plus, which retains two small bins of LPs among dozens of racks of cassettes and CDs. “I don’t think we sell five LPs a week. People hardly ever ask for albums anymore. They have a cassette player, a boom box or a CD player in the car, so who needs vinyl? When people do ask for something on LP, we’re shocked.�

Tower Records and Musicland/Sam Goody chains, however, will continue stocking vinyl albums for the foreseeable future, although the floor space they devote to LPs continues to shrink, company officials said.

“We have no date picked out when we will definitely be out of the vinyl LP business,� said Bob Henderson, senior vice president and general merchandise manager for the Musicland Group, which owns 650 Musicland and Sam Goody stores nationwide.

“We plan to continue stocking them, but in a more limited assortment. That’s dictated by two things: first, declining sales, which are down to 10%.� Henderson said cassettes represent 50% of the chain’s sales, with CDs close behind at 40%.

“Also, manufacturers are deleting many items from their catalogues, so we sometimes can’t get titles on LP even if we want them. . . . I have heard of some stores dropping them, but others are still supporting them very strongly. I don’t see any industry-wide trend to drop LPs.�

Mass merchandisers, however, began moving away from the LP long before record retailers did.

“A number of the accounts we service do not carry vinyl LPs, and I suspect that there are a number of others that will eliminate them soon,� said Frank Hennessey, president of the Handleman Co., the Michigan-based firm that supplies records to 5,500 deparment stores and general merchandise outlets including K mart, Wal-Mart, Dayton-Hudson and others.

“We saw the drop-off in LPs coming years ago,� Hennessey said. “Our mission in life is to maximize sales and profits for our customers by maximizing sales per square foot and profitability with the right configuration mix. The LP is no longer in the right configuration mix for many of our customers.�

At the mammoth Tower Records stores, LPs do not appear to be in jeopardy.

“As far as we’re concerned, the LP market is still viable,� said Robert Stapleton, manager of Tower’s El Toro store. “My problem is that I have a limited amount of money to spend on merchandise. Unfortunately, the configuration with the least sales is LPs, so that’s what I have the least money to spend on more product. I could sell more LPs if I had more, but I have to work with a budget.�

Stapleton said CBS Records’ latest catalogue to retailers substantially reduces the number of album titles that are available on vinyl. “REO Speedwagon had something like 13 albums in the last catalogue--now I think there are only two you can order on LP.�

CBS is in the midst of “developing a new program to organize means by which those titles that there is a call for will be made available,� said Bob Altshuler, CBS vice president of press and public affairs. He did not, however, detail the program, which he said will be announced soon, or indicate whether recently deleted LP titles may be restored in the catalogue at budget prices.

In the meantime, the company’s official position is that “we think there is a substantial marketplace for the LP, now and in the years to come,� Paul Smith, CBS senior vice president and general manager of sales and marketing, said in a Feb. 11 story in Billboard. “We want everyone, including ourselves, to deal with it intelligently.�

But some retailers accuse manufacturers of hastening the demise of the LP with catalogue cutbacks and the restructured return policies. (Accounts can return merchandise that doesn’t sell, but they don’t get full credit on the amount each record or tape cost them. Now, the penalty for returning LPs is even higher, penalizing customers who order more than they sell. For example, where a record company might have credited a client with 95% of what the client paid, now the client gets only 90% back.)

“They say, ‘I support it’--but then tell you, ‘I’m deleting this and I didn’t fill this order last week for you,’ � the Wherehouse’s Dobbe said.

“It’s a way to make retailers keep LPs in the store longer,� Stapleton said, “but I think it’s also a way to get retailers to be more careful in ordering.�

Manufacturers defend their restructuring of return policies and deletions of some catalogue items on LP as common-sense responses to the changing marketplace, maintaining that their support of the LP is not flagging.

Several record company officials interviewed acknowledged that despite the general downturn in LP sales, the format continues to play an important role in particular genres, such as black music, jazz and heavy metal.

“As far as cutting out vinyl, or not doing certain titles on LP, that’s a long way down the road--we’d be talking a couple of years in the future before there are any changes like that,� said Pam Haslam, vice president of communications for PolyGram Records.

As to the increased penalties for returns of unsold LPs by manufacturers, some of whom have simultaneously increased their LP purchasing bonus incentives, “We’re saying that dramatic changes have taken place and we all need to be more realistic and not overorder,� said Skid Weiss, national director of communications for Warner-Elektra-Atlantic Corp., the record distribution arm of Warner Communications Inc.

“It’s so easy to become to overreact, as if suddenly there’s a panic situation that takes place,� Weiss said. “We don’t think those conditions exist. . . . Much of what retailers are doing is experimental, and I wouldn’t be surprised in a few months if they go back and restore LPs in stores where they are taking them out.

“It’s not only a quantitative analysis and judgment that apply,� Weiss said. “You’ve got to be a little sensitive to a group (of LP consumers) that may not be the majority anymore, but it is still an important minority that was once the backbone of this business, and you can’t forget that.�