Republished from NZRetail's October 2014 issue.
With 200 full time equivalent staff, 31 shops and two online stores, the Rockshop is New Zealand’s biggest musical instrument retailer. It’s owned by Webb Group, which also owns orchestral and traditional instrument retailer KBB Music, and supporting importing and distribution businesses.
Webb Group HR and operations director Brett Wells says acoustic guitars are the most popular product group, influenced by the likes of Ed Sheeran, Taylor Swift and her peers. DJ gear is now making a big comeback, and, names New Zealand DJ software package Serato as a recognised world leader. While schools provide a captive audience, other strong markets include contemporary churches and aging boomers.
“Churches’ music teams can be massive and big churches can have three teams so the service will go all day. They’re buying huge PAs, massive drum kits, high-end, mostly digital mixing desks and wireless systems. It’s a real event,” says Wells.
Institutional customers, including churches and schools, qualify for professional discount prices.
For baby boomers recapturing their youth, spending $10,000 on the Fender Stratocaster and Marshall amp is a credible alternative to the $30,000 Harley. “That’s the biggest market for the top end stuff. The kids have left home, the Rolling Stones are still touring into their 70s, so these guys are thinking, ‘I’m not getting any younger, so why not?’”
The biggest growth area, though, is in the mid-range where the quality is mostly “good enough”. This is partly due to the lack of paying band jobs, partly due to new technology. “If I play a pub gig now I make the same money as I was making 25 years ago,” Wells says. “So rather than playing live, there’s a stronger emphasis on being a recreational player with a good guitar and the ability to record a track at home, post it on Facebook and distribute it all over the world. Music has exploded as a recreational activity but there’s no incentive to spend money on serious gear. The quality of equipment coming out of Asia and Mexico is good enough that it will do the job quite well. Our competition is with other stores in the recreational/lifestyle expenditure.”
Regarding online shopping, Wells says: “The net giveth and the net taketh away." The internet has given New Zealand customers a view of the global product range, with the expectation the goods will be available here. For big purchases, like a new drum kit, many people will prefer to try before they buy, but many other purchases are perceived as commodities Amazon can provide.
“The challenge is the internet offers you everything that ever was and so people want it here. Every time we bring a product into the country we see what the minimum advertised price is in the United States, then we look at the costs involved to land it and see how close we can get to that. But we have to ship it 10,000 miles and pay GST , insurance, be compliant with local regulations, provide warranty, carry spares and all that’s required to be a bona fide supplier.”
Wells says the internet encourages unrealistic price expectations and is critical of government authorities policing imports: “There’s a plethora of pop-up, internet-only resellers purporting to offer authorised products, service and warranty. Most have no actual business space - product is ordered by the client, paid for, then sourced from overseas. They may ignore regulations and consumer protections. Many offer no NZ warranty but a 'return to base' warranty… wherever that base may be! They are a constant source of price challenges, comparisons and frustration.
“Sales tax is applicable on imported items costing more than $400, but the enforcement is seemingly random or at the discretion of the customs agent and seldom enforced. Bona fide importers are consequently at a disadvantage: we pay on everything,” says Wells.
The Rockshop's website includes a warning for anyone considering importing directly, stating in no uncertain terms that the Rockshop, as official importer of most of the world’s leading brands, has no responsibility for warranty, parts and support on goods purchased from overseas, bypassing the official supply channels.
The group was an early adopter of e-commerce and has been running an online sales portal for more than a decade. Currently it operates two web stores – rockshop.co.nz and KBBMusic.co.nz. These make up less than 5 per cent of the Group’s turnover, but are a very dynamic division; the online stores’ prime role is still to encourage potential customers into the bricks and mortar stores “where we have made the biggest investment”.
The Webb Group carries more than 40,000 SKUs and Wells says, “We’d love to have them all in every location but we simply can’t." The solution is to list the stock online, and have a free interbranch freight service to bring goods to the local store within a couple of days for a viewing or hands-on trial. “We can do an overnight courier if it’s urgent. Every stock item is available to every client.”
Directing customers in-store means the group needs to provide good service and good sales skills to close the sale while the customer is there. Wells says service is fundamental to the Rockshop culture, which is built on recruiting active musicians and giving them retail skills. Founder Mick Webb began his musical performance and management career in London in the 1960s.
“All of our directors, senior staff, product managers, marketing and design, wholesale employees, the technical service division, and the IT team are active gigging musicians, keeping a real musical connection between the company and its clients,” Wells explains. “I can relate as a director with the guy who started yesterday by talking about the gig I played on the weekend.”
Webb Group has a strong emphasis on formal training, and everyone working in the retail side of the business must complete ServiceIQ Level 2 retail training in their first year.
“ServiceIQ provides industry best-practice and gives us a set of expectations to map individual progress against. Level 2 is essential, but we also have a bunch of people doing Level 4 who are not yet in management. They know it will count in their favour when a management role comes up. We also use other recognised training providers to keep people progressing once they’ve completed all the currently available ServiceIQ qualifications.”
The strong company culture includes calling the tune, rather than following others. Webb Group doesn’t work with other retailers to promote musical culture. Instead it works directly with events and promoters. Alongside SmokefreeRockQuest, it sponsors BandQuest in Intermediate schools, Play It Strange and Jam Bus, and has involvement with Raukatauri Music Therapy, StarJam, and Westpac Rescue. The Rockshop brings in artists and specialists from overseas for free clinics. “It costs us thousands but it’s an opportunity for our clients to meet the guys who make and play the gear.”
Rockshop’s strategy and passion lies in both encouraging existing musos and developing new talent. It has sponsored the SmokefreeRockQuest since day one, and has three full-time educational resource specialists out on the road going into schools all over the country.
Wells says the group has a database of 400,000 customers which it is yet to take advantage of in loyalty programmes (soon!), and it doesn’t do Flybuys because of the expense.
But Wells says there’s never been a better time to be a musician. Equipment is available at good prices and good quality, and technology, including the internet, opens up many new channels for musos – you can write a song, edit it on your computer or smart device, and send it round the world. People look at the success of Lorde – she’s 17, from the North Shore, and she’s huge all over the world. They look at her and think, ‘I want to do that too’.”