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Archive for July, 2017

Although many people must have thought that vinyl music records are long gone, record sales have actually been rising again in the past decade. This is not just about sales of used records but also of new albums and new editions of albums from past years. Moreover, not only veteran artists return to publish a vinyl edition of their new albums but also contemporary younger artists choose to publish their albums also as vinyl records. Not to be mistaken by any illusion however about this comeback, vinyl records are not returning to be a dominant format — they are still occupying only a marginal share of the recorded music market. Nonetheless, the revival of vinyl records is conspicuous vis-à-vis the newer technologies that have taken hold in the market since the 1990s.

In fact, this revival is not really ‘news’. The sales of records nearly died out in 2006. Yet soon after they have started climbing again — 2016 was the 10th consecutive year of growth in the US and the 8th consecutive year in the UK, mostly at a double-digit rate of growth. The renewed rise of records is catching attention because it happens to be the only format whose sales are increasing while other formats (e.g., CDs and even downloads of digital albums) are in decline. In a development that has attracted attention to this phenomenon more recently, in early December of 2016 weekly sales of records (£2.4m) for the first time surpassed revenue from digital downloads (£2.1m) in the UK. In the same period of 2015 sales of records reached £1.2m compared with revenue from digital downloads that was as high as £4.4m (The Guardian, 6 December 2016). Digital downloads are not losing indeed so much to vinyl records but primarily to streaming services — downloading or streaming digital content are closer substitutes, both more distinct from vinyl.

During 2016 unit sales of vinyl albums in the UK have risen by 52% to a volume of 3.2 million LP records, a record by itself. It was not the strongest year of growth (previous two years have seen a rate of ~65%), but that rate was nonetheless respectable, and over a span of four years the sales volume quadrupled. CDs remain the dominant format for albums: over 47 million units were sold in 2016, but that was 12% lower than a year earlier. Notably, downloads of digital albums fell 30% to 18.1m in 2016. Vinyl records account for 4.7% of album sales, physical and digital; while that is a modest share, it has mounted from 2.6% in 2015 and 0.8% in 2013 vis-à-vis a decline in sales of CDs and digital albums. (Source: British Phonographic Industry association, BPI, with Official Charts Company)

  • A metric of ‘Album Equivalent Sales’ (AES) attempts to accumulate digital and physical album sales together with album-equivalent content accessed by streaming (subscription). Out of the total volume of AES, physical albums accounted in 2016 for 41%, and vinyl LPs alone accounted for just 2.6% (up from 0.7% in 2013).

In the US the year 2016 overall was relatively poor in terms of growth rate (1.8%), nearly stagnant considering that since 2009 unit sales increased annually at rates between 20% and 40%. One might question thereof if the resurgence of vinyl LPs has reached its peak already or this is no more than a temporary halt. The better way to see this is to realise that after all the sales volume of vinyl album records has risen from a bottom level of about one million units in 2005-2006 to a level of 17 million units in 2015-2016, rising without a break throughout this period. (Source: Recording Industry Association of America, RIAA).

Even today CDs in the US (as in Britain) remain the more frequent album format purchased by consumers (99m in 2016), more than digital albums downloaded (86m). The sales volume of CDs was actually greater than digital albums all the time since the latter entered the market in 2004. However, CDs are no longer the strong force they used to be, far from it — in the late 1990s-early 2000s they reached levels around 900m, slide down to about 250m by 2010, and came below 100m last year. Yet, sales of digital albums (by downloading) that followed CDs got only as high as 116-118m (2012-2014) and are already coming down as well. Vinyl records constitute 15% of physical albums (up from 2% in 2011). Against this background the resurgence of vinyl record albums is at the very least intriguing.

The following chart shows the shifts between three main physical formats of albums followed by the digital format, based on the statistics of RIAA.

Vinyl LPs return as a small niche; since it constitutes less than 5% of the ‘album market’ it is difficult to discern the revival of vinyl records in the chart above (on the right-end). The next chart shows more clearly the new build-up of sales of vinyl after a long ‘silent’ period.

  • To maintain a common basis for comparison, ‘single’ editions in vinyl, CDs, cassettes and digital downloads are not listed here. Other formats covered by the RIAA include music video, DVD audio, download music video, and ringtones; notwithstanding, streaming (represented in ‘paid subscription’) is also omitted here (see detailed chart of RIAA).

Somehow it seems that digital albums never managed to replace the physical formats as in their primes. First, when it comes to downloads, it could be misleading to focus on albums because the major activity is in ‘single’ tracks. Unlike in the physical formats, downloads of ‘singles’ contributed from start much greater a volume than albums. Second, music listeners relatively quickly moved to on-demand streaming services, paid or free (e.g., Apple, Spotify — we can add to this video music clips viewed on YouTube). At the peak of digital albums four years ago (2013), 32.6m albums were downloaded in the UK — now listeners prefer to rely on streaming services (BBC, 3 Jan. 2017). The free services generate their revenue from advertising. Whether by downloading purchased tracks or by streaming, music listeners reveal stronger preference to create their own compilations or play-lists of songs (especially if one has grown up into the age of the Internet and mobile).

  • Notice the differences in the lists of artists leading the charts of 2016 in the UK in sales of vinyl albums (Top 10), most streamed artists, and combined sales and streams of albums (Top 10)(go to BBC).

The statistics of Nielsen Music for the US are somewhat different from RIAA though they indicate similar patterns. As reported by music magazine Billboard, 13.1m album units were sold in 2016 in vinyl format (making 11% of physical albums). Vinyl sales grew by as much as 10% over 2015 though at a lower rate than in previous years. It is also shown that CD album purchases are leading (104.8m) even compared with digital downloads (82.2m). However, the drop in sales of physical albums overall (-14%) is attributed to CDs alone (-16%). A press release by Nielsen Music suggests that listening to music through on-demand streams (audio & video) increases at the expense of digital sales.


Patrons of music stores in recent years could not ignore the re-appearance and spreading of larger displays of vinyl records — they became once again an integral part of the scene in store. This has emerged particularly as the domain of independent music stores following the demise or downscaling of large music and entertainment retail chains (e.g., Virgin Mega Store and Tower Records on the one hand and HMV on the other). While music fans started to return to independent stores, that was not enough for keeping-up their business. In 2008 American independent stores initiated the Record Store Day, celebrated on the third Saturday of April, to encourage music fans to visit and buy in their music stores; they accompanied this special day with new and renewed album special editions. Over the years the UK, Europe and more countries elsewhere have joined-in. The record store day has done miracles for reviving vinyl records: it helped to broaden the audiences interested in them and boosting their sales to new highs (Fortune, 16 April 2016). Records can now be found on sale in a larger variety of chain stores and are also purchased more frequently from online retail platforms. Vinyl records owe much to the independent retailers for their revival, but of course multiple parties benefit — producers, retailers, artists and consumers.

The segment first to be drawn by the comeback of vinyl records were music listeners in their 50s and 60s who have known records so well from their youth years. However, they are expanding from devout music fans of genres such as rock, pop, punk and electronic (‘New Wave’) into a wider audience of listeners (Baby Boomers and X-generation) with a feel for LP records.

Parents acquaint their children with this ‘old’ format and come with them to the store on record store days. People also return to buy record editions of albums they used to have but dumped them because they thought they were obsolete and will not be possible to play. Some buy them just for nostalgia or as collector items and may not actually listen to them. Yet BPI reports in its blog that over 300,000 new turntables were purchased in the UK in 2016, an increase of more than 60% — so more music listeners who return to vinyl do listen to the records again. Furthermore, Millennials show increased interest in vinyl records (Forbes, 12 January 2017), joining the original listeners to records.

On the latest record store day in Israel, an interesting mix of patrons was encountered at “The Third Ear”, one of the independent record stores in Tel-Aviv. As one might expect, there were mostly shoppers in their 40s+, but there was also a group of young guys who must have been in their early 20s at most. The latter were not browsing just CDs but gathered for a while at a display of records. Indeed, shoppers differed in genres and periods of albums they were browsing — whereas older shoppers were seen largely looking into albums of previous decades or newer albums of veteran performers, the youngest group focused on a collection of more contemporary music styles. Nevertheless, everyone seemed very busy, and more than a few appeared to know well what kinds of albums they were looking for. In an interview to business newspaper TheMarker, an owner of “The Third Ear” commented that in the past few years at least fifty new vinyl albums were issued in Israel — no one thinks that it is a great business, but things accumulate and it has built a mass not so bad (TheMarker, Hebrew, 26 October 2016). No vinyl records were pressed in Israel for twenty years, until about four years ago. A music store like this one can succeed by selling also CDs, music and film DVDs, and even turntables.

Vinyl records represent something different to music listeners from later formats of digital technology. From the early days of CDs there has been an argument about differences in the quality of sound between media formats and which has become even more intense with the transition to ‘file’ formats (e.g., MP3). In addition, the black records also feel differently as a physical medium — they signify tangible music, even better than CDs. Perceived similarities and dissimilarities are playing in shaping relations of substitution and preferences — analogue vs. digital and physical vs. virtual.

Proponents of vinyl records seek them for warmth and depth in the sound of music. It is widely accepted that the digital sound is cleaner than on records. But the sound on records is perceived more natural and authentic, even though a track may include blips and hisses once in a while. Note that misses can happen also on CDs, and if a digital file is damaged the whole track is often lost. Vinyl fans also prefer the records as souvenirs or artworks (including covers and booklets)(BBC). They may further carry an appeal of fidelity, romanticism and the ritualistic nature of the experience (Forbes). That is, records are carrying a sentiment missing from later formats. Another aspect not to be neglected is the ritual act that accompanies playing records — lifting the record carefully, wiping the dust, and putting it gently on the turntable before bringing the needle arm closer to the record and sitting to listen. Whether this a nuisance or a matter of bonding through touch with the music medium is a completely subjective matter. Yet, this bonding seems to have worked better with vinyl records than with metallic CDs. It is completely absent with virtual digital files.

Audio tape cassettes indeed are left forgotten. A great advantage of the cassettes was the ease of carrying them around and being able to hear music away from home on portable devices (e.g., Sony’s Walkman and compatibles) or in the car. They had, however, several technical flaws of working with a magnetic tape. It was a perfect fill-in that was just bound to fade away with the introduction of CDs and later portable media players (e.g., Apple’s iPod) for ease of handling and quality of sound.

As a digital medium, the CD could be more fluently substituted by virtual digital formats, files that can be downloaded from the Internet or listened to (and viewed) by streaming, as opposed to vinyl records. Nonetheless, streaming may actually contribute to purchases of physical albums in stores, particularly vinyl records. Music listeners search songs or other music pieces in streaming services, experiment with and experience them, get ideas, and after learning what they like look for the ‘original’ record album in a music store. Moreover, especially the younger listeners tend to continue their enquires online on their mobile smartphones while in the store. For senior fans, a shop owner in Brooklyn commented, it lacks some of the adventure and surprise of the old-fashioned shopping style for music (CNBC, 17 April 2017). Even so, adaptive changes in shopping styles can be tolerated if they happily lead to buying albums in music stores or shops. In the bottom line, it is acknowledged that vinyl records are desired for their tangible feel but with a warm sound, imperfect as it may be — “it’s highly personal” (CNBC).

Vinyl record fans emerge as a niche of music listeners. It is legitimate to question whether the rate of growth of record sales over ten years is sufficient for developing into a substantial and solid market segment. On the other hand, the way record sales have mounted is extraordinary given the conditions of technological evolution and competition in the music market. Vinyl records offer genuinely different, missed qualities of tangible feel and pleasure of listening to those who appreciate them. More marketing effort will be required to fuel continued growth — building on qualities of vinyl that make it special and encouraging more music listeners to join the niche (e.g., events, new and renewed editions, advertising in streaming services, and prompting more word-of-mouth and conversations in social media). Expansion of the vinyl niche can additionally benefit other sections of the recorded music market.

Ron Ventura, Ph.D. (Marketing)

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A shopper may well know what types of products he or she is planning to buy in a store, but what products the shopper will come out with is much less sure. Frequently there will be some additional unplanned products in the shopper’s basket. This observation is more often demonstrated in the case of grocery shopping in supermarkets, but it is likely to hold true also in other types of stores, especially large ones like department stores, fashion stores, and DIY or home improvement stores.

There can be a number of reasons or triggers for shoppers to consider additional products to purchase during the shopping trip itself — products forgotten and reminded of by cues that arise while shopping, attractiveness of visual appearance of product display (‘visual lift’), promotions posted on tags at the product display (‘point-of-purchase’) or in hand-out flyers, and more. The phenomenon of unplanned purchases is very familiar, and the study of it is not new. However, the behaviour of shoppers during their store visit that leads to this outcome, especially the consideration of product categories in an unplanned manner, is not understood well enough. The relatively new methodology of video tracking with a head-mounted small camera shows promise in gaining better understanding of shopper behaviour during the shopping trip; a research article by Hui, Huang, Suher and Inman (2013) is paving the way with a valuable contribution, particularly in shedding light on the relations between planned and unplanned considerations in a supermarket, and the factors that may drive conversion of the latter into purchases (1).

Shopper marketing is an evolving specialisation which gains increasing attention in  marketing and retailing. It concerns activities of consumers performed in a ‘shopper mode’ and is strongly connected with or contained within consumer marketing. Innovations in this sub-field by retailers and manufacturers span digital activities, multichannel marketing, store atmospherics and design, in-store merchandising, shopper marketing metrics and organisation. However, carrying out more effective and successful shopper marketing programmes requires closer collaboration between manufacturers and retailers — more openness to each party’s perspective and priorities (e.g., in interpretation of shopper insights), sharing information and coordination (2).

In-Store Video Tracking allows researchers to observe the shopping trip as it proceeds from the viewpoint of the shopper, literally. The strength of this methodology is in capturing the dynamics of shopping (e.g., with regard to in-store drivers of unplanned purchases). Unlike other approaches (e.g., RFID, product scanners), the video tracking method enables tracking acts of consideration, whether followed or not by purchase (i.e., putting a product item in the shopping cart).

For video tracking, a shopper is asked to wear, with the help of an experimenter, a headset belt that contains the portable video equipment, including a small video camera, a view/record unit, and a battery pack. It is worn like a Bluetooth headset. In addition, the equipment used by Hui et al. included an RFID transmitter that allows to trace the location of the shopper throughout his or her shopping path in a supermarket.

Like any research methodology, video tracking has its strengths and advantages versus its weaknesses and limitations. With the camera it is possible to capture the shopper’s field of vision during a shopping trip; the resulting video is stored in the view/record unit. However, without an eye-tracking (infrared) device, the camera may not point accurately to the positions of products considered (by eye fixation) in the field of vision. Yet, the video supports at least approximate inferences when a product is touched or moved, or the head-body posture and gesture suggest from which display a shopper considers products (i.e., the ‘frame’ closes-in on a section of the display). It is further noted that difficulties in calibrating an eye-tracking device in motion may impair the accuracy of locating fixations. The video camera seems sufficient and effective for identifying product categories as targets of consideration and purchase.

Furthermore, contrary to video filmed from cameras hanging from the ceiling in a store, the head-mounted camera records the scene at eye-level and not from high above, enabling to better notice what the shopper is doing (e.g., in aisles), and it follows the shopper all the way, not just in selected sections of the store. Additionally, using a head-mounted camera is more ethical than relying on surrounding cameras (often CCTV security cameras). On the other hand, head-mounted devices (e.g., camera, eye-tracking), which are not the most natural to wear whilst shopping, raise concerns of sampling bias (self-selection) and possibly causing change in the behaviour of the shopper; proponents argue that shoppers quickly forget of the device (devices are now made lighter) as they engage in shopping, but the issue is still in debate.

Video tracking is advantageous to RFID  and product scanners for the study of unplanned purchase behaviour by capturing acts of consideration: the RFID method alone (3) enables to trace the path of the shopper but not what one does in front of the shelf or stand display, and a scanner method allows to record what products are purchased but not which are considered. The advantage of the combined video + RFID approach according to Hui and his colleagues is in providing them “not only the shopping path but also the changes in the shoppers’ visual field as he or she walks around the store” (p. 449).

The complete research design included two interviews conducted with each shopper-participant — before the shopping trip, as a shopper enters the store, and after, on the way out. In the initial interview, shoppers were asked in which product categories they were planning to buy (aided by a list to choose from), as well as other shopping aspects (e.g., total budget, whether they brought their own shopping list). At the exit the shoppers were asked about personal characteristics, and the experimenters collected a copy of the receipt from the retailer’s transaction log. The information collected was essential for two aspects in particular: (a) distinguishing between planned and unplanned considerations; and (b) estimating the amount of money remaining for the shopper to make unplanned purchases out of the total budget (‘in-store slack’ metric).

237 participants were included in analyses. Overall, shoppers-participants planned to purchase from approximately 5.5 categories; they considered on average 13 categories in total, of which fewer than 5 were planned considerations (median 5.6). 37% of the participants carried a list prepared in advance.

Characteristics influencing unplanned consideration:  The researchers sought first to identify personal and product characteristics that significantly influence the probability of making an unplanned consideration in each given product category (a latent utility likelihood model was constructed). Consequently, they could infer which characteristics contribute to considering more categories in an unplanned manner. The model showed, for instance, that shoppers older in age and female shoppers are likely to engage in unplanned consideration in a greater number of product categories. Inversely, shoppers who are more familiar with a store (layout and location of products) and those carrying a shopping list tend to consider fewer product categories in an unplanned manner.

At a product level, a higher hedonic score for a product category is positively associated with greater incidence of unplanned consideration of it. Products that are promoted in the weekly flyer of the store at the time of a shopper’s visit are also more likely to receive an unplanned consideration from the shopper. Hui et al. further revealed effects of complementarity relations: products that were not planned beforehand for purchase (B) but are closer complementary of products in a ‘planned basket’ of shoppers (A) gain a greater likelihood of being considered in an unplanned manner (‘A –> B lift’).  [The researchers present a two-dimensional map detailing what products are more proximate and thus more likely to get paired together, not dependent yet on purchase of them].

Differences in behaviour between planned and unplanned considerations: Unplanned considerations tend to be made more haphazardly — while standing farther from display shelves and involving fewer product touches; conversely, planned considerations entail greater ‘depth’. Unplanned considerations tend to occur a little later in the shopping trip (the gap in timing is not very convincing). An unplanned consideration is less likely to entail reference to a shopping list — the list serves in “keeping the shopper on task”, being less prone to divert to unplanned consideration. Shoppers during an unplanned consideration are also less likely to refer to discount coupons or to in-store flyers/circulars. However, interestingly, some of the patterns found in this analysis change as an unplanned consideration turns into a purchase.

Importantly, in the outcome unplanned considerations are less likely to conclude with a purchase (63%) than planned considerations (83%). This raises the question, what can make an unplanned consideration result in purchase conversion?

Drivers of purchase conversion of unplanned considerations: Firstly, unplanned considerations that result in a purchase take longer (40 seconds on average) than those that do not (24 seconds). Secondly, shoppers get closer to the shelves and touch more product items before concluding with a purchase; the greater ‘depth’ of the process towards unplanned purchase is characterised by viewing fewer product displays (‘facings’) within the category — the shopper is concentrating on fewer alternatives yet examines those selected more carefully (e.g., by picking them up for a closer read). Another conspicuous finding is that shoppers are more likely to refer to a shopping list during an unplanned consideration that is going to result in a purchase — a plausible explanation is that the shopping list may help the shopper to seek whether an unplanned product complements a product on the list.

The researchers employed another (latent utility) model to investigate more systemically the drivers likely to lead unplanned considerations to result in a purchase. The model supported, for example, that purchase conversion is more likely in categories of  higher hedonic products. It corroborated the notions about ‘depth’ of consideration as a driver to purchase and the role of a shopping list in realising complementary unplanned products as supplements to the ‘planned basket’. It is also shown that interacting with a service staff for assistance increases the likelihood of concluding with a purchase.

  • Location in the store matters: An aisle is relatively a more likely place for an unplanned consideration to occur, and subsequently has a better chance when it happens to result in a purchase. The authors recommend assigning service staff to be present near aisles.

Complementarity relations were analysed once again, this time in the context of unplanned purchases. The analysis, as visualised in a new map, indicates that proximity between planned and unplanned categories enhances the likelihood of an unplanned purchase: if a shopper plans to purchase in category A, then the closer category B is to A, the more likely is the shopper to purchase in category B given it is considered. Hui et al. note that distances in the maps for considerations and for purchase conversion of unplanned considerations are not correlated, implying hence that the unplanned consideration and a purchase decision are two different dimensions in the decision process. This is a salient result because it distinguishes between engaging in consideration and the decision itself. The researchers caution, however, that in some cases the distinction between consideration and a choice decision may be false and inappropriate because they may happen rapidly in a single step.

  • The latent distances in the maps are also uncorrelated with physical distances between products in the supermarket (i.e., the complementarity relations are mental).

The research shows that while promotion (coupons or in-store flyers) for an unplanned product has a significant effect in increasing the probability of its consideration, it does not contribute to probability of its purchase. This evidence furthermore points to a separation between consideration and a decision. The authors suggest that a promotion may attract shoppers to consider a product, but they are mostly uninterested to buy and hence it has no further effect on their point-of-purchase behaviour. The researchers suggest that retailers can apply their model of complementarity to proactively invoke consideration by triggering a real-time promotion on a mobile shopping app for products associated with those on a digital list of the shopper “so a small coupon can nudge this consideration into a purchase”.

But there are some reservations to be made about the findings regarding promotions. An available promotion can increase the probability of a product to be considered in an unplanned manner, yet shoppers are less likely to look at their coupons or flyers at the relevant moment. Inversely, the existence of a promotion does not contribute to purchase conversion of an unplanned consideration but shoppers are more likely to refer to their coupons or flyers during unplanned considerations that result in a purchase.  A plausible explanation to resolve this apparent inconsistency is that reference to a promotional coupon or flyer is more concrete from a shopper viewpoint than the mere availability of a promotion; shoppers may not be aware of some of the promotions the researchers account for. In the article, the researchers do not address directly promotional information that appears on tags at the product display — such promotions may affect shoppers differently from flyers or distributed coupons (paper or digital via mobile app), because tags are more readily visible at the point-of-purchase.

One of the dynamic factors examined by Hui et al. is the ‘in-store slack’, the mental budget reserved for unplanned purchases. Reserving a larger slack increases the likelihood of unplanned considerations. Furthermore, at the moment of truth, the larger is the in-store slack that remains at the time of an unplanned consideration, the more likely is the shopper to take a product from the display to purchase. However, computations used in the analyses of dynamic changes in each shopper’s in-store slack appear to assume that shoppers estimate how much they already spent on planned products in various moments of the trip and are aware of their budget, an assumption not very realistic. The approach in the research is very clever, and yet consumers may not be so sophisticated: they may exceed their in-store slack, possibly because they are not very good in keeping their budget (e.g., exacerbated by use of credit cards) or in making arithmetic computations fluently.

Finally, shoppers could be subject to a dynamic trade-off between their self-control and the in-store slack. As the shopping trip progresses and the remaining in-store slack is expected to shrink, the shopper becomes less likely to allow an unplanned purchase, but he or she may become more likely to be tempted to consider and buy in an unplanned manner, because the strength of one’s self-control is depleted following active decision-making. In addition, a shopper who avoided making a purchase on the last occasion of unplanned consideration is more likely to purchase a product in the next unplanned occasion — this negative “momentum” effect means that following an initial effort at self-control, subsequent attempts are more likely to fail as a result of depletion of the strength of self-control.

The research of Hui, Huang, Suher and Inman offers multiple insights for retailers as well as manufacturers to take notice of, and much more material for thought and additional study and planning. The video tracking approach reveals patterns and drivers of shopper behaviour in unplanned considerations and how they relate to planned considerations.  The methodology is not without limitations; viewing and coding the video clips is notably time-consuming. Nevertheless, this research is bringing us a step forward towards better understanding and knowledge to act upon.

Ron Ventura, Ph.D. (Marketing)

Notes:

(1) Deconstructing the “First Moment of Truth”: Understanding Unplanned Consideration and Purchase Conversion Using In-Store Video Tracking; Sam K. Hui, Yanliu Huang, Jacob Suher, & J. Jeffrey Inman, 2013; Journal of Marketing Research, 50 (August), pp. 445-462.

(2) Innovations in Shopper Marketing: Current Insights and Future Research Issues; Venkatesh Shankar, J. Jeffrey Inman, Murali Mantrala, & Eileen Kelley, 2011; Journal of Retailing, 87S (1), pp. S29-S42.

(3) See other research on path data modelling and analysis in marketing and retailing by Hui with Peter Fader and Eric Bradlow (2009).

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