We are absolutely devastated that we have to close down the business which our parents founded over 50 years ago and which, in the past few years, we have continued to run. We have a fantastic customer base, we have plenty of orders, we have a high frequency of customers visiting our shop. We have the best colleagues ever and, of course, we have the immense passion which pervades our business. Nevertheless, this is not enough to secure our existence.
It should be mentioned that we are a part of a development which has already seen numerous other music shops being forced to close their doors. How many shops such as ours are still open in Germany? The financial situation of both owner-run retail trade as well as of culture in general is not rosy.
Why is that the case? Each music shop has its own history, but many aspects will be common to all, the main one being: it has to be possible to make a living from the business.
The profit margin is determined by the wholesale price. Since we are a small medium-sized business, we are not in a position to compete with the storage facilities available to other firms. This also means that, unlike these other firms, we are unable to obtain the best discounts through economies of scale, and sometimes, we are unable to buy from some suppliers because we just cannot order their required minimum quantity or we have to pay excess on the orders.
Firstly, there is the pressure from the market. Prices are dictated by the internet, whereby such additional costs as postage and packaging need to be factored in. (Our in-house policy of charging 3 euros for P&P within Germany has garnered criticism, as has the fact that we do not enclose free-post labels for the free return of unwanted goods.) In addition, the internet playing field is not even – we have to compete against firms who do not pay taxes in Germany, who do not employ specialist staff, and, indeed, who underpay their employees; such firms have no scruples in maximising their profit at the expense of others, such as ourselves.
The profit margin is determined by the wholesale price. Since we are a small medium-sized business, we are not in a position to compete with the storage facilities available to other firms. This also means that, unlike these other firms, we are unable to obtain the best discounts through economies of scale, and sometimes, we are unable to buy from some suppliers because we just cannot order their required minimum quantity or we have to pay excess on the orders.
The suppliers of sheet music, too, are reducing our profit margins: discounts are decreasing, postage and packaging is becoming more expensive, quantities necessary to qualify for free post are being increased or are no longer available.
There are many other costs which the majority of customers are not aware of, such as fees for PayPal. Some time ago, the Consumer Protection Act introduced the regulation that fees may no longer be transferred to the consumer. Fees which we have to pay for transactions from overseas or from outside the Eurozone are increased by currency exchange fees. We have always tried to procure editions from all over the world. Not only are the P&P costs exorbitant but we also have to pay customs duty on the goods. For the past 18 months, the act of customs clearance has also incurred fees!
Suppliers often also supply goods directly to the consumer. Life becomes even more difficult when wholesalers take on the role of retailers – how can we compete?
Further market forces come into play when schools and other institutions have to put their orders out to tender and have to accept the cheapest alternative – service, advice, and trust, all of these aspects become irrelevant. In the past, it such orders were nice-to-have, but it makes no sense if no profit is to be made. And how often have we heard from the institutions concerned how difficult it is to get tenders? This is because the cost of putting forward such a tender usually surpasses any profit margin.
We have always enjoyed demonstrating our specialist knowledge! But some of our customers have merely taken advantage of this, accepting our sound advice … and then buying elsewhere. How often have we been confronted by customers having bought a guitar over the internet but wishing to be given personal advice about a suitable guitar support.
The impact pressure “from above” has had on the business has been immense. More and more regulations, conditions and laws have been imposed which have led to more and more work which, in turn, costs both time and money. Or even worse, the necessity to instruct lawyers or similar bodies in order to avoid legal proceedings. We have to deal with such things to the same extent as larger firms or even global enterprises which have their own legal and financial departments at their disposal. It is becoming increasingly difficult to plan the costs. As in many other branches, the time which is invested in administrative tasks must be subtracted from other, specialist work. Our reserves have unfortunately run out; we can no longer fulfil the demands, e.g. of packaging regulations, data protection regulations, Cites (Brazilian rosewood), compliance regulations of the banking industry, health and safety, battery regulations, and so on.
Thus, we are facing sinking profit margins alongside rising costs. We have never been able to complain about having nothing to do: when other businesses had falls in sales during the summer, we had more than enough opportunities for our staff to take our wares to the customer and complete our transactions with them there. There is no longer any way of reducing costs.
What does the future hold?
The above-mentioned conditions are not likely to improve.
The photocopying agreement between VG Musikedition and German schools of music has excluded us from that market. The number of music schools signing the agreement does not seem to be abating.
The fixed-price policy for sheet music in Germany is often undermined by imports from abroad.
Increased digitisation means that the sheet music retail trade is becoming obsolete. Portals for downloading sheet music will become increasingly predominant and will eventually take over the place of retailers on the market.
“Our” platform for guitar and mandolin ensembles is steadily declining.
Societal developments are also worrying: pupils now spend all day in school, where there are more and more activities for them to participate in and where it is often possible for them to borrow instruments which have been purchased, of course using the above-mentioned tender method.
Fewer and fewer adults are choosing to spend their free time learning a musical instrument, in part due to the way their working lives encroach on their private lives.
The result remains the same: our customer base will steadily decline.
We have, of course, asked ourselves whether we can and should change our range and concept. No! we could never agree to becoming a different kind of music shop or solely an internet-based business. “Trekel” is a brand which stands for the guitar, for the mandolin, for the plucked-string orchestra, for service, for giving advice, for honesty, for respect, trust and reliability … in short, for customer service.
We are still in a position to quit this market on our own terms and with our heads held up high, and it is just that which we have decided to do.
Our hearts bleed to give up the life-work of our parents, to disappoint all our valued customers, and to say good-bye to our wonderful staff. We are sad that the knowledge, the competence and the network which has so defined our business will be lost to the future.
We would like to take this opportunity of thanking everybody who has valued and supported our business over the years – it was a great time and that is how we will remember it.
Thank you for the translation Fiona Bubbers!