Musica, the retail chain offering music and other gaming, DVD and lifestyle products that is owned by listed health and beauty retailer New Clicks Holdings, plans to open its first store selling only DVDs (excluding CDs) on a trial basis in Cape Town in early January, the company revealed in its 2004 annual report.
New Clicks, which also owns the CD Wherehouse music chain, said the innovation came about due to the “massive” growth of the DVD format in South Africa in recent times. The company has seen a sharp rise in DVD sales over the past year, growing from 7% to 13% of its total sales.
This growth forms part of the company’s strategy to continue to diversify sales away from a reliance on CDs by boosting its DVD, gaming and lifestyle product sales as a percentage of its overall turnover.
Although in 2004 it was able to increase non-CD sales to 18,2% of total sales from 11,3% in 2003, its target for the end of 2005 is a substantial 35%.
The group plans to add a further five to seven Musica stores in 2005, while the urban stores will be upgraded. Altogether the group can boast 128 Musica stores across South Africa and another six in Botswana and Namibia, and there are four CD Wherehouse stores in South Africa.
Musica and CD Wherehouse were able to boost sales growth for the year to the end of August 2004 by 12,8%, to a total of R544,2-million, up from 9,8% growth in 2003. Together the two chains give New Clicks the title of largest music retailer in South Africa, boasting a 45% share of the CD market.
Music fans will be glad to know that the chain will continue to offer aggressive promotions in 2005, including that introduced in mid-2004 of reducing the price of the top-20-selling CDs to R99,95. After disappointing sales growth of only 6,1% in the first six months of its 2004 financial year, the top-20 promotion lifted sales by 21,3% in the second half of the year, albeit at the expense of margins.
For 2005, New Clicks says that the sales growth seen in the second half of 2004 is likely to be maintained into the new year, driven by the promotional pricing strategy. DVD sales are expected to increase strongly, and with Musica having been “rejuvenated” as a brand, it can expect to benefit from continuing strong consumer spending patterns.
New Clicks shares were last quoted on the JSE Securities Exchange at R9,40, unchanged from Monday’s close in only five trades so far on the day. — I-Net Bridge