“Music is a rendition of your soul. It’s something through which you can get deeply touched. It’s present in everybody whereas some people express it and some people just enjoy listening to it.”

By: Shreya BakhshiStudent ID: 4727645

New Zealand’s largest retailer of new and used music, books, games and DVD’s.

4 stores nationwide:oAucklandoWellingtonoDunedinoChristchurch

Real Groovy believes in the range/ quality over price.

One of their great strengths is Vinyl records or LPs.

Some music lovers who collect LPs, greatly admire Real Groovy’s collection.

Another of Real Groovy’s strengths is the fact that it’s a Go-To Retailer.

Real Groovy’s customers can go to them for insurance claims.

Incase a customer loses their CD collection in an accident, Real Groovy replaces their collection for them.

This way, Real Groovy earns the trust and loyalty of their customers.

Real Groovy also runs 2 loyalty schemes and publishes 2 magazines.

Real Groovy is currently experiencing a downfall in sales. The reasons for this downfall are:

oDigital download Vs CD sales:oNew competitors & Price CompetitionoThe Generation Gap

Increasing popularity of digital downloads has become a threat to Real Groovy’s CD sales.

The above conclusion can be drawn from the statistics of album sales in the US.

o 2007 – Album sales plunged 9.5% compared to 2006.

oSales for digital music surged 45%

A generalization can be made about the current situation of Real Groovy.

Considering the size of the US music retail industry, a similar fate of the NZ music retail industry is evident.

Also, turnover in NZ music retail industry (2001 – 2005) dropped by 35% & in the last 6 years, number of music retailers in NZ has dropped from 195 – 167.

Above statistics suggest that digital downloads have become a giant threat for Real Groovy.

Hence the considerable growth in the digital music industry has become a great threat to Real Groovy and the NZ music industry.

Another threat to Real Groovy is a new competitor : JB Hi-Fi.

Real Groovy believes in quality/range over price.

Because of such a policy, JB Hi-Fi is giving tough competition to Real Groovy.

JB Hi-Fi is known for selling heavily discounted goods, be it CDs, DVDs or electronic goods.

Along with the above point, JB Hi-Fi also has a wide range.

Real Groovy however concentrates more on their range and less on their price.

Hence, Real Groovy high price range is proving to be a great economic threat when compared to JB Hi-Fi’s low prices.

Real Groovy is facing a huge generation gap.

They have lost a whole generation as their customers.

One reason for this is their high price.

The younger generation, being mostly teenagers (students etc.) do not want to spend much, hence don’t opt for CDs.

Another reason is digital downloading.

Digital downloading is much faster, cheaper and easier than purchasing CDs.

According to a New Zealand Herald article: Explosive growth in in digital music industry – “..the gathering habits of the new generation aren’t going to change much. They (the younger generation) will end downloading from the internet legally or illegally, but hardly go to the music retail store.”

This is one of the reasons why Real Groovy’s competitor – Sounds - went out of business recently.

Just like Sounds, Real Groovy too could face similar circumstances.

Apart from the reasons mentioned above, another reason is that Real Groovy hasn’t been able to appeal to youngsters.

Music retailers like JB Hi-Fi and The Warehouse more to the younger generations due to their great discounted prices.

Real Groovy’s strength - Vinyls records- have turned out to be a threat in this situation.

Hence as a future strategy, Real Groovy needs to focus their attention on gaining their back the one generation that they had lost.

Firstly, Real Groovy should concentrate a little more on their pricing, as it is one of their main issues.

Focusing on their range is an advantage, but the price should be reduced, so they can compete with their rival JB Hi-Fi.

Real Groovy also needs to focus themselves more on the younger generation to gain more customers and increase sales.

LP’s are one of Real Groovy’s strengths, but to focus more on the younger generation, they need to come up with a fresh idea.

Real Groovy should start online downloads from their website at low prices.

This way they can attract the one whole generation that they had lost.

Real Groovy should also advertise more to increase popularity.

This could have a positive effect on their image and hence sales, as more people, especially the younger generation will find out about Real Groovy.