In a world now fully impacted by COVID-19, it is disappointing that our industry currently on an upward trajectory as reported below, will be negatively impacted in 2020 along with many others by the nation-wide emergency we face. Nevertheless, good news is in short supply, so the following should give cause for optimism.
2019 saw an uplift in the overall music products market with a near 9% value increase over 2018, driven by a 9.5% increase in volume. With the currency consistent from year to year ending 2019 weaker at around 70cents against the US dollar and an Import value of well over $322million the highest total recorded in dollar terms. What appeared to be statistical anomalies in 2018 in Other Woodwind and Other Percussion perhaps proved themselves so with those segments returning to normal levels in 2019. A solid year in almost all categories and segments.
In the broad spectrum, Australian retail sales in December 2019 were below hopes and expectations. Multiple reductions in the cash rate in 2019 and federal tax cuts aimed to boost consumer expenditure did not do so with most households said to be using these extra funds to pay off debt or increase savings. The weakness was broad-based and led by discretionary areas. Music retail on the other hand, both anecdotally and supported by this year’s numbers, had a strong year of top line growth.
Led by New South Wales and Victoria, home prices made a recovery and with that some consumer confidence returned. Households were still being forced to curb spending as a result of weak income growth.
GDP growth for the year was modest at 2.8% and still largely mining sector driven but growth nonetheless and Australia could still boast a global record of 26 consecutive years of growth. Increasingly the population is asking where that is ending up as wages growth remains south of the GDP number and has done for some years now.
In 2014 our industry had started the long climb back from the lows of 2012/13. When we compare 2019 to the trends of the previous 5 years, we are looking back at a period of re-build following an economic slowdown and an industry re-organising after a major disruption. The 2019 data shows that we are now nearly back at 2014 levels in volume terms (around 2million units) at over 1.8million and import value has recovered to an all-time high of $332.6million, compared to $237m in 2014. Some of this may be due to data anomalies, but that may over-simplify the situation. An annual average value rise of 47% from $118 to $173 is notable. The AUV did stay almost steady this year, with the dollar figure driven by strong demand.
The 2019 results show another strong performance of the Keyboard category. The category value rose by another 6% to over $66 million. Units dropped nearly 4% driven by a fall in low value portable numbers.
Digitals continue to grow, perhaps at the expense of portable keyboards which fell 9% in volume and over 12% in dollar terms suggesting less leakage from digital pianos after the industry’s focus on correct coding a couple of years back. Digitals were up by 6% in units with the average unit value rising by nearly 5%. Upright piano numbers were down by over 400 units (nearly 9%), but the dollars were up by nearly 6% to nearly $20million. A good result indicating good demand in higher value instruments. The Upright drop in units imported was offset by a big jump in grand numbers year-on-year (of over 25%). Completing a very robust picture was a rise of 8% in value. Average unit value dropped by 14% with consumers preferring the lower price pointed new product to second-hand with those numbers showing no signs of recovery from the reduced numbers of 2018.
The Brass segment was back to a point of two & three years ago when 10,000 instruments were imported. While maintaining a decent average value in brass imports the 14% in extra units imported earned $6.8million. An 11% rise year on year and 14% over 2017!
Woodwind numbers bounced back strongly suggesting last year’s numbers contained some shipment cross overs and anomalies. All the same the numbers show cause for optimism with key segments back above 2017 levels and an 18% rise in value. However the drop in units comparing 2017 with 2019 would still suggest that the recorder trend is still downward. Orchestral strings were steady year on year rounding up a good year for what constitutes a big chunk of the schools’ market.
Percussion was up strongly on the 2018 year after a soft 2017. Drum kits are on fire and have recovered with a 50% jump in both value and units from 2017 and up 23% and 9% respectively year on year. Individual drums down in numbers and maybe some leakage into drum kits occurs in coding, but overall, the acoustic drum result was good.
Orchestral and Other Percussion quite simply bounced back with big increases in value (19%) and units (12.5%). Cymbals were interesting; a 39% jump in value on the back of 9% less units.
Guitars went nice and steady gangbusters! The overall volume in the guitar segment up 12% in 2019 and value likewise was up by 12% and average unit value consistent with last year. The Guitar category should be pleased with the 2019 result.
Electric guitars were up over 20% in units and value in units imported and up nearly 19% in dollars. Last year’s rise in average value continued an upward path and this applied across the category with acoustics up 11% on 2018 and 40% on 2017. With 166,000 units imported and perhaps 10,000 made locally, numbers were back above the record posted in 2017.
The value of Guitar and bass amp imports was steady with a big fall in average unit value from the past two years.
Overall, the electric guitar market bounced back breaking a downward trend of recent years and the other segments posted good results with the value of the guitar market bouncing back 20% when compared to 2017.
In Electronic Instruments we observe another big increase in Synths in 2019, (+20%) while the ‘Other’ segment thought to be driven by e-drums grew in units (+5%) but increased in terms of value (+10%). Turntables showed a decrease in units in 2019 of nearly 10% and Software posted a whopping 34% increase in value on the back of the same increase in average unit value.
Audio & Recording jumped 10% in value and a corresponding 7% in units over 2018. You must go back to 2008 to see $66million in import value for this segment. Speakers leading the way with a 23% import value increase showing a continued migration to powered speakers one would think as self-contained amps dipped in units (-5%) and value (15%). An adjustment from last year’s figures it appears. It was more than made up for by solid increases in signal processors, mixers and microphones.
Traditional products had a good year in terms of value with a 5% rise in 2019, on the back of a steady average import value and a 15% increase in units.
General Accessories, a good industry bellwether, was down a bit after a big jump in 2018, but still at an historically strong value above $24m in import value.
The continuing decline in international online sales would reflect the perceived ‘threat’ to the industry diminishing somewhat, especially with the way the exchange rate finished the year at around 0.70c and with the introduction of a GST on low value imported goods. Our
market is extremely sensitive to international currency trends and the Aussie dollar was on a downward path by the end of the year.
The value of the music retailer to the industry is something the association is keenly interested in promoting. The industry is developing in the online sales space and buying locally is an attractive proposition we believe.
The Music Trades magazine reports that the retail value of the US market advanced nearly 4% in retail value in 2019 year on year. This marked the eleventh market increase in succession after the 2008 financial crisis.
Copyright 2020 Australian Music Association