Musica bullish despite iTunes arrival

·18 Jan 2013

Musica, the South African music and entertainment retailer, is optimistic that the arrival of iTunes in South Africa will complement its offering and stimulate the local music industry.

Apple’s iTunes Store was officially launched in over 50 new countries, including South Africa, in early December.

What can be described as Musica’s equivalent in the UK, HMV earlier this week announced that it was going into administration citing a consumer shift toward online shopping and digital downloads.

“Musica welcomes the launch of iTunes in South Africa and we are certain this online music store will stimulate our country’s music industry and music lovers alike,” said Moenieba Abrahams, Musica’s marketing & HR manager.

Abrahams noted that iTunes was always available in South Africa, “just not legally until now”.

“The official launch in South Africa sits comfortably with our expansion into entertainment-related products such as headphones, portable speakers, docking stations, etc.”

“In fact, since we’re the largest stockist of headphones in this country, our brand will complement iTunes as more customers will be inspired to accessorise their music systems,” the marketing lead said.

Abrahams opined that CD sales were likely to increase “as they will benefit from additional exposure through iTunes, combined with the continuing demand for the physical format that still exists in this country”.

In results for the year ended August 2012, Musica, which is under the Clicks Group of businesses, said it would close 14 stores as part of a cost management procedure.

“Musica increased operating profit by 36.3% and has continued to gain market share in CDs, DVDs and gaming,” Clicks said.

Over the reporting period, Musica noted a decline in turnover to R871.515 million, from R895.6 million in 2011, with total income also marginally off at R313 million, from R319 million in 2011.

The group improved its pre-tax profit to R42.81 million, from R31.418 million before.

Musica performance

Arthur Goldstuck – an analyst and commentator on Internet, mobile, business and consumer technologies, and MD of World Wide Worx – was rather blunt in his assessment of what these services would mean to physical retailers. “This is the end of the beginning of the end for physical music retailers.”

Darren Levy, the chief executive of Musica rival, Look & Listen, was also bullish over the company’s prospects in a recent interview with BusinessTech, pointing out that it has had an online presence and an e-commerce platform for a number of years.

“We are focusing more and more online as we see the trend of online shopping growing as more people understand and trust the online shopping experience,” he said.

The chief executive also stressed that the company was more than just a music store.

“Regardless of music streaming or more download sites flooding the market, we are more than just a music store. Our other formats such as electronics, gifts/gadgets, toys and gaming also play an important role and form part of our brand of being an all-encompassing ‘entertainment store’.”