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Bloomington, Minn. — By most accounts, Sam Goody stores are due for a major makeover. Best Buy unloaded the chain in 2003, after watching sales fall 22 percent in one year. Since then more than one-third of Sam Goody locations have closed.
Sam Goody's parent company, Musicland, is now privately held and its financial performance is under wraps. The new management says they have erased most of the red ink by improving advertising, floor layout, and other retailing basics. But that alone won't make Musicland a long-term player.
The company hopes a new store concept now being tested at the Mall of America will make Sam Goody relevant and profitable into the future. In the center of the store, the company has built a lounge area it has dubbed "Graze."
Musicland senior vice president Rob Willey says customers suggested the name to describe someplace you could "roam" and "nibble" on entertainment at your own pace.
"With everybody carrying music now -- everybody from Best Buy to Wal-Mart, Starbucks to Circuit City -- there's no reason to take a trip to a music store," Willey says. "This is about transforming Musicland from a music store to a 'lifestyle' store."
For Musicland, the goal is to remake a visit to the store into a social and entertainment experience.
In the Graze lounge, black leather couches are bathed in sound and light, under images projected on a wall of glass panels. Customers can choose the entertainment on the panels -- whether it's music videos, movie previews, or even their own personal photos -- by sending text messages from their cell phones.
This is about transforming Musicland from a music store to a 'lifestyle' store.
- Musicland VP Rob Willey
"It's actually inspired by the L.A. clubbing scene," Willey says, sitting on one of the lounge couches. "The mesh (around the lounge) is an example of something you'd see in a club scene. I don't know if you can smell this or not, but there's actually a smell machine here pumping out a light chocolate smell as we speak. Part of the reason for doing that is that we want to elevate the consumer to a creative high."
Of course, the trick is to channel that creative high into actual spending. Eight touch-screens around the lounge, equipped with credit card slots, allow consumers to create and burn their own CDs from a library of about 400,000 songs. That's less than half the selection of major online music stores like iTunes or Napster, but Willey expects to match them soon. A 12-song CD would cost about $15.
A second set of touch-screens hints at the target demographic for Graze -- the tweens and teens who roam malls across the country. Thousands of cell phone games and ringtones are available for download on the terminals.
Most 15-second ringtones cost two or three times an entire song downloaded to CD, one reason cell phone ringers have become a $300 million annual business in the U.S.
Willey punches buttons on the screen, demonstrating some of what's available for cell-toting teens who are eager to express themselves.
"It's fun. You can come back out and change it out every week if you want to," he says. "Imagine for a 14-year-old boy, peeing into a toilet as your cell phone (sound). All the bodily functions are in here."
There are clear challenges ahead for Graze -- aside from the reaction of parents to their kids' new ringtones. The Graze lounge is ringed with digital music players for sale, but there's not yet a music industry agreement to load them up with music at the store; teens and other customers could show up for the free fun, and not necessarily buy anything.
And there's the challenge of attracting music consumers like Liz Schuster, an iPod-owning mall employee who dropped by to check out Graze -- but who hasn't bought a CD from a music store in a while.
"Probably five years at least, I'll be honest," she says. "Because now with computers and technology you can make your own CD at home, too."
Still, after a brief tour Schuster pronounced the redesign at Sam Goody "a good idea."
Two music industry analysts we contacted seemed to agree, saying surveys show a strong demand for in-store CD burning. What they found even more interesting is Musicland charging full-speed into the one area iTunes and Amazon.com will have a hard time copying -- the in-store entertainment experience.