Musicland plans to launch its e-commerce business by midyear through the development of several separate Web sites, company chairman Jack Eugster reported last week. Musicland will use its well-known retail operations -- Sam Goody, Suncoast, Media Play and On Cue -- to help promote its brands on the Internet. "People will be able to enter our world through the brand they're most familiar with," spokesperson Marcia Appel said. Among the products to be sold through the sites are music, videocassettes, music and entertainment books and entertainment software.
Musicland began formulating its e-commerce plans last fall following the hiring of Karl Sowa as managing director, e-commerce; Sowa had been in marketing at GeoCities. Although Musicland is entering the e-commerce field after some of its competitors, it believes a number of factors will permit the company to develop a profitable business. The company will use its annual $65-million advertising budget for its stores to help it market its sites aggressively. In addition, Musicland will use its existing distribution infrastructure to ship most e-commerce orders directly from its own facilities, rather than depending on a third party.
As Musicland prepares to enter the e-commerce world, it reported a good December for its retail operations. Comparable store sales for its Media Play and On Cue stores rose 7.9% for the five-week holiday season ended January 2, helping to boost total sales in its superstore division to $148 million for the period. The superstore division outperformed its mall stores, which posted only a 2.8% increase in same-store sales in December.
Company vice chairman Gil Wachsman said that given its strong holiday sales, the company will slightly exceed analysts' earnings estimates for the year. Total sales for Musicland rose 4.5% in 1998 to $1.84 billion.
