October 29, 2003

Universal vs. Retail [8:46 am]

Music Retailers Slow to Adopt Plan to Lower Price of CD’s [pdf]

A month after Universal Music announced it was cutting CD prices by as much as 30 percent, shoppers looking for the results in the aisles of music stores may be coming away disappointed.

Retailers, many of them angry over details of the plan that may hurt their profit margins, are instituting the price changes slowly and unevenly. A result is a patchwork of prices, ranging from less than $10 to nearly $16, on new Universal CD’s from artists like Ludacris and Edie Brickell. At least one major retailer, Virgin Megastore, has refused to comply with the plan that lowers the wholesale price and eliminates promotional subsidies, selling new Universal CD’s like Ludacris’s “Chicken & Beer” for $15.99. Others, like the HMV chain, have clambered on board, selling “Chicken & Beer” and other Universal titles for the new suggested list price of less than $13. Other deep discounters, including Wal-Mart and Best Buy, have stuck near their customary prices of just under $10.

The result has muted the effect of the price plan, setting the stage for a new battle next month when Universal Music, part of Vivendi Universal, begins an advertising campaign telling consumers to look for the lowered prices at cooperating stores.

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