Question

Case Study: Not Easy Being Indie
Tough time to be in the retail music business. That wasn’t always the case as chains such as
Sam Goody’s and Tower Records competed side by side with thousands of independent record
stores. Back in the day, one of the best independents was Millennium Music in Charleston,
South Carolina—perennially winning awards for best CD store and best store staff. But things
change.
Millennium Music owner Kent Wagner had done everything possible to fight the changing tide
brought on by the rise of digital music: At the apex of the business, Wagner owed seven stores,
but for seven straight years, Millennium had suffered double-digit revenue declines. We always
thought of ourselves as a community center, a meeting place,” says Wagner. “We knew the
industry was in decline, but we thought we were different.”
It turned out Millennium wasn’t different. And Wagner and his business partner, Clayton
Woodson, soon faced a stark choice: fold up the business completely and walk away, or attempt
to transform it into something entirely different. The once-hot business had but one glowing
ember left: a small but growing online trading business that allowed customers to exchange
used CDs, DVDs, and books for electronics—iPods and the like. Millennium was able to make
money by reselling the used merchandise on Amazon, eBay, and other sites.
Millennium was launched by Wagner in 1994 with the focus of creating a thinking person’s
music store. Their competitive advantage was based on an inventory of hard-to-find records
with large classical and jazz sections and stellar customer service. Millennium would make
music connoisseurship friendly and accessible.
In the early years, that philosophy worked well, and revenue grew some 20 percent annually.
At its peak, Millennium generated sales of about $10 million annually. Live bands played
regularly, Millennium hosted a live-jazz happy hour, and they held book readings. Wagner
opened a restaurant and a bar and expanded to book sales and DVD rentals.
But the seismic industry shifts that put Sam Goody’s, Tower Records, and many others out of
business started catching up to Millennium. As the years rolled by, the losses mounted.
Wagner’s empire was hemorrhaging, and he was soon ready to try anything. In 2006, he turned

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for help to his marketing director, Clayton Woodson, whose eclectic background included
making furniture, teaching first grade at a charter school in New York, and teaching acrobatic
yoga. “Clayton tends to see looking at the abyss as a growing experience,” says Wagner. “I’m
the opposite.”
That glowing ember of Millennium’s business—the used-CD section—gave Woodson an idea.
Customers often came in hoping to exchange their old CDs for store credit. What if Millennium
could formalize the process to entice additional customers by offering to trade iPods for used
CDs? In the summer of 2005, he persuaded Wagner to give the idea a try. Woodson soon had
another insight: Buying a used CD online was actually cheaper than buying an MP3 album
through iTunes. If Millennium moved its iPod trading program online, it could collect discs
from across the globe, profitably resell them online, and still undercut iTunes’s prices.
Millennium launched FeedYourPlayer.com in 2006. Traffic soared from a few hundred visitors
per week to more than 15,000. New customers were soon mailing in more than 6,000 items a
week. By 2007, the online exchange brought in $400,000 of Millennium’s $1.7 million
revenue. FeedYourPlayer’s performance was heading in the exact opposite direction of
Millennium’s lone remaining store. In its last full year of operation, the store lost nearly $1
million. In September 2007, Wagner called a company meeting with his 25 or so remaining
employees. He delivered the news that many had already foreseen. The retail business was
dying. The future was online. The store would remain open, but resources would be put toward
building FeedYourPlayer.
Employees were still upset even if they had seen the changes coming. Millennium’s music
buyer quit when he realized the emphasis would be peddling used CDs rather than fresh
releases. Wagner understood his employees’ anguish. He says, “staff members were
accustomed to being tastemakers.” Wagner felt the confliction himself. He clung to the hope
that the huge changes might save the store. “When you spend so much of your energy fighting
against the blindingly obvious,” says Wagner, “you can lose your focus on the big picture.”

Required:
1.
a. Using the strategic planning process discussed in class, describe three core
problems to be solved by Millennium?
b. Explain four potential alternative solutions to the problems identified?

Answer 1

(a) The strategic planning process is a combination of 6 steps.

1. Know the story

2. Analysis and objective setting

3. comparative assessment and performance evaluation.

4. Strategic solution

5. Implementation

6. support and feedback.

Now in this case we need to understand the whole situation and figure out the main problems:

1. Change in preference of customers from CD to digital music.

2. lack of systematic record-keeping of music in order and according to their category.

3. Exchange of CD DVDs and iPods. so it minimizes the cost so the profit also decreased.

4. Horizontal expansion of business so there was no related growth in the original business so face difficulty to adopt the market demand.

b) Alternative solutions:

1. When there is a big change in preference then it is better to change the business accordingly from CDto digital version. So it will better if the Millenium will be the first digital music provider with a wide range of collections.

2. Making all the preferred music into digital form. So here the market is competitive and in digital form, it is easy to spread it over the market. The Millenium has provided horizontal expansion instead of vertical which was the biggest mistake. so it can expand its business from CD selling to transforming it into digital forms.  although they have adopted this idea later but it failed as the market was full of competitors.

3. Advancement and adaptability were the best alternative solutions for this business. As the customer wants advanced and the latest music onto the company need to be updated accordingly. So company can think of more digitalization with online platforms.

4. The store is having already popularity in the market so it can take advantage of that and establish the online business according to the music lovers' demand.

PLEASE LEAVE A LIKE. IT REALLY HELPS ME A LOT. THANK YOU!!!