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RetailX Brand Index 2019

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Gear4Music to improve its distribution processes as it looks to deal with its fast growth

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Gear4Music to improve its distribution processes as it looks to deal with its fast growth

Gear4Music has grown quickly in recent years - but over Christmas fast growth in a promotional market means that its warehouse reached full capacity, resulting in higher than expected costs while holding back its potential to sell more. Today it said had seen strong sales growth in the last 13 months, and would see profits come in at at least £2m for the period.


The retailer, ranked Top250 in IRUK Top500 research, has seen sales grow from £12m to £110m in six years, including international sales growth from £1m to just over £50m making it, it says, the UK’s largest retailer of musical instruments and equipment, and the second-largest in Europe.

 

Gear4Music says that decisive action has been now taken after a combination of a highly competitive market and fast sales growth meant that its York warehouse reached its limits over Christmas, resulting in higher distribution costs and hitting profits.

 

In today’s statement it said: “After careful consideration, in the short term, we are now planning to alleviate peak trading capacity constraints by improving the efficiency of our distribution and logistics management systems. Where applicable, we will optimise our load balancing and order fulfilment within our European distribution centres, where we have significant capacity headroom. This will delay the need to expand the footprint of our UK warehouse operations, and ensure our longer-term commitments in the UK are minimised during a time of political uncertainty.”

 

Gear4Music said sales of £118.3m were up by 36% in the 13 months to March 2019, compared to the same time last year. At the same time customer numbers were up by 53% in the 13 months to March 2019. UK sales of £63.6m were 33% up on the same time last year, while sales in Europe and the rest of the world were 41% ahead at £54.7m. Website conversion improved to 3.4% from 3.25% in the last financial year.

 

Looking to the future, Gear4Music said it continued to see a “significant opportunity” to boost its market share in the UK and Europe. "Although profitability for this financial period has been impacted by a combination of growth-related factors, we have taken decisive action to address the underlying causes, and we are confident that these will not recur in the new financial year,” it said. “Consequently, we will continue to focus on growing margins and believe our long-term growth strategy remains firmly on track.”

 

Image: Screenshot of Gear4music home page, InternetRetailing Media

 

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