By JILL ROSENFELD
Moving to capture a bigger share of the Latino market, Wherehouse Entertainment Inc. is opening a series of Tu Musica! stores specializing in Spanish-language compact discs and tapes.
The first Tu Musica! store opened in La Puente late last month, and the Torrance-based Wherehouse chain plans to roll out nine more stores on the West Coast in the next year.
“In analyzing the location of our stores, we identified that a large number of our customers came from the Latin market,” said Nick Alvarez, Wherehouse’s vice president of Latin marketing.
“We decided to make a conscious effort to service that consumer, by offering a larger selection, by educating our current staff, and by increasing our Latino staff,” said Alvarez, who is the son of Wherehouse Chief Executive Tony Alvarez.
Wherehouse, which is majority owned by the New York investment fund Cerberus Partners, ranks among the top five music chains in the nation, with 220 stores nationwide. Its Tu Musica! venture represents the first time a major U.S. music chain has created a store geared solely for the Spanish-language market, according to industry experts.
“This is very exciting,” said Hilary Rosen, president and chief executive of the Recording Industry Association of America. “It represents tremendous progress in the mainstream recognition of the importance of the marketplace.”
Wherehouse’s push into the Latin market dates to January 1997, when it emerged from Chapter 11 bankruptcy. Tony Alvarez started introducing Tu Musica! Latin music sections into existing Wherehouse stores in areas with significant Latino populations. Now, 76 of Wherehouse’s 220 stores have Tu Musica! “store within a store” sections.
The Philippines-born CEO was raised speaking Spanish. But he said the decision to launch Tu Musica! stores was based more on market research.
“I do think we’re creating an awareness of the Latino market, and giving them the attention their purchasing power warrants,” he said.
The Tu Musica! store in La Puente has brightly colored Spanish signage, and offers an expanded selection of a variety of genres ranging from salsa and merengue, to ranchero, norteno, Tex-Mex and rock. The store also offers Spanish-language videos, as well as video games, T-shirts and personal electronics.
“I think it’s a good idea,” said Orlando Robles, who was browsing in the store. “Especially with the large Hispanic community here. People feel more comfortable shopping here because the signwork is in Spanish. They feel more at ease.”
In 1997, Latino music sales were $490 million, a 25 percent jump from a year earlier, according to a RIAA report. “The growth in the Hispanic music market is extraordinary,” Rosen said.
Whereas 85 percent of English-language recordings are sold through major retailers like Virgin, Tower Records and Target stores (the remaining 15 percent through record clubs and mail order), almost half of the Spanish units are moved through small, multiple-purpose retail outlets, such as bodegas and drugstores.
Prajin 1 Stop Distributors is one of a plethora of wholesalers that service the mom ‘n’ pop operations. Peter Prajin, whose parents started the Huntington Park-based company, said the Latin music business “is where the Anglo market was 25 years ago. Now people are taking a very, very serious look at the market, and they see it’s the biggest potential market out there.”
A family-run operation, Prajin has close to 1,000 customers nationwide who buy at least once a month. He doubts that the introduction of another major chain will hurt the smaller stores. “Smaller stores can get merchandise in two or three hours,” he said. “And mom ‘n’ pops usually beat them on pricing, because their overhead is not as big as the chains. They’ll cut their margins down as much as they can just to stay in business.”
Currently, the largest Spanish-language music chain is Ritmo Latino, which has 24 stores, including 13 in the Los Angeles region.
Ritmo Latino founder David Massry said he is not surprised at the new competition.
“People are opening their eyes about this market,” Massry said. “It’s not a closed market any more.”