1) Real Groovy has adapted to changes in the music industry by offering additional services like insurance and loyalty programs. They have also capitalized on increased demand for vinyl records. 2) While they do not directly compete with other stores on all products, Real Groovy attracts specialist customers by offering a wide range of goods beyond just music. 3) The report recommends that Real Groovy advertise their large vinyl selection and open a new store in Taupo to attract more customers.

1. Situation Assessment Report Real Groovy

2. The Changing Business Environment In any society, there must be evolution “ In the US last year album sales plunged 9.5 per cent compared with 2006, while sales of digital music tracks surged 45 per cent” Real Groovy has coped by providing services to customers, some of which aren’t provided by other businesses in the industry These include an insurance cover, a loyalty program and a hassle free exchange service One that stands out it the insurance cover; if your house is broken into and your CDs are stolen, Real Groovy replaces your collection These services provide an incentive to customers to shop at Real Groovy, especially the inclusion of the insurance cover

3. In with the Old, change is vital Being the only store that carries latest release LPs across all genres gives a huge advantage in a changing environment The reason is the discovery that the sound quality of CDs and DVDs cannot compare to one of a well recorded LP This has given Real Groovy a one-up on their competitors (akin to a mini monopoly) and is an advantage that they should capitalise on The consequence for not changing with the environment can be seen by looking at Icon Entertainment, the owner of Sounds, Blockbuster and Games Plus

4. Selecting the Competition Real Groovy does not compete head on in every aspect with other businesses in the environment This may prove to be a disadvantage during peak periods like pre-Christmas and Boxing Day However, they do have a very wide range of products like video games and clothes In my opinion, wide range attracts specialist customers This is a good thing as these specialist customers are more likely to spend on a product they want The main competing music businesses in the industry (since Sounds has shut down)

5. Real Groovy’s Services The ticketing box office service acts as an aid in bringing more customers into the store, some on whom will end up purchasing something Real Groovy launched a website in 2001 This was a step in the right direction as it allowed anyone to browse Real Groovy’s entire product range In 2002, the website re-launched with an increased emphasis on books This widened the online target market and dealt a stinging blow to other online retailers “ To become rich and wealthy, create an invention that will make man lazier” According to Nielsen Media Research, Real Groovy’s website is the third busiest in the shopping category, after TradeMe and the Xtra Shopping Channel, neither of which are online retailers Fans queue up for Big Day out tickets

6. The New way to buy Music? They have survived despite not conforming to the latest technology, music kiosks “ These are little digital centres in-store that allows customers to choose from 2.4 million songs to add to a list” Essentially, this allows the user to create their own personal mix and the choices are [almost] limitless Shops like Borders, HMV and Best Buy have recently embraced this new technology In my opinion, Real Groovy does not need this new technology as the amount of competition in New Zealand at the moment does not justify the need for this change The main players in the music industry that have recently embraced the technology of music kiosks

7. Publicising When comparing Real Groovy to businesses in the same environment, it can be seen that they do not advertise anywhere near as much However, they are not suffering as a consequence This is because Real Groovy have an advertising method much more effective than any other, the word-of-mouth method This is more effective and valuable as it relies on the free will of a person wanting to spread the word People will also tend to trust opinions concerning a business when it comes from a friend or relative instead of the business

8. What’s not new is still Good Real Groovy’s strongest selling point is its second-hand stock “ A third of its Auckland store turnover is second-hand goods” This is mainly due to the majority of customers being students, who are low income earners Second-hand goods offer opportunities to students and low income earners to maximise their purchasing power However, second-hand goods displayed in Real Groovy do not appear to be second-hand The CD has no scratches, the case isn’t cracked and the sleeve isn’t damaged These small details do indeed have an impact on the number of customers contemplating second-hand purchasing

9. Recommendation After analysing Real Groovy, I have a 2 recommendations for its owners to consider I advise them to begin newspaper advertising to inform the public that they have the largest range, not JB Hi-Fi They should also advertise that they are the last music store in New Zealand to carry a full range of latest release LPs across all genres This would draw in more customers who appreciate good quality music and would overall increase Real Groovy’s turnover The second recommendation is to work towards opening a new store in the Taupo area This would attract people who go to Mt. Ruapehu to ski during the day and stay in Taupo at night #1 in Vinyl Range

10. Notes and References Netherby, J. (2008). Let’s get digital . Retrieved 31 March, 2008, from Business Source Premier Slade, M. (2008). Shops change tune to battle downloads. NZ Herald , 10 th January, p.C01. The Press. (2004). Right on track . Retrieved 27 March, 2008, from Newztext Plus database http://www.theage.com.au/ffximage/2005/12/09/iconbg_vinyl2_dec10,0.jpg http://www.twistingthrottle.com/images/real-groovy.gif http://www.lakopacific.com/content/Image/Resellers/JB-HIFI.jpg http://www.thecdanddvdstore.co.nz/images/banner.jpg (cropped) http://www.stuff.co.nz/images/332910.jpg http://upload.wikimedia.org/wikipedia/en/thumb/f/f5/Best_Buy_Logo.svg/800px-Best_Buy_Logo.svg.png http://www.newcastlevipers.com/_assets/_uploads/db_files/tbl_sponsors/file_0_0_imageFullWidth_hmvlogolarge.gif http://theportnoygroup.typepad.com/my_weblog/images/2007/03/16/2003_borders_logo.gif http://www.durham-nc.com/reynblog/uploaded_images/MPj03875700000%5B1%5D-771602.jpg