Record Store Business Overview

A record store provides music enthusiasts with a physical retail space to browse and purchase various music formats and related merchandise. These businesses serve collectors, casual music fans, and audiophiles who value tangible music products and enjoy the browsing experience.

Many record stores create an inviting atmosphere where customers can discover new music, get recommendations from knowledgeable staff, and connect with other music lovers. The stores stock everything from current releases to rare finds, often curating their selection based on local tastes and customer requests. Some record stores also host community events and maintain an online presence to reach customers beyond their local area.

Common business models in this industry include:

• Traditional Retail Model: Physical storefront selling new records, CDs, and music-related items, often with listening stations for customers to sample music before purchasing
• Used Music Model: Buying and selling pre-owned vinyl records, CDs, and other formats while offering store credit or cash for customer trade-ins
• Hybrid Entertainment Model: Combining music sales with additional entertainment offerings like live performances, coffee bars, or lounges where customers can gather

Related: Checklist To Start A Business

How Do Record Stores Make Money?

Record stores build their business around multiple revenue streams, with physical music sales forming the foundation of their income. These businesses purchase inventory from distributors, labels, and individuals, then sell items at a markup to cover operational costs and generate profit.

Some common ways record stores make money include:

• New Music Sales: Selling new vinyl records and CDs provides the largest portion of revenue for most record stores. This remains the primary income source because new releases attract regular customers and collectors who want pristine, unopened items.
• Used Music Sales: Buying used records and CDs from customers at lower prices and reselling them at a markup. This creates higher profit margins than new music sales.
• Music Merchandise: Selling band t-shirts, posters, buttons, stickers, and other music-related items.
• Video Sales: Offering DVDs, Blu-ray discs, and other video formats to supplement music inventory.
• Electronics and Accessories: Selling turntables, headphones, record cleaning supplies, and storage solutions for physical media.
• Online Sales: Maintaining an e-commerce presence to sell inventory through the store’s website or third-party marketplaces.

Industry Statistics

Record stores operate in NAICS 451220, Record Stores & Music Retailers. These retailers sell physical music formats, videos, and related merchandise.

Record Store Industry Size & Growth: The record store industry generated $1.2 billion in revenue last year. While revenue has decreased by 5.5% annually over the past five years, the industry projects slight growth over the next five years. (IBISWorld)

The record store industry, contrary to some perceptions, isn’t a dying industry. It’s a niche market, yes, but a resilient one. Vinyl sales have seen a steady increase in interest over the last decade, thanks to the “vinyl revival.” There’s a growing appreciation for the tangible and the analog in an overwhelmingly digital world. This expected growth stems from rising consumer interest in vinyl records, particularly among college-age buyers who value physical music formats and older generations reconnecting with a beloved format from their past.

Number of Record Stores: There are 2,031 record stores operating throughout the marketplace. The industry maintains a decentralized structure, with no single company dominating market share. Most businesses operate as independent retailers, allowing them to focus on local markets and build specialized inventory based on community preferences. (IBISWorld)

Record Store Profit Margin: Record stores typically achieve profit margins between 5% and 10%. These margins vary based on their business model and product mix, with used record sales often providing better returns than new releases due to lower acquisition costs. Competition from digital platforms and large retailers affects overall profitability, making inventory selection and pricing strategy particularly important

States with Most Record Stores: Record stores have the highest concentration in the Southeast, West, and Mid-Atlantic regions. This distribution pattern follows population trends in these areas, with dense urban centers supporting more stores. (Bureau of Labor Statistics)

Also See: Ideas for Naming a Record Store

Costs To Start a Record Store

Starting a record store could range from $30,000 to $150,000. The lower end assumes a small retail space with used inventory, while the higher end includes extensive new inventory and premium store design.

Here are the main costs to consider when starting a record store:

Initial Inventory ($15,000 – $80,000): Stock includes new and used vinyl records, CDs, and music-related merchandise. Used records can help manage costs while building inventory. Many stores start with a mix of popular genres and local artists. Building relationships with distributors and private sellers helps maintain a diverse selection.

Retail Space ($8,000 – $35,000): First and last month’s rent plus security deposit for your lease. Basic improvements include record bins, listening stations, and simple renovations. The store layout needs proper spacing for browsing and storage areas for additional inventory.

Store Equipment ($5,000 – $25,000): Record bins, display cases, listening stations, audio equipment, and point-of-sale systems create the shopping experience. Equipment for testing and grading used records to ensure quality control. Security systems protect valuable inventory.

Record Care Equipment ($2,000 – $10,000): Professional cleaning machines, grading equipment, sleeve replacement materials, and storage solutions maintain inventory condition. Tools for evaluating and pricing used records to help establish fair market values.

These cost estimates are approximate, and actual expenses will vary based on your business model and scale of operations.

Resources
Independent Music Store Owner Association
Coalition for Independent Music Stores