THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, October 26, 1995 TAG: 9510260469
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Medium: 63 lines
Planet Music Inc., the mammoth music retailer that opened its first store in Virginia Beach, is considering opening two more outlets in Hampton Roads, the company's chief executive officer said.
``All I can tell you is that we're looking for sites in the market,'' said Paul Mayer, chairman and chief executive officer of Durham, N.C.-based Planet Music. ``We have nothing signed at this time.''
The company has been considering properties in Chesapeake and Newport News, among others. At one point, Planet Music was looking at Greenbrier Market, a shopping center slated to open in Chesapeake next summer. But the center's developer said Wednesday that Planet Music isn't on the list of new tenants.
``We like the market very much,'' Mayer said of Hampton Roads. ``We had spectacular success with our store in Virginia Beach.''
Mayer and a college buddy, Ed Fadel, formed CD Superstores Inc., a small chain of music stores in North Carolina, in 1986. But they envisioned creating something much bigger: a CD outlet named Planet Music.
They found a site for their gargantuan outlet off Virginia Beach Boulevard, near Pembroke Mall. When completed, the store was 32,500 square feet, or six times the size of a traditional record store. It also offered about 100,000 compact discs and 26,000 cassette titles.
Planet Music debuted in November 1993 and was an immediate success, Mayer said.
A year later, Mayer and company President Fadel sold CD Superstores to Ann Arbor, Mich.-based Borders Group Inc., a chain of book and music stores, for $17.5 million. The music company's name was changed to Planet Music.
With Borders' capital, Planet Music was able to expand. It opened four more Planet Music stores: two in Houston and one each in Baltimore and Memphis, Tenn.
But Planet Music's expansion in Hampton Roads won't be good news for smaller retailers. During the summer, The Record Exchange left this market, closing its three stores in Norfolk, Virginia Beach and Hampton. The Charlotte-based company in part blamed Planet Music and other giants in the industry.
Planet Music hasn't escaped the cutthroat competition. In addition to battling with Blockbuster Music and Tower Records, it has been stung by new competitors such as Best Buy Co. Inc. and Circuit City Stores Inc.
Richmond-based Circuit City, for example, is known to sell CDs at below cost, using them to lure customers into its stores. Once they're inside, shoppers might realize they need more expensive items, like vacuum cleaners or stereo equipment.
``The music market in general is very difficult and extraordinarily competitive right now,'' Mayer said.
As a result, Planet Music scaled back its planned openings for this year. The company had anticipated opening 15 stores this year but opened none. It does not plan to enter any new markets in 1996. Instead, it intends to fill in its existing markets.
``We'll have a few stores next year, and that could change, up or down,'' Mayer said. ``But clearly the first place we'd want is Hampton Roads.'' ILLUSTRATION: [Color photo of Planet Music]
by CNB