Best Buy reportedly plans to stop selling CDs

Format biting the dust because of streaming

The shiny compact disc, once as essential to every living-room music system as a copy of Michael Jackson’s Thriller album, is quickly going the way of the eight-track and cassette tape.

The rise of streaming music services such as Apple Music, Spotify and Pandora and the availability of digitally downloadable tracks and albums are making the CD extinct.

The latest nail in the coffin comes from the nation’s largest store-based electronics retailer, Best Buy, which plans to quit selling music CDs at its stores by July 1, Billboard reported.

Another retail giant, Target, is considering a change in how it acquires CDs, which could reduce inventory in its stores and leave fewer choices for music fans, Billboard also reported.

Best Buy declined to comment on the report, but CD sales have fallen at its stores. During the retailer’s 2017 fiscal year, which ended Jan. 31, entertainment (gaming, music and movies) accounted for 7% of domestic revenue ($36.2 billion). But entertainment sales were down 13.8% from the previous year, while overall domestic sales revenue dipped only 0.3%.

Target denied news reports that it might quit selling CDs but hinted in a statement that it is exploring a way to make sales more cost-effective.

“We are committed to working closely with our partners to bring the latest movies and music titles, along with exclusive content, to our guests,” its statement read. “The changes we’re evaluating to our operating model, which shows a continued investment in our entertainment business, reflect a broader shift in the industry and consumer behavior.”

Target has historically had exclusive versions of new CD releases, including Taylor Swift’s most recent album Reputation — a savvy sales strategy to increase store traffic.

The music CD, which first made a dent in the U.S. market in 1983, was embraced by music lovers for its convenience and quality, amounting to $13.2 billion in sales in 2000 — far outpacing Hollywood’s box office of $7.7 billion that year. But physical sales of CDs have been falling since.

Neil Saunders, managing director of Global Data Retail, says that CDs typically offer retailers a meager profit margin of at most 9 cents on the dollar, “and it’s likely a player like Best Buy may (take) a slight loss when all overheads are accounted for.”

Getting rid of them can free up space for laptops and tech-related gear that yield stronger profits and a more engaged in-store experience, says Sean Maharaj, a director in the retail practice of consultancy AArete. “This move is long overdue,’’ he says.

GETTY IMAGES/ISTOCKPHOTO Music CD sales have fallen sharply as paid music subscriptions have grown.