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Rock 'n' Espanol

Wherehouse succeeds in the Latin market with Tu Musica


Browsing through the music selections at Tu Musica, a new store in La Puente, Monica Cruz found a "Banda" recording for her father, ballads under the "Romantica" section for her mother and some "Rock en Espanol" for herself.

"There's a lot here," she said, pointing to music category signs such as "Norteno" and "Regional Mexicano" in the CD bins. "You can't find this kind of selection at the major chains."

Except that Tu Musica isn't another neighborhood music store. It is owned by Torrance-based Wherehouse Entertainment, which opened the store last month as part of a push into the fast-growing Latino market.

Wherehouse, which emerged from bankruptcy 1 1/2 years ago, sees opportunity in the Latino market, where competition is not as fierce as in mainstream music. Neighborhood discotecas and small chains--the largest of which is 25-store Ritmo Latino--account for one-quarter of Latin music sales.

The Tu Musica venture is part of a larger Wherehouse plan to become a dominant force in music retailing. The company took a major step in that direction last week, announcing an agreement to acquire the Blockbuster Music chain from New York-based Viacom Inc.

Wherehouse might convert some Blockbuster stores to Tu Musica outlets but no decision has been made, Wherehouse Chairman Tony Alvarez said.

The idea for Tu Musica arose from an experiment. Last October, Wherehouse expanded the Latin music selection and boosted bilingual sales help in 30 stores--two-thirds of them in Southern California. The results were mixed. In about 20 stores, the changes alienated some customers, who grumbled that the new bilingual staffers weren't sufficiently knowledgeable about non-Latin music. But in about 10 of the stores, sales surged. Wherehouse decided those neighborhoods would support free-standing Tu Musica, or "your music," stores.

Wherehouse plans to open eight to 10 more Tu Musica stores this year--a small number compared with the 220 stores that make up the Wherehouse chain--592 after it acquires Blockbuster Music. Tu Musica stores will stock 8,000 to 10,000 Latin titles, making up 60% of the total selection. Latin titles account for only 2% of titles at the typical Wherehouse.

Tu Musica stores won't be Wherehouse clones. All Tu Musica stores are to be draped in bright green, yellow, purple and orange, unlike the more conservative--color schemes of Wherehouse stores. Large posters of Latin recording artists--Enrique Iglesias and Alejandro Fernandez among them--decorate the walls.

Spanish language signs identify various categories of music and direct shoppers to listening stations along a wall. Its slogan is "Tu Musica, tu tienda, siempre cerca de ti," Spanish for "your music, your store, always close to you."

The outlet in La Puente is about half the size of a typical Wherehouse, largely because it doesn't stock videocassettes.

Tu Musica's success will depend on how it fares against competing neighborhood discotecas throughout the Southland and from New Jersey-based Ritmo Latino. Ritmo Latino's store on Broadway in downtown Los Angeles, one of 17 in Southern California, beckons with neon lights and monitors playing music videos. It's frequently jammed with shoppers.

Then there is Tower Records, which is making its own bid for the Spanish-speaking consumer. Tower recently launched a Spanish language version of Pulse, its music magazine. And it created a new position--Latin music coordinator--to manage inventory. In its Southern California stores, it cleared out slow-selling English-language recordings to make room for up to 4,000 Latin titles per store.

All of these music retailers seek to benefit from the boom in Latin music sales.

Music & Copyright, a British publication that tracks music trends, estimates the value of U.S. Latin music sales at $470 million, a 20% increase over last year. Billboard, another industry publication, has also estimated the growth at 20%, but the exact value is unknown because many of those sales are generated by mom-and-pop stores that do not report to industry trackers.

Behind the growth in Latin music is a growing population. About one-third of California's population is Latino, and that figure is expected to double by 2025.

And compared with the general population, the Latin population is young, making them prime consumers of recorded music, said Carlos Garcia of Garcia Research Associates, a Burbank-based marketing and research firm that specializes on the Latino market.

Tu Musica is part of Wherehouse's recovery strategy. The company had operating earnings of $24 million in 1997, compared with $1.6 million in 1996. Founded in 1970, the company filed for bankruptcy reorganization in August 1995--a victim of heavy debt and fierce competition from Tower and discounters like Best Buy and Wal-Mart.

But Wherehouse sees Latin music as a niche where it won't have to fight discounters. Though Tu Musica's prices on best-selling Latin CDs are higher than prices at Wal-mart and Best Buy, Tu Musica offers greater selection. Its prices are comparable to Ritmo Latino's. Because Tu Musica stores will be in Latino neighborhoods, Wherehouse believes it won't face direct competition from archrival Tower.

"We are more of a neighborhood store for the Latino market," said Nick Alvarez, the Wherehouse executive who oversees Tu Musica and is the son of Chairman Tony Alvarez.

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