Schmitt Music Company

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Schmitt Music Company

88 South Tenth Street
Minneapolis, Minnesota 55403-2473
U.S.A.
Telephone: (612) 339-4811
Fax: (612) 339-3574
Web site: http://www.schmittmusic.com

Private Company
Incorporated: 1926
Employees: 525
Sales: $60.2 million (1999)
NAIC: 45122 Prerecorded Tape, Compact Disc and Record Store; 45114 Musical Instrument and Supplies Store

Schmitt Music Company (also known as Schmitt’s) is one of the country’s largest full-service music retailers. The company sells pianos, electronic keyboards, church organs, accessories, and printed music. Schmitt operates 11 stores in Minnesota and 13 stores in eight other states. Schmitt Music also teaches more than 170,000 music lessons each year and sells about 20,000 starter band and orchestra instruments. A family owned and operated store for four generations, Schmitt has served the musical needs of the Midwest for over 100 years.

Starting with Sheet Music: 1920s-30s

The company owes its genesis to Paul Schmitt, who in 1890 traveled from New York City to take a job managing the sheet music department for Century Piano in Minneapolis. An unsuccessful salary negotiation led to Schmitt’s decision to quit his position and strike out on his own. In 1896, Schmitt founded the company, but did not incorporate until 1926. Initially, Schmitt Music Company concentrated on sheet music sales. The company expanded into publishing its own school choral, band, and orchestra music by the 1930s. Within the decade, Paul’s son Robert A. Schmitt joined his father in guiding the business and expanding the company to include record, radio, and phonograph sales. Fostering an appreciation for the enticing power of music, clinics were introduced featuring recitals of new compositions for music educators to offer their students. Creative marketing strategies led to swelling inventories that demanded larger accommodations. In 1941, Robert A. Schmitt signed the mortgage for a larger location in downtown Minneapolis. He moved the business into the newly purchased building, and made room on the fifth floor for a warehouse and piano-rebuilding shop, which allowed the company to begin selling pianos and organs.

Massive Expansion in the 1950s

Robert P. Schmitt, son of Robert A., became company president in 1958. Almost immediately Robert P. began an aggressive expansion program to acquire other music companies. He purchased Bach Music in Rochester, Minnesota, Day Music Company in Wisconsin, and Hospe Music in Nebraska. In a Twin Cities Business Monthly interview, Robert P. said, “once you learn how to play your horn well, there are all sorts of other resources for supplies and music that you might use. Our specialty is education—bringing music to kids at the piano bench.” Schmitt developed a plan for locating stores in neighborhoods to accommodate parents in getting their children to and from music lessons. His goal was to make the company indispensable to band and orchestra directors. The company sold and serviced big ticket instruments such as euphoniums, tubas, xylophones, and pianos directly to schools. Sales representatives visited schools to market instruments and purchasing plans to students during band sign-ups.

The company’s Minneapolis headquarters became an unofficial landmark when Robert P. Schmitt decided to beautify one of the large exposed exterior brick walls. Like other American cities of the 1970s, citizens and business owners in Minneapolis were concerned about beautifying the older downtown buildings. Schmitt hired the repair of the old bricks and bricked up 32 exterior windows. He asked a company employee to choose notes from a musical score that could be painted as a mural over the enormous facade. The employee searched through the store’s sheet music and came up with the most graphically attractive piece of music she could find, Maurice Ravel’s “Gaspard de la Nuit.” Pianist Van Cliburn posed playing a Steinway concert grand piano in front of the mural for a now famous photograph, which attracted the attention of national newspapers.

Robert’s son, Tom Schmitt, took charge of the business in 1985, becoming the fourth generation family president of Schmitt Music. Tom had been accepted to both medical school and law school, but before making a decision, he queried his father about how much the president of Schmitt Music made in a year. He determined that a ten-year apprenticeship with his father would be preferable to graduate school. In 1989, Tom Schmitt bought a four-store Colorado keyboard retailer, Wells Music, adding a musical instrument division to the Schmitt Music Company. Under his direction, one of the company’s divisions developed a “Baxstage” section, introduced in 1992. According to Pamela Hill Nettleton in Twin Cities Business Monthly, “Baxstage looks like rock-and-roll band heaven, with scores of electric and acoustic guitars hanging on the walls, drums and cymbals set up on the floor and glass counters stocked with microphones and cable.” Following the family tradition, Tom convinced his brother Doug to begin learning various areas of the business and to concentrate on the musical instrument stores and printed music.

1990s: Steinways Sold in Suburbs

Schmitt Music became the fourth largest keyboard retailer in the country by the mid-1990s. Predicting that high-end pianos, such as Steinway, Kawai, and Boston, would sell well in the suburbs, Tom Schmitt added separate “Steinway Rooms” to several locations on the outskirts of the Twin Cities. He reasoned that being located outside the typical mall environment would encourage musicians to come in and sample the instruments without the noise and distractions of mall traffic. Piano sales evolved into the major revenue producer for the company, making up over half of Schmitt’s total sales in 1994, along with sales of electronic keyboards, digital pianos, and home and chord organs. Total sales for 1994 topped $40 million.

In the Twin Cities metropolitan area, instrument sales competitors included Trestman Music Center, Guitar Center, Groth Music, Knut-Koupee Music Stores, and Roger Dodger Music. In 1999, a music superstore chain called MARS opened in the Twin Cities. When asked what Schmitt’s stores offered that MARS did not, Tom Schmitt told a Star Tribune reporter that Schmitt’s offered great customer service, competitive pricing, community involvement, and knowledgeable employees. The company had became known for hiring well-trained, friendly staff that included professional musicians.

The MARS product line included digital keyboards, guitars, drums, amplifiers, mixing boards, and microphones—catering to rock ‘n’ roll tastes, although the MARS company also dabbled in the school band market. As the new competition targeted rock bands, Schmitt served the niche market of church and home organ business. Schmitt’s was particularly strong on keyboards, sheet music, and band and orchestra instruments and had established strong contacts with regional band directors who appreciated the company’s emphasis on customer service. In addition, music lessons had become a lucrative part of the business, evidenced by the fact that the company’s Edina store alone was giving approximately 2,000 music lessons per week.

The company offered six free lessons with every instrument purchase, along with affordable purchase plans to allow almost every child the opportunity to engage musically. Under terms of the instrument trial purchase plan, parents could buy an instrument with a low down payment followed by monthly payments. Should a child lose interest, Schmitt permitted a return of the instrument during the contract period without requiring further monthly payments. Unfortunately for the company, 44,000 Minnesota families alleged that Schmitt’s Music charged excessive interest on instruments purchased via credit. A class-action lawsuit was filed against the company in February 1993. The suit alleged that the company charged 18 percent interest on instrument sales. Under Minnesota’s usury law, 8 percent annual interest was the maximum amount allowed on such transactions. Tom Schmitt told a St. Paul Pioneer Press reporter, “We still contend it was a revolving charge account—and it still is.” Minnesota law permits up to 18 percent annual interest on revolving charge accounts. “The program has not changed one iota,” according to Schmitt, “We did change the contract a little bit, taking a belt-and-suspenders approach so it’s even more clear to customers that they’re signing a revolving charge application.” Schmitt said the company agreed to a settlement because they could not run the risk of losing. “When the stakes are so high, it was literally the whole future of the company,” he said. The company agreed to pay about $1.7 million in cash and to provide coupons worth $2 million to customers who said they were overcharged.

Schmitt Music joined the bandwagon of other Twin Cities businesses in promoting community philanthropic deeds. In an effort to provide musical instruments for underprivileged children, Schmitt Music held a drive during the holiday season for used band and orchestra instruments. The Music for Kids Project collected the instruments from families no longer needing them, organized and repaired them, and then donated them to Minneapolis and St. Paul public school music departments. In the program’s first year, 300 instruments were collected and donated. According to company records, Schmitt Music also gave 5 percent of its profit to charity each year.

Company Perspectives:

At Schmitt Music Company we believe, as our customers do, that music is an essential part of life. We value those customers and the opportunity they give us to help bring music into their lives. Our mission is to become America’s favorite stores for people who love to make music. Our plan is to achieve that mission based on taking good care of our employees, our customers and our business. As guiding principles, we try to treat everyone—fellow employees, customers and suppliers —just as we would like to be treated. We base our decisions and actions on doing what is right and do the very best we can.

2000: Opening of First California Store

Continuing its westward expansion, in the winter of 2000, Schmitt Music opened a new organ store in Laguna Hills, California. The company also announced that the “landmark” downtown Minneapolis headquarters building was being sold to a group that planned to remodel the retail-and-office space for a business appraisal firm and two tenants. The new owners agreed to maintain the black-on-white mural of “Gaspard de la Nuit” since it had become a favorite local landmark. Tom Schmitt said the company had been considering a move for several years as a means to centralize its administrative, distribution, and warehouse functions. A Brooklyn Center site was chosen because of its proximity to a current store and warehouse. The company had seven stores in the metro area by the end of 2000.

The market for music instruments had grown between 6 and 9 percent over the past decade, according to Brian Majeski, editor of Music Trades. That trend was expected to continue, with guitars as the biggest seller, school instruments second, followed by acoustic and digital pianos. The 12- to 24-year-old category of consumers were the largest purchasers of musical instruments and census figures showed that the category was growing. However, Majeski said the industry performed better during times of economic prosperity. Consequently, the slowing economy would likely impact revenues. Tom Schmitt, optimistic about the company’s future, said that academic research showed that musical skills boosted children’s intelligence and reports of that information created more interest. In regard to the company’s long success, Robert P. Schmitt commented, “When I think about the secret of our longevity, I keep thinking that we have good people working for us and that all of us believe that what we do has a benefit. The products and the services we sell are close to our hearts. And,” he added, “we all like music.”

Principal Divisions

Wells Music; Schmitt’s Music.

Principal Competitors

Trestman Music Center; Guitar Center, Inc.; Groth Music; Knut-Koupee Music Stores; Metropolitan; Bodines; MARS.

Key Dates:

1890:: Paul A. Schmitt moves to Minneapolis from New York City to manage Century Piano’s sheet music department.
1896:: Schmitt leaves Century Piano to found a retail music store.
1926:: Schmitt Music Company is incorporated.
1932:: A record department is added.
1933:: Radios and phonographs are added.
1934:: Schmitt Music expands and publishes school music.
1937:: Company introduces music clinics.
1940:: A recording studio is added.
1942:: Store is moved to new location on South 10th Street in Minneapolis.
1947:: Company enters keyboard business.
1958:: Robert P. Schmitt, grandson of the founder, becomes president and adds Martin Guitar line.
1960:: Schmitt Music opens stores in St. Paul and Robbinsdale, Minnesota.
1966:: Schmitt Music opens store in Edina, Minnesota.
1971:: Schmitt buys Rochester, Minnesota-based Bach Music Company.
1973:: Schmitt begins rapid expansion.
1985:: Tom Schmitt, great-grandson of the founder, becomes president.
1999:: Schmitt buys piano store in Independence, Missouri, and an organ store in Antioch, Kansas.