Competitive Edge: Ellis Drum Shop
As part of the Twin Cities’ vibrant local music scene, Ellis Drum Shop caters to a tight-knit community of professional drummers and their followers. The store stocks assembled drum sets and accessories from major manufacturers, but put itself on the map for manufacturing its own custom line of drums on-site in St. Paul’s Midway neighborhood.
In recent years, competition from inexpensive music software and at-home recording equipment has hit many instrument retailers—market leader Guitar Center’s debt surpassed $1.5 billion, driving the behemoth to leverage its buying power to negotiate ever-lower prices from manufacturers and ensure theirs is the lowest retail price around. “They have ruined the retail profit margin,” says owner Tim Ellis, who notes that smaller retailers are forced to price competitively with the big-box retailer. “You’ve got to [work on] volume, not margin.”
Specializing in drums helps Ellis compete with multi-instrument stores. “There are a lot of music stores, and drums are always the afterthought in those stores,” he says, “primarily because they take up a lot of room.” Ordering a full kit for a sales floor is costly, as customers often place special orders instead of buying the kit as shown. While drum accessories are Ellis’ bread and butter, custom drums account for 15 to 20 percent of sales (and earn the shop a greater margin than it gets on other makers’ drums).
Ellis says poor product knowledge and lax customer service are common problems in the industry, creating an opportunity for specialty retailers. At Ellis, sales staff is composed of drummers who use the equipment they stock. “When you walk into our shop, we know people by their first name,” says Ellis. “You’re not greeted at the door by someone checking your bag or wanting to look at your receipt when you leave.”
Ellis recently took down his e-commerce site. He says with drums—“the Neanderthal of musical instruments”—players still need to hear them in person. Like most instrument stores, Ellis offers music lessons; currently five instructors teach about 130 students. “Do the lessons sell drums and accessories? Absolutely.”
2002 Ellis drums debuted
4 Employees (sales staff and one drumsmith)
7,000 Square feet (4,500 sales floor, 2,500 manufacturing and storage)
$800 Average complete drum set
$3,000–$5,000 High-end drum set
$2,500 Custom five-piece wood-shell Ellis drum set (15 percent more for acrylic)