Best Buy relegating CDs to bargain bins as sales dwindle

The beleaguered compact disc, made increasingly obsolete in the age of streaming, now has found itself in the bargain bin.

Richfield-based Best Buy, once one of the bigger music retailers with several aisles of CDs, now has a time capsule to another era jumbled up inside the $5.99 bargain bin. Lynyrd Skynyrd, the Who, Cat Stevens, Billy Ocean, Lionel Richie — all a nod to the aging demographics of those who still buy them.

"Does anybody remember the last time they bought a CD?" Best Buy CEO Hubert Joly asked rhetorically earlier this year in confirming the retailer is "de-emphasizing" the category.

The truth is that CDs have been in a freefall for more than a decade. In recent years, Best Buy's collection had been reduced to a single row. Displays of iTunes gift cards can be found more easily and plentifully in its stores than CDs.

Best Buy is also in the process of removing CDs altogether from its website. It only has a handful of audio systems with a CD player left in stores as streaming takes over the music business.

"I don't know if I've ever bought a CD," said high schooler Tommy Zimbinski of Prior Lake, who sometimes listens to his parents' collection but mostly streams music on sites such as Spotify and Pandora.

He was, however, buying a handful of records. Indeed, while CDs have been on the decline, vinyl has been on the rise, prompting Best Buy to still carry LPs and Target to add them in the fall.

Target, too, is cutting back on its CD selection. The Minneapolis-based retailer still sells new releases, but in October 2016 it pulled back on the number of catalog, or previously released, CDs it carries from about 300 to 100.

Target is in the midst of an aggressive push to modernize hundreds of its stores. As stores are remodeled, the space for CDs, especially those catalog titles, will be further squeezed, said Joshua Thomas, a company spokesman.

"Music is an important part of our DNA," he said. "We're making changes that reflect changes in the industry and the shift in consumer behavior."

For example, at its Nicollet Mall store next to headquarters, which was remodeled last year, the music aisle now only takes up half a row in addition to a stand-alone fixture. The selection ranges from the newest hits from the likes of Bruno Mars alongside more classic titles from Bob Marley and Jimi Hendrix.

Target also has continued to partner in recent years with A-list stars such as Justin Timberlake and Taylor Swift on selling exclusive versions of albums.

But down the road, Stephen Baker, a tech analyst with the NPD Group, sees Target and other larger retailers such as Walmart following Best Buy's lead when it comes to CDs.

"They have a little more space to play with, and their customer base is a little longer in the tooth in terms of adoption rates," he said. "But I think eventually, sooner rather than later, [CDs] will end up just in some bins for impulse purchases in those stores as well."

Best Buy's customers tend to be earlier adopters of new technology, he said. Whereas in the past, browsing Best Buy's CD selection was a reason to come to a store, these days it's things that weren't around 20 years ago like 4K TVs, connected devices and smartphones that bring people in.

At the same time, keeping the bargain bins around is a way for Best Buy to pick up some extra sales without a lot of effort, Baker said.

"It's kind of like putting candy, gum and Red Bull up in the front of the store," he said. "Someone might come in and go, 'Oh that's interesting. I need a new Rolling Stone CD.' "

CD sales slipped 6 percent last year while revenue from vinyl was up 10 percent. Still, vinyl sales are only about a third of CD sales overall. While CDs seem destined to continue to decline, many see them as having more lasting power than cassettes.

"They're still a billion-dollar business — that's nothing to shake a stick at," said Cara Duckworth, spokeswoman for the Recording Industry Association of America (RIAA). "There are still fans who love CDs and want to continue to have that tactile experience of holding a physical product and reading through the liner notes, the cover art, and all of that."

CDs enjoyed a meteoric rise in the 90s, replacing cassette tapes as the popular music mode. They peaked around 2000 with about $13.2 billion in U.S. sales that year, according to the RIAA. Last year, they totaled only $1.1 billion in sales, making up 12 percent of the music industry's overall revenue from recorded music. In contrast, streaming services made up 65 percent and digital downloads 15 percent.

The Electric Fetus, the venerable Minneapolis record store that is celebrating its 50th anniversary this year, has been slowly but steadily shrinking the space for CDs in its stores over the years. But CDs still account for half of its music sales, tied with LPs, said Bob Fuchs, the shop's music retail manager.

"People talk about the rise of vinyl, but we still have thousands of regulars who come in throughout the year who are still committed to CDs," he said. "The demographic skews a little bit older, but I'm also surprised how many young kids are buying them."

Some of those regulars own 1,000 to 2,000 CDs and like the quality of sound compared to streaming and other options.

"They've been collecting for 20-plus years. They're not changing formats again. A lot of people are like, 'This is it. I'm going to ride this out for the next 20 years as long as they still make them.' "

Part of the appeal is also price. Many new releases are now between $8 and $12, and consumers can spend about half that for used CDs.

"Granted, CDs are at their lowest-ever popularity right now, but that also means there are some really great bargains," Fuchs said. "I've got a lot of under-$6 used CDs in the racks with killer titles — just great stuff."

As Best Buy and other big-box retailers shrink their CD selections, Fuchs hopes it may bring more customers through the doors of the Electric Fetus and other independent record stores.

Joel Anderson, 52, of Minneapolis, still buys CDs but acknowledges only his desktop computer can still play them. So he has half given in and downloads them onto his smartphone or iPod because it's easier.

But there are some occasions that still bring him to a music store, such as shopping for his wife's birthday as he did at the Electric Fetus on a recent day. He picked up a couple of CDs for her, noting that she worked at a record store in college so still appreciates physical music.

"Gifting music is not as fun with a subscription," he said.

Kavita Kumar • 612-673-4113