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NORTH OF THE BORDER

Music chain Ritmo Latino is a hit with growing U.S. Hispanic population

By Ed Christman

Ritmo Latino seeks out strip center and Main Street locations with a high concentration of Hispanics.

Generally in the music retail sector, chains cater to mass appeal, but some rare exceptions have emerged.

Ritmo Latino is one of two niche music retailers with more than 10 stores. Newbury Comics is the other.((See story, Music chain seeks new spin for future success.)

Ritmo Latino, founded in 1989, carries music, books and videos, in 35 U.S. stores, all appealing to the Hispanic market.

There was a void in the marketplace for a music chain serving the Hispanic community when David Massry, founder and owner for Neptune, N.J.-based Ritmo Latino, moved to the United States from Mexico. And he had a hunch about what to do about it, based on his experience as the co-owner of a chain of 50 stores in Mexico with his brother Isaac, called Mixup and Discolandia.

Targeting the growing Spanish-speaking population in the United States — the number of Hispanics in the country has soared to 35.3 million people from 22.4 million in 1990, according to the 2000 U.S. Census — Ritmo Latino carries music from all over South America, and some of the stores also stock Spanish books, magazines, videos and gift items. The signs are in Spanish and all the employees speak the language.

“David suits the needs of the lifestyle of his customers; it’s not just music,” said Carmen Cervantes, national sales manager for Latin music at WEA, the distribution arm of the Warner Music Group. “If you are [Hispanic and] raised in this country, you have two cultures, and David caters to both. He has mixed the best of both worlds.”

In addition to music, books and video, he carries items like traditional Mexican candies, T-shirts, and artwork, among other product lines. Most stores have a gift section, which Massry said is similar to the Spencer Gifts (adult-geared novelty items) concept, but with a Latino twist.

But music is the heart of the chain’s business, and Massry stocks the full gamut, from regional Mexican music to tropical, tejano and Latin pop.

Ritmo Latino is usually “a step ahead of all the Latin labels,” Cervantes said. “[Massry] is in tune with what’s going on in Mexico and the rest of Latin America and usually when we solicit, he already knows what is going to be hot.”

Three of the chain’s stores have a store-within-a-store, called Ritmo Rock, an 800-square-foot department that Massry describes as “a niche of a niche.” It carries mostly Spanish rock music, and clothing and accessories appealing to Hispanic rockers.

The company also has set up three music outlet stores called Bodega Musical, in Southern California.

Since many of his Hispanic customers also enjoy non-Hispanic music, Ritmo Latino also carries artists such as Eminem and other pop music. Massry declined to quote numbers, but label executives estimate his mainstream pop music business to be anywhere from 20% to 40% of volume, with the remainder Latino. Those executives note that the amount of pop music depends on the location, with the New York stores having the highest percentage. In New York City alone, Hispanic people comprise 27% of the city’s population of 8 million.

David Massry, owner, Ritmo Latino

Massry started out by opening up a Latino wholesale operation in Santa Ana, Calif., with the intention of paying less for music from the manufacturers. Usually, the major music manufacturers don’t sell to independent retailers directly, forcing the latter to pay a higher price since they have to buy from a middleman wholesaler, known as a one-stop.

“[When] I came to the U.S., I didn’t have a precise plan; so it occurred to me to open up a Latin music store,” he said.

A few months after opening his Ritmo Latino wholesale operation, he opened his first store in Southern California, growing to eight stores in the first six years. In 1995, he sold the wholesale operation to giant Coral Springs, Fla.-based distributor Alliance Entertainment Corp., and moved to Neptune to concentrate on his music stores.

Today, the chain employs 400 employees, and Massry is currently looking for a larger warehouse.

“We love them,” said Jim Urie, president of Universal Music & Video Distribution, the largest music manufacturer in the United States. “They are very good at what they do. They have been expanding quite rapidly.”

Just the fact that they have been expanding at all in this current environment “is a miracle,” according to Urie. Practically every other music chain has been downsizing over the past four years. Even those chains that have grown by acquisition, like Albany, N.Y.-based Trans World Entertainment, today have fewer stores after pruning out weak performers.

The Ritmo Latino stores are in six states, with California claiming the largest number, 14. There are two stores in the Bronx, N.Y.; two in New Jersey; and stores in Washington, D.C.; Houston; and Chicago. All growth has been financed by internal cash flow, and Massry said he plans to open six stores this year.

When choosing real estate, Massry said he always locates in strip centers and in-town on Main Street areas that have a high concentration of Hispanics.

Most stores measure about 2,500 square feet, although recently he opened a larger outlet, measuring some 5,000 to 6,000 square feet that included an arcade as well.

Massry is “excellent at picking locations,” WEA’s Cervantes said. “When he opened in Texas, they were immediately the top stores” in the market.

Ritmo Latino’s main competition comes in the form of a few Latin chains, the biggest of which, Latin Music Warehouse, has nine stores. Also, the giant 500-store Wherehouse Entertainment chain, in Torrance, Calif., has jumped into Latino music, launching nine stores under the Tu Musica name, and opening a department under that name in about 40 Wherehouse stores. In Florida, Ritmo Latino’s main competitor is the Spec’s Music chain, now under the ownership of Trans World.

Compliments for Ritmo Latino also came from Bob Navarrete, director of sales for BMG Latin, who calls the stores “very modern. They are the closest that you can get to an Anglo store,” like Sam Goody or Camelot’s. He said that the Ritmo Latino listening stations are very sophisticated for the Latin market.

“I believe that the store has to be exciting and fun,” Massry said. He said he likes to keep his stores fresh, redesigning them every four or five years. To further promote itself, the chain orchestrates the Ritmo Latino award show, an annual broadcast carried on the Telemundo cable channel that features the hottest Latin stars. The nominations are based on sales and the winners are chosen by shoppers who can vote at Ritmo Latino, the Von’s supermarket chain and Red Lobster.

With Latino shoppers flocking to Ritmo Latino, Massry hasn’t been in a rush to open an online store. But beginning this spring — before press time — Ritmo Latino intended to go online, although not with a full offering of titles. Instead, Massry said he will edit his inventory and present key music and book items. The site will be “more informative” than a sales vehicle, he said.

Massry said he never felt threatened by the Internet revolution.

“When the video came out, they thought the movies would close down,” he noted. “The boring stores may go out, but an exciting store will continue.”

 

 

 

 

 

 

 

 

 

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