Homer's down to two stores

Homer's Music, an Omaha-based independent record chain, will close two stores — on Saddle Creek Road in Omaha and its last store in Lincoln — and relocate its flagship store in the Old Market about a block west.

The retail environment is the most difficult general manager Mike Fratt has seen in his 31 years with the 38-year-old company, he said, and Fratt didn't want to renew his expiring leases at their current rates.

“I have never seen a pullback like I saw in October. January was pretty ugly, and mid-July to mid-August was also pretty ugly.”

Rather than have many mediocre-performing stores, the company is choosing to run a few highly successful stores, he said.

While Homer's had as many as 15 stores in the 1990s and as far away as Des Moines, the closings will leave the company with two stores — one in west Omaha and one downtown.

That number is more consistent with other independent record stores elsewhere today, he said.

Fratt currently is renegotiating the lease for Homer's Orchard Plaza store at 2457 S. 132nd St., northeast of 132nd Street and West Center. He declined to discuss the negotiations.

The Old Market store will move from its midblock location at 1114 Howard St., where it's been since 1986, to another midblock site at 1210 Howard St., a now vacant storefront formerly home to Bella's Place art gallery.

Homer's occupied that space from 1980 to 1986, when damage from a fire forced the retailer to relocate. The record company has had four Old Market locations since it started there in 1971.

Fratt said the latest move, tentatively scheduled for October, proves the company's commitment to the historic district. Homer's signed a multiyear lease for the space, which is about 1,500 square feet smaller than the current location, Fratt said.

“There's been an explosion in the per-square-foot rates in the Old Market in the last five, six years just as there has been anywhere else,” Fratt said. “We've had substantial rate increases in the last three years, and we can't keep taking those on. So we decided to move to a smaller-size space to save money, to cut our overhead.”

Homer's will close its Saddle Creek store, at 530 N. Saddle Creek Road, on Sept. 19.

Fratt said he wanted a month-to-month lease at that corner when the current contract expires at the end of September, but the landlord wanted to double the rent, which would have been too costly.

The store, which opened 11 or 12 years ago, attracted a diverse clientele from Dundee, Fairacres, north Omaha, Creighton University and the University of Nebraska Medical Center, Fratt said. But business has fallen since a neighboring Target store closed in July 2006 and other restaurants and retailers followed, Fratt said.

“For a long time it was our most profitable location per square foot, and we know it's convenient for a lot of people,” Fratt said. “We're at the point where we're close to breaking even, so we're just unwilling ... to head into the red.

“For a few months this year we explored moving it, but with the way the economy is now, we've just become too conservative.”

A similar stalemate over lease terms led to the decision to close the remaining Lincoln store at 6105 O St., which follows the June 2007 closing of a Homer's near the University of Nebraska-Lincoln.

The closings will result in the loss of about six full- and part-time jobs at each location, Fratt said.

The Lincoln store will close Sept. 5 but will reopen for one day Sept. 9 for the long-awaited release of digitally remastered versions of all the Beatles studio albums.

Homer's, as part of the Coalition of Independent Music Stores, has negotiated with the major music labels to be able to sell new releases at $9.99, or $2 below cost.

Fratt said mass merchants have sold new releases at or below cost for years, making it difficult for independent retailers to compete. Discounting has affected the independents even more than the advent of digital music, Fratt said.

The Sept. 9 release will be the coalition's first foray into head-to-head competition with the discount chains at $9.99 first-week pricing.

“We think it could be a game changer. Our own customers go to Target or Wal-Mart the first week, but they come to us for everything else,” he said. “If we can change that, that's healthy for our business.”

Homer's sales were up in 2008 over the previous year, he said, but overall sales this year are down by a “low single digit” percentage over the same period last year.

The company's gross profit margin is up slightly because of other factors — a lower wholesale cost of CDs, adjustments to the company's mix of products, and a resurgence in the popularity of vinyl albums, Fratt said.

Free on-line file sharing initially slammed the music labels and bricks-and-mortar stores like Homer's, but Fratt said the Internet is not the threat once predicted.

Rather, people use the Internet to preview music and then come to stores like Homer's to buy, he said.

“We're still the only places that sell deep catalog (meaning older releases and rarities), and we've got to have the sales of the big hits in order to carry the deep catalog.”

The creation of online music store iTunes and others provided a legal way to access digital music. While that definitely has affected stores, Fratt said, recent research shows that it mostly has boosted sales of singles.

When people buy an entire album, 80 percent of the time they choose the physical product at a physical store, he said.

Homer's opened its own digital music store in May 2009.

“It's growing every month,” Fratt said.

Fratt doesn't want people to think Homer's or other independent record stores are dying.

Decisions to close or relocate, while difficult, are part of how Homer's continues to survive the ever-changing music industry, he said.

“We constantly make sure we reposition ourselves to make sure we're a vibrant organization, whether that means 11 stores in the '90s or two stores in 2010. We hope that they would consider shopping at the other two locations.”

Contact the writer:

444-1183, christine.laue@owh.com

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