Sunday, October 7, 2012

The Record Mart

 The birthplace of NRM on Wood Street from Life in Western PA

In 1937, the record industry was just beginning to sprout, and juke boxes were popping up all over town, spanning malt shops and night clubs that were spinning the music of Tommy Dorsey, Benny Goodman, Count Basie and Bing Crosby. East End brothers Howard and Sam Shapiro were in on the ground floor of the action, servicing the machines.

Then the bulb went on: why not make a buck off the used records they pulled from the music boxes? There was virtually no record sale competition at the time other than variety and department stores, and the cost was little-to-nothing for the second-hand shellac, which the owners considered warehouse clutter.

That year they opened the tiny Jitterbug Record Mart shop at 424 Wood Street on the corner of Diamond (now Forbes Avenue) and Wood in downtown Pittsburgh. They were backed by their dad Hyman and eventually brought in younger brother Jason, who was still at Peabody High at the time. The store started out selling used 78s: Bluebird, Decca and Vocilion labels sold for a dime/three-for-a-quarter, while Victor and Brunswick discs went two-for-a-quarter.

Business took off, and after the store became established, a distributor arranged for them to add new records to their offerings; they got up to 50 cents per disc for them. They gradually eased out the less profitable used discs and added foreign and classical record departments on the second floor to attract Pittsburgh's melting pot.

By the early forties, Hyman started two more locations in East Liberty and town (he ran the operation while his sons were in the service during WWII with the help of their wives and family) and changed the name from Jitterbug to the National Record Mart. When the boys returned to civilian life, they each had their own store.

During the postwar economic boom the business became a door-buster, and the stores began offering both 45s and LPs. They added a key and long-time staffer, Frank Fischer, to the payroll. He was a North Side kid from North Catholic High who started out with NRM by washing windows at the East Ohio Street store in 1951 and left the chain as president in 1994.

By 1958, they had at least 19 shops in their chain: Six were in town at 234 Forbes Avenue, 701 Smithfield Street, 930 Liberty Avenue, 100 Smithfield Street, 507 Market Street, and 540 Liberty Avenue, back in the day when Pittsburgh's center city didn't roll up the carpet after happy hour.

Others were at 1723 Murray Avenue (Squirrel Hill), Great Valley Shopping Center (E. McKeesport), 347 Fifth Avenue (New Kensington), McKnight-Siebert Shopping Plaza (North Hills), Banksville Plaza (Banksville), 5927 Penn Avenue (East Liberty), 500 East Ohio Street (North Side), 3715 Forbes Avenue (Oakland), Whitehall Terrace (Brentwood), 2889 West Liberty Avenue (Dormont), Heights Plaza (Natrona Heights), 300 Mt. Lebanon Boulevard (Mt. Lebanon) and on Chestnut Street in Washington.

More shops were added in quick order in places like McKeesport. NRM also operated a half dozen Gimbels' music departments and managed the music sales at several other general retail outlets. Adapting to the times, many new NRM stores were opened in malls instead of adhering to the old business district/shopping center model, setting up outlets first in the partially enclosed Whitehall Terrace in 1952 and later at Eastland (1963) while adding true mall shops at Northway (1962), South Hills Village, Greengate and Shenango, the last three all in 1965.

And they learned how to protect their growing turf. The Shapiros cut back their orders of records from the Columbia, RCA Victor and Capitol labels by nearly half in 1959 to protest their record clubs, which were undercutting NRM's prices. While not exactly sure that one thing led to the other, it was also the year that they began to discount albums at a dollar under suggested retail, approximating record club list prices. It eventually led to a meeting of the minds, peace in the valley and merrily ringing cash registers once again.

Entering the sixties, the National Record Mart chain operated 25 stores, all located in and around Pittsburgh. They were headquartered in their 18,000 square foot Forbes Avenue flagstaff store (it even had listening booths for the customers) by Market Square. It also served as a retail site and storehouse, with Gateway Studios on the third floor.

In 1978, the offices and distribution facilities moved to 5607 Baum Boulevard - the building is now The Offices at Baum Boulevard, across from the old Day Auto lot - after a seventies record boom fueled by discomania overwhelmed the old downtown warehouse, and then to Carnegie in 1991 to take advantage of the new airport.

They pumped music throughout the store to help drive sales subliminally, and their sales list was widely distributed to the radio stations. They had their own label, which produced records like Jimmy Pol's "Pittsburgh Steelers Polka" and DJ Mike Metrovich's "Mad Mike's Moldies." (Mad Mike worked for NRM in the sixties, after Bob Mack's downtown Tri-State Record shop closed down.)

During this period, the chain hired another key North Side guy, Oliver High's George Balicky, as an oldies buyer. He would spend over 30 years with NRM, leaving in 1999 after serving as a senior VP of Marketing and Merchandising.

1964 was the year they entered the ticket sales business with promoter Tim Tormey. It was for a Civic Arena show featuring some Brit mop-tops called the Beatles, selling the tickets out of a cigar box. They were the first local outlet to move tickets outside a venue box office and the first to take mail orders.

In the sixties it was common to see lines forming outside a store the night before a sale, complete with sleeping bags. No, it didn't start with Black Friday midnight madness - it was a NRM phenomena first. And for years, they handled the duty without a service fee; NRM eventually added one when they realized the ticket crowd didn't often hang around the record store to browse and buy after they paid for their concert passes, starting at a quarter and going up to $1.25 during the Shapiro's tenure.

The chain expanded big time in the seventies, establishing locations in Roanoke, Buffalo and Chicago to become the first truly national music chain. Up until then, all the company's stores were within a four-hour drive of Pittsburgh, set up regionally like the other larger music outlets. The Shapiros grew NRM to a total of 57 stores by the end of the seventies.

The hot issue then was hot records. The bootlegging industry, working out of car trunks (always a thriving Pittsburgh underground option, then and today) was claimed to be cutting retail sales by a third. NRM survived that bump nicely, thank you, as did the record pirates.

In 1978, the Shapiros opened the company's first entertainment superstore in Pittsburgh, Oasis Records and Tapes, adding videos to the record stock and introducing the dollar-per-night movie rental when the going rate in other shops was $3.99. It got its name from its first location in Bloomfield, across from the bridge, when a NRM scout reported back to the office and said the site was "an oasis" (and it was for a while, between the '78 closing of the old Bloomfield Bridge and the 1986 opening of the new span.)

The impetus was a southern outlet called Peaches that was aggressively expanding, taking over old A&P markets and filling them with records sold off wooden pallets, along with vids and merchandise. Peaches moved one store into Bethel Park at 5253 Library Road (Route #88), and that got the Oasis ball rolling.

NRM opened superstores in Bloomfield and McKnight Road, eventually buying the Peaches store in Bethel Park, too. Oasis always had the biggest record selection and the most one-off merchandise like tees, posters, etc. to offer of all the NRM stores because of their size.

Shelly Berman, a Columbus adman whose firm now operates as SBC Advertising, undertook a study that was completed in 1978 and determined National Record Mart as a name was outdated and clunky (Records were being replaced by tapes and later CDs, and Mart was associated with big-box stores), but NRM was sleek and sexy, foreshadowing the Kentucky Fried Chicken conversion to KFC in 1991. So the National Record Mart became NRM.

The company remained a privately held family operation into the eighties, and store expansion was deliberate, usually limited to no more than a half dozen carefully vetted new sites annually. The chain had grown to 75 shops by 1986 with annual sales of $40 million.

That's when the Shapiro brothers, then in their sixties, decided it was time to retire. By now, they were spending more and more time on near-to-the-heart community projects. Business required sharper pencils and longer hours, too. Mall expansion was becoming increasingly expensive to ramp up as square footage costs shot through the roof and discount retailers like Sam Goody were circling the boat like sharks, engaging in tactical price wars. Still, the brothers knew NRM was in good financial shape.

They could pass the torch and keep the business bloodlines intact, but with various kids and cousins in the mix, they feared creating a family feud. So they put the business up for bid, and a group headed by Bear-Stearnes' Bill Teitelbaum put together the top offer of $10 million.

The thirty-something Teitelbaum had little experience in the music industry, and had been unable to cobble together a package for the CBS music library in his first effort to break into the biz. But he still wanted in the door. Teitelbaum felt with the technology of CDs and laser discs on the horizon and some Big Apple marketing innovations that he could lead NRM to the top of the retail music food chain. His plan was to tap into the first wave of savvy music fans as they made the transition from tapes and wax to more modern media.

Teitelbaum had several other irons in the fire in New York and so wasn't a day-to-day presence at HQ. In fact, it took him a couple of years to become a hands-on owner.

He formed an executive committee of holdover NRM vets to help in the decision making. They were Fischer (President), Balicky (VP Marketing & Advertising), George Tunder (Merchandising director), Lori Winterburn (Operations manager) and newcomer Mary Ann Miller (VP Finance). Jason Shapiro stayed aboard as an adviser. Fischer and Balicky, with the ear of both the Shapiros and Teitelbaum (Fischer in real estate and new locations, Balicky in marketing and strategies), would be the only ones of the committee to make it into the nineties.

His plans for growing the company included the expansion of NRM stores through the acquisition of other smaller chains, heavy advertising campaigns, personal & knowledgeable service (the staff bought into the concept, and many ended up NRM lifers, from floor help to managers) and the introduction of a new concept store called Waves, which eliminated record sales entirely in favor of CDs and cassettes.

The new NRM opened the upscale Waves Music, featuring “Tomorrow’s Sights and Sounds Today,” in Columbus in 1987 and eventually thirty shops marched under the banner. Waves later featured its "Wave Net," a computer that accessed the Muze record database and additional info on a company intranet. A decade later, the store was retasked to appeal to adult consumers as the boomers began to gray.

Teitelbaum's NRM had a solid financial return from 1986-88, but the following couple of years were almost his last. Teitelbaum left his New York sanctuary after two years of absentee ownership to visit Pittsburgh for weekly executive meetings beginning in 1989, but the company went tumbling downhill even during his more active watch - or maybe because of his presence; that's a topic of some debate, with good arguments made either way.

The investors had incurred a heavy debt load from the leveraged purchase, and with the additional cost of its expansion, NRM was approaching a financial abyss. But Teitelbaum neatly sidestepped that approaching freight train. In 1991, facing predictions of bankruptcy, he sold 20 stores to WH Smith's record chain "The Wall" for about $12 million, generating enough cash for National Record Mart to go public.

In June 1993, NRM, trading on the NASDAQ under the symbol NRMI, was infused with a fresh $10 million after its IPO, and that payed down the debt. The company negotiated a $17 million line of credit, and then purchased the Leonard Smith Inc.'s "Music For You," "One Stop Entertainment Center" and "Merle's Record Rack" shops located in New York and New England, increasing the number of NRM stores to 115. The turnaround was so dramatic that the chain was nominated for the "Retailer of the Year" award.

Teitelbaum's expansion blueprint wasn't to enter new markets with NRM's bread-and-butter record stores and butting heads with the locals, but to buy up smaller competitors with an existing reputation, shops and customer base. And he did have some specialized concept projects in mind to target a now segmented customer profile as the market matured beyond kids buying records. Waves was the tip of the iceberg.

NRM launched the Music Oasis in Canton the following year, a membership club featuring more than 30,000 CD titles with “The Coolest Prices in Town.” Its appeal was to cost-conscious customers as a response to the big box retailers. NRM also opened its college-oriented Vibes Music stores (so named from a meeting where an exec noted the idea gave him "good vibrations") at Princeton, Penn, Boston U and IUP, eventually serving 15 campuses.

The company joined forces in a cross-promotional venture with alternative radio station The X (WXDX). In 1994, NRM opened Music X stores in Monroeville Mall and on Forbes Avenue in Oakland near Pitt and CMU to cater to the grunge generation. Music X was a regional shop, mostly mall-based.

The Record Mart had several other smaller brands in the marketplace, tailored to a narrow customer base. In fact, one of its sales pitches to potential operators was that NRM offered an outlet for every demographic.

NRM even entered into the brave new world of online music starting during the Christmas sales season of 1998 when it launched two web sites: www.wavesmusic.com and www.nrmmusic.com. The Record Mart thought it could outperform pioneer e-tailers like Tower, K-TEL and CDNow, and that the web offered an untapped opportunity to cross promote with the existing shops.

They offered over 28,000 titles as downloads of current sounds. They sold used and overstocked CDs, taking a percentage of the sale for their cut. NRM even featured World Wrestling Federation products in a mutual back-scratching deal with Titan Sports, jumping the hits and sales from their site by 40%. While forward-looking, the site was too-little, too-late, and never really took off, earning $400,000 in 1999.

In addition, Teitelbaum started a "frequent buyer" discount program, giving regular NRM customers a break on the prices as both a reward and an enticement for brand loyalty. But the storm clouds were beginning to gather.

While some in the company felt it was time to retrench, cut stores and find focus, Teitelbaum instead expanded NRM to the West Coast and added eight stores, including four in Hawaii and another in Guam when it bought California's Tempo One Stop Records in 1998. National Record Mart operated 175 stores under its umbrella in 30 states that year. That expansion was funded by borrowed money, and within a very quick time, that debt would become a cash flow game breaker.

No matter how hard NRM tried to turn the tide, the era of the retail music store was ending, dying from a thousand cuts by the turn of the century. There was an industry-wide drop in record sales as the market flew into a million sub-genres. Discount retailers were selling CDs as a loss leader at prices the record retailers couldn't compete with, and at a volume that gave them favored nation status with the labels.

Walmart became the world's largest music seller for years. It was a boomerang for the business, too, as the big boxes preferred to carry just a hot 100 titles during the "Top Forty" heyday. So the labels cranked out wax from a few chart-topping stars, but put developing new acts on the back burner, with the unintended consequence of torching their bridges to future sales. And the discount marts weren't the only retail interlopers.

There were superstores like Media Play and Best Buy to compete against. Borders and Barnes & Noble found CDs to be a cozy fit with their book and magazine business. Heck, within a handful of years, coffee houses like Starbucks would serve CDs with their lattes. Other entertainment media began to muscle into the leisure marketplace, from cable TV to video games.

The final straw was piled on by the nascent downloading/streaming sites on the web. Everyone from Napster to Amazon took a bite out of the shops, and as of today, iTunes is the world's largest music retailer. Without major brick-and-mortar overhead or inventory/distribution logistics as headaches, the web took down the music retailers one by one. The overall result was that The Record Mart, like most record chains, was waist deep in red ink.

NRM was hounded by creditors, had too many shops over too wide an area, and lost some of its identity through all its niche stores, trying to be all things to all people. And it wasn't entirely the economy. Teitelbaum held what senior execs called "blame-storming" sessions, during which he would try to bully his staff by catching them off guard with loaded or leading questions at the weekly meetings, according to the Pittsburgh Business Times.

He decided not only to add stores but also items like scooters, lava lamps and incense to the sales mix. The internal bone of contention was that NRM's local honchos wanted to consolidate and Teitelbaum wanted to expand. In hindsight, his managers may have been on the right side of that debate. So at a time when senior leadership needed to be on the same page, Teitelbaum and the investors were reading from a different book than the operational staff.

The turbulent climate of the music industry and within the company itself formed a perfect storm that roared over the retailer. Its stock was delisted in 2000 after dropping to under $1 per share and the company recorded losses of $10,000,000 in 1998-99. NRM went into bankruptcy, and while rumors of mergers, buyouts and white knights were swapped around the water cooler, there would be no cavalry charging down the hill to its rescue. In early 2002, they auctioned off their final assets and shut their doors forever.

Not only was the company shuttered, but its founders were gone, too. Hyman had went to his reward in the sixties, while Sam and Howard died within months of each other in 1998. Jason is the sole Shapiro remaining from the infancy of NRM, living in Santa Monica. But the Shapiros can rest easily with the legacy they left behind.

National Record Mart stayed true to its roots as a Pittsburgh area company during its entire 1937-2002 life span, even as the first national music chain. NRM was also the first satellite ticket and mail order outlet. It peaked at 178 stores in 30 states with 1,200 full time employees, and was once the fourth largest music retailer in the nation.

Pittsburghers didn't go to the music store; they went to The Record Mart, where generations of music collectors flipped through NRM's racks of CDs and records, choosing from rock to rap to Rachmaninov.

RIP, National Record Mart. It was more than a fond memory; NRM was as much a part of Pittsburgh music history as were Mad Mike, The Skyliners, Groovy QV, the White Elephant, Syria Mosque, Civic Arena and all the other icons of the city's glory days as Hittsburgh.


Main National Record Mart outlet by Market Square
picture by rhondamarierose

We've identified some local store sites, and our incomplete list is below. Please let us know if you're aware of any of the many area shops we've missed:

 * Altoona: Park Hills Plaza * Aspinwall: Waterworks Mall * Banksville Plaza * Bethel Park: 5253 Library Rd., South Hills Village * Bloomfield (no address) * Brentwood: Whitehall Terrace * Bridgeville: Great Southern * Butler: 2800 Pullman Sq., Clearview Mall * Carnegie: 507 Forest Ave. * Center Twp: Beaver Valley Mall * Clarion Mall * Clearfield Mall * Cranberry Mall * Dormont: 2889 W. Liberty Ave. * Downtown: 234 Forbes Ave., 540 Liberty Ave., 930 Liberty Ave., 507 Market St., 100 Smithfield St., 701 Smithfield St., 424 Wood St. * East Liberty: 5927 Penn Ave. * East McKeesport: Great Valley * Edgewood Towne Center * Erie: 5800 Peach St. * Greentree: Parkway Center * Harrison Twp: Highland Mall * Hempfield: Greengate Mall * Hill District: Centre Ave. * Indiana Mall * Johnstown: Galleria, Richland Mall * Lower Burrell: Hillcrest * McKeesport: 211 Fifth Avenue, later relocated across street * Meadville Mall * Monroeville Mall * Mt. Lebanon: 300 Mt. Lebanon Blvd. * Natrona Heights: Heights Plaza * New Castle: 2553 W. State St. * New Kensington: 347 Fifth Ave. * North Side: 500 E. Ohio St. * North Versailles: Eastland * Oakland: 3715 Forbes Ave.* Penn Hills: East Hills * Ross: McKnight-Siebert, North Hills Village, Northway Mall, Ross Park Mall * Shadyside: 5524 Walnut St. * Sharon: Shenango Mall * South Strabane: Washington Mall * South Union: Uniontown Mall * Squirrel Hill: 1723 Murray Ave. * State College: 232 E. College Ave. * Washington: Chestnut St. * West Mifflin: Century III Mall *

6 comments:

Anonymous said...

About what time did NRM leave McKeesport and went to East Land Mall? I noticed that you have nothing said about that. Been trying to find some history on that. I thought that East Land Mall was one of the firsts to have a NRM in it. Thankyou!!

Anonymous said...

A nice job of pulling together what, for me, were a bunch of half-remembered factoids and giving them a narrative along with some behind-the-scenes info. One old story I've heard from more than a few Pittsburghers has to do with the bootlegging angle you brought up in the 1970s; according to the story, NRM itself used to counterfeit major-label records in the early 60s and sell them in their stores. Given what you wrote about the company's complaint about record clubs in the same timeframe, I wonder if that was a negotiating tactic....

Ron Ieraci said...

Anon 1 - I'm checking the McKeesport stores, and will let u know what I find out. As u know, there were multiple locations. It's a little tricky because when NRM closed one store, it sometimes transferred the store number to the next outlet that opened, so it makes for a zig-zag trail.

Ron Ieraci said...

Anon 2 - Thx for that tidbit; actually, I hadn't heard of NRM or Gateway Studios being much involved in counterfeiting (although they did do reissues), so that's an angle I'll dig into a little more. But they did for sure have a lot of promotional tricks up their sleeve, and I'm working on a second NRM post that focuses on the chain's method's of influencing the music charts, and the ways they promoted their music and sales.

Ron Ieraci said...

McKeesport Anon - I can shed just a little light on the McKeesport NRMs. The one in town on Fifth Ave probably opened 60-ish, and moved across the street at some point. It may have replaced the Great Valley store. Eastland's opened in 1963. They were separate outlets and were operated at the same time. Eastland's closed in 74-75; the mall never recovered from a 1973 fire. I can't find a date for the McKeesport City shop's shut-down.

Larry said...

There was a National Record Mart up in Williamsville, NY (Buffalo suburb) in the Eastern Hills Mall. From what I remember it was around in the late 80s and early 90s.