Tesco’s New Music ‘on consignment’ Business Model

Tesco’s decision to push music companies to accept minimal upfront payments is much more than a ‘take it or leave it’ offer.

Instead of paying £7 or £8 upfront for a typical album, Tesco wants to pay just 50p initially, with the remainder handed over when it sells the disc.

Given the falling demand for CD & DVD media, the move represents a way of optimising the final stages of an era as online replaces all other delivery media.

Incidentally, full consignment would mean no upfront payment leaving suppliers to worry about the gap between an invoice based upon scanned sales and the quantity delivered to the retailer ( i.e. supplier absorbs the shrinkage).

Real issue for other categories is what if retailers decide to adapt the model to all categories, thereby reflecting the true nature of what the retail route-to-consumer has become….!

P.S. Always wanted an excuse to put Elvis into Kamblog...