Tower Of Power Russ Solomon's dream of a record supermarket set the groove for today's music megastores.

Russ Solomon's dream of a record supermarket set thegroove for today's music megastores.

Russ Solomon is the president and founder of Sacramento,California-based MTS Inc., the corporation that owns TowerRecords--a company that racked up sales of just under $1 billionlast year. He is also living proof that anyone with a clear andinnovative marketing concept--and the passion to make that dreamcome true--can transform their concept into a reality.

Ply him with intelligent questions about his record empire andhe'll spin a saga spanning 28 years that not only chroniclesthe rise of his trend-setting BIZ Experiencesial empire, but thegrowth of the modern recording industry.

Solomon enjoys coming off as a regular guy who just happened tobe in the right place at the right time. But that's only partof the story. When "Flower Power" swept the nation in themid-'60s, Solomon, who was in his 30s at the time, fantasizedabout opening a "record supermarket," a megastore sellingeverything from Wagnerian opera to psychedelic rock. So began theTower concept, and the ascendance of a pioneer record chain whichnow boasts 120 national and 61 overseas stores. Yet there's alot more to Tower's story than luck and timing.

While Solomon strikes the pose of the laid-back and freewheelingentrepreneur, a couple of the time-tested secrets of his successwere patience and persistence. "I've been in the recordbusiness for 55 years," he chuckles. "That's not whatI call `overnight success.' There was no secret formula. I justkind of did it. I climbed up the hill by putting one foot in frontof the other." Unlike many successful BIZ Experiencess who builttheir companies on elaborate business plans and calculated visions,Solomon had no clear direction when he started. "It was allkind of seat-of-the-pants; I just kind of took things as theycame."

He does admit to entertaining visions of selling different kindsof music, catering to people's diverse tastes. His dream grewout of a deep love of music which can be traced to his mid-teens,when he sold 78 rpm records in a corner of his father's drugstore, the Tower Cut-Rate Drug Store in Sacramento.

Yet Solomon cavalierly plays down his modest start in the recordbusiness. "Forget all the stuff you've read aboutentrepreneurs working around the clock and entertaining the grandfortune-making visions they've had since they were kids,"he says. "When I was a teenager, I couldn't see beyond thenext 24 hours. Girls and listening to music were my biggestpriorities."

School certainly wasn't high on his list, either. Unlikemany famous BIZ Experiencess who are embarrassed about having quitschool to build their fortunes, Solomon boasts about being kickedout of school. "I was bored and didn't go to class,"he says. "I certainly didn't have any big plan up mysleeve."

The young Solomon did demonstrate a flair for merchandising,however. Working the record counter in his father's store, hebought used jukebox records for 3 cents and sold them for a dime.When 45 rpm records were introduced, he gave away $6 worth ofsingles to each customer who bought a 45 rpm record player for$12.95, thus building an audience for the new singles.

Before he got serious about record retailing, Solomon triedjunior college for a few months, then joined the Army. After hisdischarge, he went back to selling records in his father's drugstore.

In 1952, the 26-year-old Solomon took over his father'srecord inventory and opened a music wholesaling, or rack-jobbing,operation. "A rack-jobber sells discount records inmass-merchandise stores," he explains. "I quicklydiscovered that you can't make a profit if you'reundercapitalized." After eight years of lacking the funds tobeef up his inventory, distributors moved in and liquidated hisbusiness. He shrugs it off as a learning experience: "I washumbled, but not defeated. I came away more determined thanever."

In 1960, he borrowed $5,000 from his father and reopened hisbusiness under the MTS corporate banner in his father'sdrugstore. A month later, he opened a second Tower Records store."The record-retailing business suddenly made a lot ofsense," he says. "It was just a question of building aninventory and selling it."

By 1967, he had opened two Tower Records stores in Sacramento.At 42, married and with two children, Solomon realized his grandvision of a supermarket-style record store. In March of 1968, hetook a five-year lease on an enormous vacant storefront at SanFrancisco's Fisherman's Wharf and opened his first SanFrancisco Tower Records. He filled 6,000 feet of space with recordsfrom all over the world. Prior to that, records were sold in smallstores with limited selections in major categories. "As soonas the store was stocked," he says, "I realized this wasthe only way to sell records."

With the opening of that first sprawling store, featuringcolorful, six-by-six-foot paintings of record covers as windowdisplays, Solomon had opened what he felt was the ideal recordstore for music lovers, a veritable smorgasbord of listeningpleasures.

The new store was an instant success, attracting serious recordbuyers from all over the state. If Tower didn't have an obscurerecord in stock, Solomon promised to find it. And, by monitoringthe output of tiny, obscure record companies and wholesalers, heusually did manage to find those hard-to-get items, scoring lastingpoints with music cognoscenti.

With the success of the San Francisco store, Solomon once againbecame excited about his business, and dreamt of growing evenbigger. "What better time to be in San Francisco?" asksSolomon, fondly remembering those exciting times. "Woodstockwas a year away and the music scene was bursting with newmusic."

Two years later, in 1970, Solomon opened his second superstoreon Sunset Strip in Los Angeles. Over the next decade, he opened 26more stores in major cities across the country.

When video became hot in 1981, Tower began selling and rentingvideos. By the early 1990s, Solomon had expanded his product lineto include books and CD-ROMs. But it's still music, now oncompact discs, that accounts for the bulk of Tower's sales.

Solomon has taken his record supermarket concept to new heights."In the early years, our biggest obstacle was not havingenough capital," he says. "Today, we have the trackrecord to strike good banking arrangements." With plenty ofcapital, he spares no expense in renovating and designing stores,which range in size from a modest 3,600-square-foot location inSonoma, California, to Tower's largest store (53,000 squarefeet) in Tokyo.

However, Solomon encounters more competition each year. With 181stores worldwide, he finds himself surrounded by copycats. Hisbiggest competitor is Minneapolis-based Musicland Group Inc., witha whopping 1,472 stores and 1995 revenues of $1.72 billion. Despitetheir size, Solomon says he doesn't lose any sleep over them.After all, he was first. More importantly, Solomon is convinced heoffers his customers a unique and more eclectic selection."We're the best," he asserts, immodestly.

Being the best means mastering the art of competitive retailing,something Solomon has been doing all of his life. "I was doingit when I ran the record counter in my dad's drug store,"he says. "I'm still doing it today, but on a much largerscale."

Solomon has never strayed from his original retailing concept,which is "giving the public lots of stuff that they want at aprice they want to pay." He explains, "That's whatgood retailing is all about."

Even deep discounters like Wal-Mart, K-Mart and Price Clubdon't faze Solomon. "We can compete with anybody," hesays, insisting that his success also rests with smart buying andcreative handling. "Nobody can buy records cheaper than wecan."

More upsetting to Solomon are changes in the industry."Music has become a commodity, and everyone is trying to feedfrom the same trough," he says. "Besides the discounters,a lot of the electronics retailers, like Circuit City and Best Buy,and booksellers like Borders Books and Music, have jumped into themarket as well."

Solomon forecasts an industry shakedown over the next few years."Some of the companies will go away," he speculates."The good ones will get bigger." Despite a crowdedmarketplace, Tower consistently manages to rack up a 15 percentannual revenue growth rate.

"The business is exciting because music never stopscoming," he adds. "There is more variety and moreaccessibility to music than ever before."

Solomon spends most of his time overseeing new businessdevelopments, but has little to do with the day-to-day running ofthe company. His management philosophy encourages Tower managers todo their own thing. Solomon calls it the "Tom Sawyer School ofManagement." According to his interpretation of the classictale, "It's based around doing as little as possible. Justlike Tom Sawyer had the good sense to hire Huck Finn to paint hisfence, my secret is to hire good people and let them do what theydo best." (What does it matter if Solomon rewrote TomSawyer to suit his own purpose?)

Solomon explains that Tower was built using what he calls ahorizontal management concept: "I'm involved in one way oranother with everything Tower does, but I'm not autocratic tothe point where they can't do things without me. The managementteam can do everything they need to do without me. I like to beinformed, but they don't need my permission. Many decisions aremade at the store level."

The general operation is based on a regional-manager system.Each regional manager (all of whom have come up through the ranks)is responsible for 10 to 15 stores. The managers report to a fewsenior executives. Company ranks have swelled to more than 7,000,yet there is little turnover within the supervisory and managementranks. And Tower promotes from within; most managers started asclerks.

As for the future: What's next? A superstore the size of anairport? Solomon refuses to comment. One thing is certain: Thiscantankerous BIZ Experiences says he'll never retire. That'seasy to believe, given his past record.

New York City writer Bob Weinstein is the author of 10 books;his latest is Who Says There Are No Jobs Out There?, fromMcGraw-Hill.

Contact Source

MTS Inc., 2500 Del Monte, P.O. Box 919001, W. Sacramento,CA 95691, (916) 373-2500.