Predictions about record stores’ demise have been circulating since Napster launched in 1999. Yet independent stores continue operating, some even thriving, despite music being essentially free and universally accessible via streaming.

The shops surviving aren’t doing the same thing they did 20 years ago. They’ve adapted—sometimes dramatically—to changing customer behavior and economics. Here’s what’s actually working.

Vinyl Saved the Store

This is the obvious one but it can’t be overstated: the vinyl resurgence has kept physical music retail viable. According to ARIA’s 2025 data, vinyl revenue exceeded CD revenue in Australia for the third consecutive year.

That doesn’t mean CDs are dead—plenty of stores still move significant CD stock, especially catalog titles and local releases. But vinyl’s margins and pricing structure are healthier for retailers.

A new LP retails for $40-70 versus $15-25 for a CD. Wholesale margins are similar percentage-wise, so dollar margins per sale are 2-3x higher on vinyl. That improved economics allows stores to operate on lower transaction volumes than would be required selling primarily CDs.

Vinyl also can’t be easily pirated or replicated digitally. You can rip a CD in three minutes. Vinyl requires a turntable, phono stage, and either analog recording or real-time digital transfer. It’s enough friction that people who want vinyl actually buy vinyl rather than downloading alternatives.

Curation Over Catalog

Big box retailers and online stores compete on catalog depth and price. They’ve got everything, it’s cheap, it arrives tomorrow. Independent stores can’t win that game.

What works is curated selection—choosing interesting stock, making recommendations, providing discovery that algorithms struggle with. Customers who just want the new Taylor Swift record can get it anywhere. Customers who want to find something they didn’t know existed value knowledgeable staff and thoughtful buying.

I’ve built Spank Records’ stock around music I think is interesting and defensible—not necessarily what’s commercially popular. That means passing on some obvious sellers but also carrying records that nobody else in Melbourne stocks.

It’s a narrower customer base, but they’re more loyal and spend more per visit because they trust the curation. Better to be essential to 200 customers than forgettable to 2,000.

Events Create Community

Record stores that function purely as retail spaces are struggling. Those that’ve become community hubs are doing better.

In-store performances, album listening sessions, meet-and-greets with artists, record fairs—these create reasons to visit beyond just buying music. They build social connection that online shopping can’t replicate.

The economics are challenging. Events require staff time, create disruption to regular trading, and might not directly generate revenue. But they build loyalty and make the store a destination rather than just a shop.

We do roughly one in-store per month plus quarterly record fairs. They’re time intensive but they bring people in who might otherwise buy everything online. Some become regular customers, which justifies the effort.

Secondhand Market Matters

New vinyl is expensive. Pre-owned stock provides price diversity that appeals to budget-conscious buyers and creates buying opportunities for customers building collections.

Managing secondhand inventory is labor intensive. You’re assessing condition, researching fair pricing, cataloging stock, and dealing with individual items rather than wholesale cartons of new releases.

But margins can be excellent. Secondhand records bought at 30-40% of market value and sold at 70-80% of market value generate better absolute margin than new stock at standard wholesale discount.

The key is knowledge. You need to know what’s valuable, what’s common, and what condition issues matter for pricing. That expertise takes years to develop and can’t be easily automated or replicated by generalist resellers.

Online Presence Without Online Focus

Every surviving record store has some online presence—website, social media, maybe online sales through Discogs or eBay. But most aren’t trying to become primarily online retailers.

The role of online presence is supporting physical retail—announcing new stock, promoting events, maintaining connection with customers between visits. Social media particularly serves as a shopfront display that reaches people at home.

Online sales happen, but typically represent 10-30% of revenue for successful independent stores. The physical shop remains the core business because that’s where margins are better and community connection happens.

Some stores have gone heavier into online sales and it’s working for them. But it’s a different business model requiring different skills and infrastructure. Most independent stores succeed by being great physical shops with adequate online presence, not by trying to compete with Discogs or Amazon.

Pricing Strategy

Pricing’s a constant tension. Price too low and you’re leaving money on the table or creating unsustainable economics. Price too high and customers go elsewhere.

Most successful stores price new releases at or near suggested retail pricing. That’s where customers expect them, and undercutting doesn’t generate enough additional volume to justify margin sacrifice.

For catalog and secondhand, pricing’s more art than science. Research comparables, understand condition grading, price fairly without leaving value on the table. Customers will pay premium for convenience and immediate availability, but not unlimited premium.

Dynamic pricing—adjusting prices based on stock level and demand—is becoming common. A record that’s been on the shelf for 18 months might get discounted. A recent arrival that’s in demand might price at full market rate or above if it’s difficult to source.

Diversification Strategies

Some stores have diversified beyond just music sales:

Turntables and equipment: Selling entry-level turntables and accessories generates additional revenue from customers already buying records. Setup and advice differentiate from online retailers.

Merchandise: Band shirts, posters, books about music. Complementary products that appeal to the customer base and use existing retail space.

Coffee or bar: A few stores have integrated cafe or bar operations. This creates additional revenue stream and encourages customers to spend time in the space. Operationally complex but can work in the right location.

Events and ticketing: Acting as ticket outlet for local shows or promoting events creates connection with live music community.

These work when they’re natural extensions of existing business and expertise. Diversifying into areas you don’t understand or that require completely different skills rarely works.

What Doesn’t Work

I’ve watched stores fail by:

Trying to compete on price: You can’t beat online retailers or chain stores on price. Competing on curation, service, and experience is viable. Racing to the bottom on pricing isn’t.

Neglecting online presence: Even customers who primarily buy in-store check online first to see what’s in stock. No web presence means missing opportunities.

Ignoring customer service: Elitist record store staff are a cliché for a reason, and they kill business. Customers can buy anywhere—they come to physical stores partly for the experience. Make it a good one.

Overstocking slow sellers: Capital tied up in stock that sits on shelves for years is capital not available for buying in-demand inventory. Manage stock levels actively.

The Sustainable Model

The record stores I see succeeding long-term share characteristics:

• Focused on vinyl with selective CD stock
• Curated selection reflecting staff knowledge
• Active community engagement through events
• Balanced new and secondhand stock
• Strong local connection and identity
• Adequate but not excessive online presence
• Realistic pricing that sustains business

It’s not easy. Margins are tight, rent’s expensive, streaming continues siphoning potential customers. But people still value physical music media and the discovery experience that good record stores provide.

The shops that understand they’re selling curation and community as much as product are the ones still around in another decade. The ones treating it as purely transactional retail struggle against better-capitalized online competition.

It’s a viable business for those who approach it with realistic expectations and willingness to adapt. Just don’t expect to get rich running an independent record store in 2026. If you’re doing it right, you’ll survive and occasionally thrive. That’s the reality.