WEB EXCLUSIVE: Russ Solomon Interview

Editor’s Note: In a Web exclusive, we are reprinting an interview with late Tower Records and Video founder Russ Solomon, who died earlier this month. The interview appeared in the November 1990 issue of Video Store Magazine, under the headline, “A Towering Presence: Last month, Russ Solomon celebrated Tower’s 30th anniversary and made the Forbes 400 list of richest Americans. What’s he do for an encore?”

It’s a few minutes past 2 o’clock on a Thursday afternoon, and Russ Solomon, the founder and president of the 59-store Tower Video chain, has just come into the office, battling a fierce hangover.

You can’t really blame him: He’s been partying all week, celebrating the 30th anniversary of the opening of the first Tower Records store, in Sacramento. It’s a festive occasion – and a resounding send-off for Solomon, 64, as he enters his 50th year in the entertainment software retailing business.

It all started in 1941, when Solomon’s dad decided to carry 78s in the family drugstore, also in Sacramento, and put his 15-year-old son in charge of the new “department.” In 1952, Solomon struck out on his own. He went into rack jobbing, then ran a one-stop, before returning to retail in 1960.

“As near as I can figure, I’ve been in this business longer, continuously, than anyone I know of,” Solomon says. “Almost 50 years – jeez, it hardly seems possible.”

Ah, but it is. Solomon grew up with the record business – and, since 1981, with the video business as well. And the wisdom that comes from those many years of experience – the wisdom of Solomon, if you will – is something his competitors both admire and envy, particularly since he’s applied that wisdom twice: first, toward building a successful chain of record stores, and then, a successful chain of video stores.

And how successful are they? For starters, Solomon just made the Forbes 400 list. According to the Oct. 22 issue of Forbes magazine, “Were MTS (the corporation that owns Tower] a publicly traded company, it would probably be valued at $325 million, a figure that puts Solomon on Forbes’ 400 list for the first time.”

There are currently 59 Tower Records stores and 59 Tower Video stores, in 15 states. Last year, Tower Video, with 52 stores, had video revenues of $54 million, or an average of $1 million per store. That total was more than any other audio-video software “combo” chain in the country except for Wherehouse Entertainment, which reported video revenues of $118 million in 268 stores. But unique among the combo retailers, Tower has video-only stores, totaling 45 of its 59 video units. Most are next door, down the street, or across the street from Tower Records stores; 14 are under the same roof.

This year, Solomon says, Tower’s estimated video take is $61 million, and for 1991, he’s projecting $70 million, “assuming the same 15 percent growth rate per year.”

Solomon says the primary reason for Tower’s success in the video business is his early commitment to sellthrough-part of his overall “record-store philosophy.”

“We emphasized it from the beginning, and it goes back to the historical idea that record dealers understood selling things and video specialty stores didn’t – and for the most part, even today, really don’t,” Solomon says. “We simply applied the same techniques to selling videos as we did to selling records – you stock them, you merchandise them, and you advertise them.”

Indeed. Walk into any Tower Video store and you’ll find that “every video is for sale,” Solomon says; even rentals are stickered with price tags. And there are plenty of signs and displays promoting new as well as catalog sellthrough titles. “If you want to get into our philosophy, it’s that the place to get growth is sellthrough,” Solomon says. “In rentals, you’re eventually going to reach a plateau, and there’s nowhere else to go. But in sellthrough, the potential growth is unlimited.”

Solomon’s commitment to sellthrough has certainly had an effect on Tower’s video business, The latest available figures at press time, for September, show that of the chain’s total video revenues, 55% came from sellthrough and only 36% from rentals (the balance, 9%, came from blank tape sales). At almost every other video store or chain, rentals are still No. 1.

“Tower Video is probably the world’s greatest sellthrough outfit, and that’s basically because Russ Solomon doesn’t like to rent,” says Steve Gabor, owner of the three Odyssey Video stores in the Los Angeles area. “They do a very nice job in their signage, in calling their movies collectables, and in drawing from their retail record expertise and applying it to video.”

Lou Fogelman, president and chief executive officer of Show Industries, the corporate parent of the 82-store Music Plus audio and video software chain in California, offers this view of Tower: “We came out of the same school: We started in the record business, which is all sellthrough, and then got into video and had no problem switching over, adding sellthrough to the video business, because that’s where our mentality and history comes from.”

“I’ve been in their stores, and I think they support the [sellthrough] category very well,” Fogelman says. “And that makes them a very good and strong competitor.”

A key element of Solomon’s commitment to sellthrough is breadth of copy—the importance of which he also learned from his many years in the record business. Each Tower Video store has at least 10,000 tapes; the biggest store, in Hollywood, has more than 25,000. And not only are there lots of tapes, there are lots of different titles, titles that are hard to find in other video stores.

“Just like in the record business, if the customer comes into your store and wants to buy something, you better make sure you have it, or he won’t be back,” Solomon says.

The “superstore” concept that’s the current darling of video retailing may be a belated nod to this philosophy, but as far as Solomon is concerned, it’s the right idea, the wrong execution.

“The so-called superstores essentially have a lot of wood on sale, and not much else,” he says. “Go in and at them: There’s a lot of space between titles, so they’re selling wood and wall, and maybe it’s comfortable for shoppers, but we’d just as soon pack it in tight. That’s how you sell things – you have them.

“Store size and content don’t always correlate; our video stores are not particularly big – even our Hollywood store is just over 4,000 square feet – but they do have a big selection. Size is important only in the number of tapes you have to sell or rent. Space alone doesn’t mean that much; it’s theatrical, all right, but I don’t think customers give a damn.”

Tower Video’s expansion strategy is also guided by Solomon’s record-store philosophy. Many chains, like Wherehouse Entertainment, try to saturate one market before moving on to the next; Tower, on the other hand, tends to open stores whenever, wherever, a site looks good, regardless of where that site is.”

The Wherehouse has been trying to conquer the Western market for the last 20 years, and they haven’t succeeded yet,” Solomon says. “Our philosophy is just to constantly expand, period, and we do it all the time, all over the place. We zero in on a certain area for a while, depending on what real estate opportunities come up; we open a flagship unit, build around it a little bit, and then move on to some other city we want to be in, for various reasons.

“I don’t think location means everything to us, as it does to the Wherehouse. They go into every little corner because their philosophy is the video store philosophy, which is that nobody’s going to drive five or six miles to rent a tape. Our philosophy is the record store philosophy: We sell things, and we have a lot of things you won’t find anywhere else, so we don’t have to be as densely populated in the number of stores.

“And we probably do the same business in California as the Wherehouse does, with a helluva lot less stress.”

A Wherehouse spokesman declined to comment.

But Tower Video is not without its detractors. “I think Tower is good for the sellthrough marketplace, but they don’t work their rentals very well,” says Tom Keenan, who owns

The three-store Everybody’s Records, Tapes & Video chain based in Portland, Oregon. “If Russ would put as much emphasis on rentals as he does on sellthrough and music, Tower could be tremendous. He could have done the Blockbuster thing before Blockbuster.”

And Jim George, manager of Blockbuster’s 73 Western region stores, says, “I think Tower is a very good record store; I know when I’m looking for a specific record or tape, Tower is the first place I go. But quite frankly, I don’t think we’ve been impacted by their video operation, because they’re not putting as much emphasis on it as they are on records, tapes and CDs.

“If Tower is doing good sellthrough business, that’s fine. But everyone is emphasizing sellthrough; we’ve been increasing our sellthrough emphasis in the past year or so, and we’re very happy with our selthrough numbers.”

To which Solomon replies “There’s no way we’re ever going to impact them, and it’s reciprocal – they haven’t impacted us, either. And that isn’t a sour grapes type of comment, that’s just the nature of the business. Each of us is good at what we do. We don’t expect to impact them, or even try to. I would laugh if somebody ever thought we wanted to impact them. Jim should know better.”

Accordingly, Solomon says, he doesn’t fear the competition – he welcomes it.

“I think good retailing can exist very well in the same marketplace,” he says. “We’re certainly not about to knock anyone else out, and I would think that no one’s going to knock us out, either. We’d just as soon be next door to a Blockbuster, so that they could take our overflow and we could take theirs.

“Business tends to expand with the availability of more retailing. For instance, when there’s one bookstore or record store in a mall, and another one comes in, the first one doesn’t necessarily experience a drop in business. Instead, what usually happens is that both stores end up doing twice as much business. There’s something to be said clusters of retailers offering the same product: You see antique stores together, flower stands together, gas stations on every corner. People can shop from store-to-store, and total business expands.

“Of course, you also have to be good. If you’re going to have big competition, you’d better be as good as the competition – or better, in a different way. You can’t be a secondary dealer; you’re not going to succeed if you’re a 7-Eleven next to a Safeway or an Albertson’s. And I suspect competitive pressure really makes you look at your own stock and company and make it better.

“Let me put it this way: If the competition comes up with a better idea, we’ll steal it faster than they could steal one from us. We have no compunction about that, and that isn’t necessarily the same as copying or imitating – I mean outright stealing and improving on it, if we think it’s a good idea.”

Nor does Solomon fear the recession almost everyone predicts for the near future.

“We, the video dealers, couldn’t be in a better position, because we’ve got the cheapest, most valuable piece of entertainment in the world,” he says. “People may forgo the purchase of a house or a car or new clothes or whatever, but they’re always going to want to entertain themselves. And I can’t think of a cheaper way to go than to rent a movie, or even buy one.

“You’re dealing with a $14 or $15 purchase product, and that isn’t a significant figure, in the scheme of things. No matter how bad things get, people are going to feed themselves and entertain themselves.”

Still, Solomon says, “You don’t ever rest easy, unless you want to quit – that’s easy enough to do. The name of the game is to keep improving, keep expanding, keep on top of it. If you don’t, it isn’t any fun.”

Russ Solomon of Tower Records and Video on the cover of Video Store Magazine, November 1990

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