Two big box retailers are changing their policies when it comes to sales of CDs in moves that could further dampen sales of the format. Best Buy told suppliers that it will remove CDs from its stores completely beginning July 1. Billboard reports that Best Buy will continue stocking vinyl for the next two years as part of a commitment to vendors.
Target will continue keeping CDs on shelves, but it is looking to renegotiate the terms with suppliers. The retailer currently assumes the inventory risk, paying for any goods in receives from labels, then returning unsold CDs for credit. Now, Target wants to take a consignment model that places that risk on the labels. The company reportedly made this offer to both music and video suppliers in Q4 2017.
These combined developments are a bad sign for the physical format market. Both retailers have scaled down their space for CDs as the market for that listening approach has contracted. The RIAA report for the first half of 2017 found that physical formats took just a 16% share of total U.S. music revenue, reaching $632 million in contrast to the $2.5 billion generated by streaming.