Banking on Sixteen

As he spouts off the industry's vital stats for the last few years, John Kunz knows that music retail has seen serious trouble. Let's see, square footage has increased by 50% and overhead costs have risen accordingly by the same amount. Due to the tactics of "big box" retailers, the Best Buys who sell CDs for dirt cheap, profit margins are down 10%. Sales? Sales are only up 1-2% over the same period of time.

In fact, many big chains are already in (Camelot Music) or teetering on (Musicland) bankruptcy, while small, independent stores are falling by the wayside with fantastic frequency. So why is Kunz, the owner of Waterloo Records, the picture of calmness and security made flesh?

For one, Kunz just picked up his 15th consecutive Austin Music Award for Best Record Store. That's an award for each year Waterloo's been in business. It was 15 years ago April 1 that the store opened up in the tiny, shoebox-shaped building about a half mile down from the store's current location on North Lamar. And what was once 1,000 square feet of unconventional ambition has become, after a handful of expansions and one move, about 9,000 square feet of local institution.

Music Awards don't keep you solvent, though. How does Waterloo continue to thrive at a time when other retailers struggle just to survive? And how the hell does Kunz get people to come into his store and pay from $11.99 up to $14.99 for music that may run as cheap as $9.99 at a national chain?

Well, it's a couple of things -- none of them genius but all of them generous. From its inception, Waterloo has been consumer-friendly. They've had a liberal return policy allowing customers to return anything for any reason. Also, from day one, customers have had the luxury of being able to listen to anything in the store before buying it.

The practices sound common sensical now, but 15 years ago they were fairly bold moves -- things nobody else was doing. Remember, this was a time when vinyl was king, and vinyl was a much riskier medium than CDs. "The industry was telling us that we were crazy," says Kunz. "They were predicting that all of our customers were going to come in here, tape something, then bring it back, saying they didn't like it."

John Kunz, owner of Waterloo Records photograph by Minh Carrico

Of course, in typical poetic justice fashion, now that the CD is dominant, Kunz sees that other retailers have paid him the ultimate compliment by copying his policies. Still, it's not every store that will let you return music you don't like. Go to your Best Buy and purchase a CD. Even if you spend $4 less, if you don't like it, you're stuck with it. And that's forgetting that while you buy it, you're also being assaulted with speakers and camcorders and computers that the store is goading you to buy.

The 'loo not only has a superior environment, but also offers other perks. "If you consider the fact that over the last few years you could have seen a free show in Waterloo Records by Nirvana, Counting Crows, Sheryl Crow, Lyle Lovett, Nanci Griffith, and on and on and on, is that worth paying an extra couple of bucks?" muses Kunz.

Finally, the success of Waterloo Records may have a lot to do with Kunz himself, a man who hasn't a smug fiber in his body. Instead of gloating over his own business savvy or touting a visionary master plan, he continually credits his staff with much of the store's success. "They are immensely talented," he says, deflecting absolute credit, "I can't do any of this stuff all by myself. It's impossible. It runs because of them."

Couple that kind of person and that kind of store with an informed populace that has a tendency to patronize local businesses and there's your success story. It's not genius, but it results in a very unique store.

It's a store that in 1996 sold more copies of Toni Price's Hey than it did of Alanis Morissette's Jagged Little Pill; a store that last year sold more copies of Cesaria Evora's self-titled release than it did either the second Beatles anthology or Pearl Jam's No Code. It's a store that makes around 200 special orders a week for its customers. It's a store that has won 15 consecutive Austin Music Awards and with quiet confidence can probably bank on number 16.