His coup will be a major boost for area consumers, thanks to his unique strategy.
Canterman's CD City factory outlet concept features compact discs as low as $2. He's consolidating the concept in a large 6,000 square-foot store at Campbell and Glenn that promises to become the new nexus for music lovers in Tucson.
Canterman's secret to becoming king again is other people's trash.
"We're the bottom feeders of the music industry," he says gleefully.
Canterman alone seems to have realized what to do about mountains of discs that were piling up in stores and warehouses around the country, thanks to changes in the music industry. He figured out that a lot of it wasn't really unwanted, but merely overpriced and poorly distributed. He's exploited that niche, buying by the truckload and making money on the age-old formula of low margin/high volume. He's moving CDs by the millions and has become the largest music recycler in the country.
"When we stumbled onto recycling, we wondered why no one else was doing it, but no one was," he explains. "I didn't think it was going to get this big this quickly. It's crazy."
Canterman's quest to retake the crown comes at a fortuitous time. His major competitor in the used music niche, Zia Record Exchange, is in transition, having been sold earlier this month to a group of Scottsdale investors. Zia's long-term future has been a question mark since the death of founder Brad Singer in 1998, followed a few months later by the sudden closure of their eastside store at Speedway and Kolb. Zia has two stores here and four in the Phoenix area.
DAVID CANTERMAN FIRST drove his hippie van to Tucson from his native Pittsburgh, not long after attending Woodstock. He grew up in the retail music business, working in his father's record store. After arriving in the Old Pueblo, he and Ron started Zip's.
By 1993, however, Canterman was burned out and left retailing. He returned in 1997 at his brother's request. The Zip's chain, in which he still had a substantial financial stake, was on the verge of bankruptcy. Big box outlets, such as Circuit City and Best Buy, had begun using discounts on CDs to draw in customers. Meanwhile, the record labels had instituted policies that made it harder for small, dedicated independent stores to compete. One of those policies, which prevented pricing below industry-set minimum, is currently the subject of a multi-state lawsuit that Arizona has joined.
Another industry policy severely limited returns. Previously, retailers could return overstock and the labels absorbed the loss for their stiffs. Now the loss was pushed to the stores, including the big chains, which found themselves with literally tons of unwanted inventory.
Canterman realized there might be money to be made from all that surplus. He set up Boomerang Recyclers and started to buy large quantities at salvage prices, sight unseen. His first purchase was 37 pallets of junk music and videos from an Ohio distributor. Nervously unpacking his booty, his heart sank as he saw boxes of useless Buns of Steel videos. Then he found 130 rare, out-of-print boxed sets of ABC's Beatles video. That truckload ended up making him more money than Zip's had made in the prior two years.
Next he bought out the inventory of a California music distributor in bankruptcy. He also cut a deal to take the returns of a major retail chain with several thousand stores (he won't disclose which one). Canterman's company receives semi-trailers of CDs that his staff reviews and processes. Much of it is indeed junk, which he simply repackages and resells at a modest market-up to other retailers, including a second major chain (which he also declines to disclose), for their discount bins.
Canterman claims to know little about popular artists or who sells. He does know a lot about how to move product, however.
"My employees know music, not me," he avers. "This could be cans of soup. I just make deals."
Along the way, Canterman decided to get back into retail with some of the gold he'd gleaned from the dross. He opened CD City on Speedway Boulevard in April of last year. The store quickly became a treasure trove for knowledgeable collectors who found rare items in the anonymous bins, sometimes priced as low as three for $5. Canterman added a store at Foothills Mall a year ago. Both of those locations are now closed as he concentrates on the new location in Albertson's Campbell Plaza, just north of Glenn.
The new store, set for grand opening August 25, will feature competitively priced new merchandise. It will also buy and sell trade-ins. But the big lure will be the dirt-cheap salvage merchandise. Customers will find everything from obscure rappers to out-of-print Blue Note jazz albums to European classical labels such as Hyperion and Kontrapunkt.
The store will have the largest selection of boxed sets in the area, many of them otherwise unavailable anywhere. What's more, Canterman picked up the distributorship for Wurlitzer jukeboxes and also hopes to have live music in-store. The back room will house his fledgling on-line operation.
Canterman estimates that he keeps about 8 percent of what he receives for his own store. Overall, he expects to move more than 2.5 million units this year through Boomerang Recyclers. The best stuff, however, will be available exclusively to Tucson customers.
Getting ready for the grand opening, Canterman has just returned from a buying trip, scoring 100,000 CDs in San Francisco.
"We aren't always right," he admits, "but there's some incredible stuff here."
