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Chaos Seeks a Leading Edge on Retail

[Sydney, AUSTRALIA] Online music retailer ChaosMusic has extended its foray into the bricks and mortar side of its industry, announcing a deal with national physical music store chain Leading Edge Music.

Chaos has joined the 225-store buying group to help boost the its exposure to suppliers. "We are able to take advantage of the Leading Edge's buying power as a group in addition to our own relationships with music and video suppliers," said Chaos CEO Rob Appel of the motivation behind the arrangement.

Chaos also intends to benefit from reductions in transactional costs from credit card, EFTPOS and BPay purchasers through Leading Edges own deals with its credit providers.

While providing benefits to the transactions within its business, Appel maintained that the deal would also extend advantages for its customers, with users able to redeem Chaos gift vouchers from Leading Edge stores.

With this link to a national bricks and mortar chain, Chaos is seeking to continue to broaden its exposure to potential users, in an established customer base of music lovers and buyers. Not willing to leave this exposure to chance, though, Chaos will use Leading Edge for national promotional and advertising opportunities.

"The benefits presented by the Leading Edge affiliation will add a new dimension to the Company's ability to chase a greater share of the total music market in Australia," said Appel of the agreement.

This latest deal with a bricks and mortar operation follows on the heels of Chaos partnership with bricks and mortar operation the Strathfield Group. The company, which owns the Strathfield Car Radios chain of electronics stores, took a 6.5 per cent stake in Chaos for $1 million in a deal announced in October (see story).

This investment was an extension of the partnership established between the companies in June, and while fulfilling goals for both partners, was part of Chaos strategy to move further into offline music retail.

Chaos quest to enter the bricks and mortar world started with Melbourne music store Gaslight Music, which had its own small e-commerce operation to support its offline sales.

With this latest deal, Leading Edge group executive director Gavin Ward maintained that the music chain would see its own rewards. "ChaosMusic will Leading Edges largest single account," he said. "The involvement of Chaos through the Gaslight arm strengthens our groups presence in Melbourne, which has been a strong objective of the group."

"This, combined with the additional buying power provided by the Chaos total business, should grow the groups total share of the Australian market to around 17 percent," Ward predicted.

"Their dominance in the online area recognizes a change in the paradigm of music shopping which will include an online business strategy to supplement all record stores," said Ward.