It is impressive, this vinyl supermarket: 18,000 square feet on two floors housing 300,000 records and innumerable tapes, compact discs and videocassettes, all sequestered in glitzy, neon-splattered sound environments so that strains of Twisted Sister and Ellington and Beethoven and Run-D.M.C. do not overlap, all open till midnight, 365 days a year, at 21st and I NW -- not exactly your bustling neighborhood, as Washington goes, but Tower has already made a difference in the night life there.

Huge speakers and dozens of television monitors splay out the hot sounds and images of this age of video. A deejay sits in a silver booth, dealing appropriate sights and sounds to each environment.

"You're going to see things there you haven't seen anyplace else," says one competitor grudgingly, "and you won't be able to escape without buying something."

Half a block off Pennsylvania Avenue on the edge of the George Washington University campus, Washington's Tower is the third largest record store in America, as well as the third largest record store in the Tower chain, now 37 links strong. It is also the newest arrival in one of the most competitive markets in the country.

"This is one of the best retail markets in the country for price, selection and promotion-mindedness," says Van Wyckoff, who heads the local branch of Warner/Elektra/Atlantic records, "and Tower is certainly a welcome addition to that."

If a record is in print, chances are you will find it in the store's large and deep catalogue. The import selection is larger than some stores' domestic offerings. And everything is within reach, mostly in bins, but also in the stacks of hot records that crop up all over the store.

So far, though, while the competition in the nation's sixth largest market has been impressed, it has not been running scared.

"What they do, they do brilliantly, and founder Russ Solomon's a genius," says David Blaine, manager of the 24-store Waxie Maxie's chain.

But, says a local record distributor, requesting anonymity, "Tower's impact is minimal right now. And I don't think it's going to increase, because there are too many aggressive retailers in the market who aren't going to let it happen."

Russ Solomon started in the business at 16 by setting up makeshift record racks in the back of his father's Tower Drugstore in Sacramento, Calif., in 1942. This year Solomon will celebrate the 25th anniversary of the first free-standing Tower Records, which opened across the street in 1960. Although MTS Inc., Tower's corporate identity, is privately owned and therefore not required to report its sales and earnings figures, Solomon has estimated MTS' 1984 income at somewhere around $125 million, making it the third largest record retail operation in the country.

The move to Washington is the latest step in a cautious 18-month expansion that includes two New York stores even bigger than the one here. Solomon is a legend in the business, and his openings usually confirm his high-profile reputation: Luciano Pavarotti opened the 34,000-square- foot Manhattan outlet. In contrast, the Washington store opened quietly 10 days before Christmas -- but still managed to post the second highest opening-day sales figure in Tower's history.

Thanks to Solomon's marketing pizazz, Tower is well known even in areas where it has no stores. The Sunset Tower in Los Angeles has figured in a number of feature films -- "FM," "Fun With Dick and Jane" and the recent "Hollywood Wives."

But it's the wisdom of Solomon's "retailing as entertainment" concept that has made shopping at Tower an experience. "It's an environment that happens to sell records," he says. "You feel good being in there, which is really what we try to achieve in the first place.

"We succeed in stimulating the marketplace," he adds. "Hopefully, and I really mean this, when we enter a marketplace like Washington, the business in other stores does not get affected much. What we really end up doing, even though we hopefully end up doing well, is to get a lot of business that was kind of latent in the market."

While that latent market may exist in some cities, Washington has a long history of both excellent catalogue stores (Record and Tape Ltd. -- which will soon be changing its name to Olsson's Books and Records -- and Serenade, in particular) and highly competitive chains (Kemp Mill, Waxie Maxie's, Penguin Feather). Washington is also known as an R & B and crossover powerhouse, an excellent progressive and classical market, and one of the few markets in the Northeast to sell country.

"A lot of records break out early in Washington, and 4 to 6 percent of a record's business may be done here, higher in many instances," Wyckoff points out. And Washington's 3 million potential record buyers have a higher level of discretionary income than those in most markets.

"That's what draws us to the big cosmopolitan cities like Washington," says Solomon. "The audience here is terrific, eclectic, intelligent, well-educated, diverse, rich -- all the good things that people who buy records and live in close proximity to a big metropolitan center should be."

While one retailer concedes that Tower is "a great store for the record collector who has to have everything somebody's done," Solomon doesn't distinguish between the buyer and the collector. "I don't know that there's a difference," he said.

According to store manager Rob Bruce, early buying patterns support Washington's upscale reputation: 20 to 25 percent of the store's business has been in compact discs, and classical and jazz sales are outstripping rock and soul.

The strategy of having a deep catalogue "goes way back," says Solomon. "It wasn't even my idea." He points to "the original Sam Goody in New York back in the '50s, when he carried every record that was made at the time. We carry on the same idea."

What some people are questioning is Solomon's wisdom in opening a store downtown (parking is a problem), much less keeping it open till midnight 365 nights a year. Washington is not a night town like New York or Los Angeles, and while there is a high-density population within a 10-mile radius, since the riots of 1968 many suburbanites have been loath to journey into town after dusk, except to Georgetown.

Russ Solomon believes his store can change that. "We could see on the streets that no one was there," he concedes, "but there was no reason for anyone to be there because there was no place to go. I sensed that there was a dense population in Washington that would love to go out at night to do something that doesn't necessarily involve drinking. Shopping and hanging around a record store is not a bad idea. And kids are much more mobile than you realize. Right now our evening business, and Saturday and Sunday business, is the same as everywhere else -- those are the two big days.

"We've provided someplace that's open, and now we're being helped in that building by the restaurant Devon's that just opened, and probably before another year there'll be another restaurant in the building. It will be an active little hub."

Whether that alone will change Washingtonians' record-buying habits is the million-dollar question.

"We find that a lot of people are comfortable shopping not too far from home," says Howard Applebaum, whose Kemp Mill chain has grown from one to 26 stores in a decade. "We find three things that attract people to a particular record shop: price, proximity and selection. Where selection is most important, people might be willing to travel. On those records that sell in enormous quantities, pricing is going to be really important. After all, these are not blind items in the record business -- the records are the same everywhere in the city. But competition is good, it makes one more aggressive. And ultimately, the consumer is going to benefit."

Long-time Washington retailers have been miffed at the media blitz Tower's arrival has provoked. "We've been here for years, building up our reputation and our clientele," says John Olsson of Record and Tape Ltd. Like Serenade, Olsson's stores have been serving Washington's discriminating record buyers for years. They're also the ones most likely to feel the impact of Tower's deep catalogue and buying power.

"I told my people it would hurt us for the first six months," Olsson says, "but that gradually people would be coming back to us because we make such an effort to keep the good stock around all the time."

If retailers face one set of problems, then local record distributors face another. Blaine, whose 24 Waxie Maxie's constitute the second-largest local chain behind Kemp Mill, says his "suppliers' lives are more complicated by their need to pay homage to Mohammed and still pay attention to the mountain that's been here all along."

For his part, Solomon refuses to be drawn into a controversy. "We're not out to kill the market or anything like that," he insists. "We really want to be a plus factor in the marketplace. That's what happened in New York, and it's the best possible effect we can have. After all, I'm part of the record industry and we're interested in the growth of the whole industry. I also believe there's plenty of unbought phonograph records, that's for sure. And unbought videos."

But not if Russ Solomon can help it.