Guitar Center Struggling

[Richard Martin]

Looks like Guitar Center (which also owns Musician's Friend and Music 123) is struggling amid the pandemic.

Guitar Center's issues aren't with struggling. Their issues are with debt acquired after 2 leveraged buyouts by companies like Bain Capital. They're still looking for single digit growth and profits even considering the coronavirus. If they could get out from under that debt they'd be doing great.

 

[40Hz]

How do you view that the majors like FMIC, Gibson, Peavey, and whoever ended up with the former Kaman properties have positioned themselves owning so many brands under one roof ?

I see it as suicidal.

If you have truly complimentary and focused product brands, it might work and work well indeed. But scooping up companies willy-nilly because they’re in the same broad industry category (or to eliminate a small competitor - or acquire patents you intend to “weaponize” against other larger competitors - seldom works long-term. It didn’t work for Kaman and it definitely didn’t work for Gibson. FMIC is a little different because, with the exception of Rickenbacker (who is a “pure play” single brand business if there ever was one!), Fender enjoys a semi-cult status most other brands can only dream of. So it’s hard to say if what applies to the rest of the industry applies as much (or at all) to Fender. But every industry seems to have its outlier. Apple in the consumer electronics sector is one example, as is Amazon in online retail.

I haven’t paid too much attention to FMIC. since they withdrew their IPO back in 2012. It’s hard to analyze their current performance. And slogging through 200 or so pages of their original (and now 8 years out of date) IPO filing hardly seems worth the effort. My educated guess and gut instinct says they'll probably weather whatever storms come along better than the rest will just as they survived the CBS years and the synth rock dominated 80s when the prophets of doom were falling over themselves to announce the final demise of the electric guitar.

I’m not superstitious nor do I believe in the supernatural. But if protecting spirits do exist, Leo’s must be on the job and putting in some overtime.

 

[vvvmmm]

I lost faith in GC - a place I had previously spent most of my gear money on, back in the late 90's when I asked an employee to leave me alone and he challenged me so aggressively about being in "his store" that I never went back there.

I've been in a few others since, bought some sale stuff, not once been thrilled in the last 10 years with any used gear, price on new, or rare item.

Sam Ash was better, but they closed here.

That said, the local indie store is a rip-off; guy took 3 months to get me a guitar stand after I paid for it in the mid '00's - never went back.

I buy here, Ebog, Reverb, CraigsList before I do stores.

 

[MordBass]

I see it as suicidal.

If you have truly complimentary and focused product brands, it might work and work well indeed. But scooping up companies willy-nilly because they’re in the same broad industry category (or to eliminate a small competitor - or acquire patents you intend to “weaponize” against other larger competitors - seldom works long-term. It didn’t work for Kaman and it definitely didn’t work for Gibson. FMIC is a little different because, with the exception of Rickenbacker (who is a “pure play” single brand business if there ever was one!), Fender enjoys a semi-cult status most other brands can only dream of. So it’s hard to say if what applies to the rest of the industry applies as much (or at all) to Fender. But every industry seems to have its outlier. Apple in the consumer electronics sector is one example, as is Amazon in online retail.

I haven’t paid too much attention to FMIC. since they withdrew their IPO back in 2012. It’s hard to analyze their current performance. And slogging through 200 or so pages of their original (and now 8 years out of date) IPO filing hardly seems worth the effort. My educated guess and gut instinct says they'll probably weather whatever storms come along better than the rest will just as they survived the CBS years and the synth rock dominated 80s when the prophets of doom were falling over themselves to announce the final demise of the electric guitar.

I’m not superstitious nor do I believe in the supernatural. But if protecting spirits do exist, Leo’s must be on the job and putting in some overtime.

Agreed. I feel like companies can make it work if they let the absorbed companies do their own thing, but they so rarely do.
Look at Gibson with Trace Elliot... and Tobias. Fender obviously didn't carry SWR very well but Jackson has done alright, all things considered. I guess it really does come down to the reason you're buying them. Do you want to see it through and add it to your empire, or are you looking to buy them out of your market?

 

[roswell1965]

Sweetwater gets a lot of love here, but I don't see it. No sales, but we'll make up for it with a little bag of candy and a follow up sales call from a guy that doesn't really know much about bass.

The added value of their photography more than makes up for it, unless you're ok receiving and returning guitars with crooked tremolo covers, misaligned bridges, and nuts that look like they were hacked out with a butter knife.

 

[fdeck]

I've realized that there are two Guitar Centers. 1) A music store chain. 2) A complex web of investments. Understanding one doesn't result in understanding the other.

 

[MultiScaleMale]

The added value of their photography more than makes up for it, unless you're ok receiving and returning guitars with crooked tremolo covers, misaligned bridges, and nuts that look like they were hacked out with a butter knife.

Never had any issues remotely like that.

 

[Ryno1330]

GC is wasting a ton of money IMO propping up multiple brands that sell the exact same inventory. If ever there was an opportunity to streamline operations, this is it.

Yep. Right now when things are really tough is when the smart business people will make it.

But I also laugh because guitar center end-of-life threads have been going on for years.

 

[Rolling Thunder]

GC is a local store? Good to know....

 

[40Hz]

Reverb as a whole and Amazon to a lesser degree has been my go to for gear lately. Guitar Center mostly has low end stuff that doesn't interest me and I know that Sweetwater gets a lot of love here, but I don't see it. No sales, but we'll make up for it with a little bag of candy and a follow up sales call from a guy that doesn't really know much about bass.

I found Amazon ok. TB classifieds great. Reverb a mixed bag depending on who you’re dealing with. GC, except for used and the rare “stupid deal of the day” is largely a waste of my time. eBay nearly a total waste of time. Mercari pretty much clueless amateur hour although that may change with time.

But my experience with Sweetwater has been uniformly excellent. As has everyone else I know personally who orders from them. Their prices are more than competitive based on my own market watching. And their customer service is excellent. The bag of candy is just a nice little personal touch. So I find it hard to understand why it so offends some people based on the derision they feel compelled to show. Guess it’s true that no good deed goes unpunished as the saying goes.

And my sales rep has always been helpful both before and (if needed) after the sale. The “trick” when it comes to sales reps is using them for what they’re there for: to provide information, advice when asked, and clarification when you’re not sure about something. Mine is great to work with. And when my question involves something outside his wheelhouse, he puts me on the line with someone who does have the necessary expertise to help me out. Sweet!

I’ve been playing bass for most of my 65 years. And I know a lot about a lot of stuff. But I don’t know everything. And sometimes what I do “know“ turns out to be wrong. So I still ask a lot of questions. If you’re more the type that likes do the James Dean thing and go it alone (or you’re just somebody who’s acutely uncomfortable talking to someone on a voice line - and freak out if you suspect you’re not invisible - and are only are truly happy when masked behind a computer screen or text message) then a good sales rep trying to do his or her job isn’t going to be your thing. But that’s not a mindset that’s shared by everyone. Just sayin’

 

[60bass]

one of the independently owned stores around here recently shut down - he just couldnt afford to stay open any longer with no income/revenue while being forced to close its doors .......
Michigan Music Store Owner Weeps as He Loses His Dream Due to COVID Lockdown

A very sad story being repeated over and over again by small business owners throughout America. Lockdown and die.

As far as GC goes I'll be sad if they have to close down. I've bought a lot of gear from them over the years and have NEVER had an issue with returning anything. They do however have a lot of "drones" working the floor there. The only way to get deals decent done is by getting to know the department and store managers.

 

[Ryno1330]

Never had any issues remotely like that.

I've also experienced horrendously set up and conditioned "new" instruments with guitar center. And also agree that good pictures, weights, and more customer service is exactly why Sweetwater is many tiers above.

 

[willsellout]

Sweetwater thrives because they are better at just about everything. They have smarter people; often times hired from fired GC employees, working for them. They are nimble because Chuck Surack owns the company and has very little/no debt. They have better gear and a wider range of products available and in stock than any other online retailer, and they have an incredibly competent sales force. They also inspire loyalty with their customers.

I worked there for a year so I have a biased view. I still love the company even after I worked there and I would imagine that's probably pretty rare, although who knows. As far as sales go...what i love about my SE is I don't need to wait for sales. I give him a call and ask for a price and get it and generally buy it. Their big selling point is their financing. You might not get the lowest price possible, but many times the financing more than makes up for it.

I hope GC makes it through this, but ultimately I believe they will fail because they aren't able to grow with the times.

 

[JimmyM]

Just like Sam Ash, Sweetwater continues humming along nicely because they never allowed a leveraged buyout, while GC has had its ups and downs. Meanwhile, it's been 15 years since I was first told that GC would be shuttering their doors in a year, and they are still here. So hey...

 

[Big Shrek]

One place GC is hurting is the music lessons. I was taking them to get better at bass.
After the COVID shutdown, I thought...why did they keep the store open and only shut down the lessons??
Especially when they have an absolutely HUGE porch on their Pensacola Store...
could have set up a few partitions, kept everyone 6' apart, run a few long cords for amps...
open-air lessons! But they went with Online lessons...which is substandard any way one slices it.
Not to mention my bass instructor left the company as COVID was gearing up.

So that's literally around thousands per month gone in income they used to get. Poof.
Few opted for online lessons, I sure didn't.


On to the Mom & Pop local stores.
If you don't own your own building, as a business owner, it's called playing with fire.
A bad landlord can turn a thriving or struggling biz into a non-existant one.
Even a Good landlord is still a PITA, and will still raise the rent periodically.
But if you OWN your place of business, the things that can knock you out are fewer.
Nobody can raise your rent. Once you are paid off, you are Paid OFF.
Renting/leasing is simply throwing the money away every month.
If you Own, you can use your Equity to stay afloat in hard times.

It's the same thing as renting an apartment instead of owning a home.
Costs 2-3 times as much to rent as it does to own.
My house payment is literally $150 less than the cost for a one-bedroom apartment...

Economics...it's a thing.

 

[JimmyM]

One place GC is hurting is the music lessons. I was taking them to get better at bass.
After the COVID shutdown, I thought...why did they keep the store open and only shut down the lessons??
Especially when they have an absolutely HUGE porch on their Pensacola Store...
could have set up a few partitions, kept everyone 6' apart, run a few long cords for amps...
open-air lessons! But they went with Online lessons...which is substandard any way one slices it.
Not to mention my bass instructor left the company as COVID was gearing up.

So that's literally around thousands per month gone in income they used to get. Poof.

THOUSANDS?!? LOL!

 

[lucas303]

I tell you right now GC is struggling (in my opinion) because they do not treat there customs right. I just bought a pedal, some Chromes, and an SR505 online. I bought a new bass not a floor model. When I received it at my door two weeks ago the box was smashed open and I could see the unprotected head stock. Ok UPS is not taking care of their packages was my first thought. When I opened the box the bass was wrapped with one layer of bubble wrap in an oversized box with absolutely no protection. When I took the bubble wrap off the bass had at least 50 pick marks and the finish was chipped in several places on the front And around the jack hole. This was an extremely abused demo. Not sellable as new by any means whatsoever. The truss rod was completely loose and became really tight after about a Quarter turn. I could not adjust it enough to get even close to the proper relief. I received no invoice, packing slip, or new tags on the bass. I waited on hold for an hour to try to return it. I finally called my local store and talked to the manager. His only remedy was for me to call the return number and wait. He told me that he had to wait on hold for hours as the store manager to get return slips right now. He told me he could not do anything for me. I called and waited on hold again another hour. I finally got in touch with someone who told me he would send me an email for the return. He waited until I received it and gave me his direct line so I didn’t have to wait on hold if I needed to call again. My faith in GC was returning. I replied to the email requesting a full refund. Several days I waited and no reply. I called the direct number and left a message. A week later and still no response. So I paid $700 dollar for a new bass and received a demo model that is unplayable with finish damage that was extreme. No paperwork. No protective packaging whatsoever. And Now I cant even get in touch with anyone. Needless to say I will be purchasing my gear somewhere else from now on. And the saddest part is I know when I do get it returned they are going to turn around and try to burn the next customer who orders that bass by just throwing it in a box calling it new. That (in my opinion)is why GC is struggling. They do not care because someone else will replace me as a customer. Not a satisfied customer for sure.

Take them to small claims court. Seriously.

 

[klejst]

I did notice they started putting back up a lot of the gear on their used site.

 

[Big Shrek]

THOUSANDS?!? LOL!

Figure 40 hours a week of lessons times 6 instructors, that's a nice chunk of change.
Some stores have more instructors, some less.

Most folks take the $199 per month package...every 5 people at that rate is a Grand.
So yeah, lessons definitely keep music stores going.

 

[MultiScaleMale]

Sweetwater thrives because they are better at just about everything. They have smarter people; often times hired from fired GC employees, working for them. They are nimble because Chuck Surack owns the company and has very little/no debt. They have better gear and a wider range of products available and in stock than any other online retailer, and they have an incredibly competent sales force. They also inspire loyalty with their customers.

I worked there for a year so I have a biased view. I still love the company even after I worked there and I would imagine that's probably pretty rare, although who knows. As far as sales go...what i love about my SE is I don't need to wait for sales. I give him a call and ask for a price and get it and generally buy it. Their big selling point is their financing. You might not get the lowest price possible, but many times the financing more than makes up for it.

I hope GC makes it through this, but ultimately I believe they will fail because they aren't able to grow with the times.

For me, Chuck Levin's is local. They have really good service, I get great pricing without having to do anything and they have a pretty good selection. There is the bonus of El Pollo Rico (Peruvian chicken) within a block of their store, but I can't really use that metric against anyone else. I've never gotten a cent off Sweetwater's pricing, so I assume that my profile in the database has me flagged as whatever personality type that will pay full price because he values the experience, or something like that. Sweetwater doesn't make the Fender P bas, Guitar Center doesn't, Chuck Levin's doesn't, any retailer on Reverb don't so pricing and convenience will win my money. There are five Guitar Centers within a 45 minute drive and I can check their inventory before I leave the house. I want to like Sweetwater, but their "you will pay full retail" and random calls from a guy that's a hip hop producer, it just turns me off. The calls aren't to see how I'm doing, they're obviously to sell me more gear. Please tell me about the latest version of Serato. He's not going to tell me anything about bass. I guess I haven't had any bad experiences with Sweetwater, just haven't had any really good experiences that makes me want to pay full retail.