So, what if Guitar Center DOES go under...

[Troph]

Holdsg, in his reply to my earlier comment, conceded this point (like the gentleman/scholar that is his.) Tbh I think anyone paying attention to this problem at the financial level has to come to the same logical conclusion that you have.

GC would have had no problems sustaining modest growth, with the level of debt, and overall company value they had pre-Bain buyout.

But that's an argument for private ownership, not public ownership! It's fairly well established that publicly-traded companies face much greater pressure from their boards to show ever-greater short-term profit, sometimes at the expense of long-term growth. Private companies do not necessarily face this same pressure, which is one of the benefits to taking a company private in many cases.

Really a shame when you break it down. Big finance tries to take a piece of our industry, gets greedy, and potentially causes a collapse.

I really don't follow your logic here. "Big finance" isn't any more or less greedy than the shareholders were back when GC was publicly-traded. Remember, the shareholders voted to accept the buyout in the first place, and they pocketed a nice premium when doing so.

The market forces that have forced this industry to change so dramatically over the last decade have little to do with Guitar Center's ownership and much more to do with Internet sales and an infusion of cheap imports. Trying to pin the blame for the downturn in the music instrument industry on Bain is far-fetched indeed.

 

[tbz]

The market forces that have forced this industry to change so dramatically over the last decade have little to do with Guitar Center's ownership and much more to do with Internet sales and an infusion of cheap imports. Trying to pin the blame for the downturn in the music instrument industry on Bain is far-fetched indeed.

It's possible I over simplified my argument, so I understand the mis-interpretation.

If Bain had not bought out GC, GC would be in a stronger position financially and would therefore be better equipped to survive, despite a dwindling market, cheap imports and the drastic changes to the retail model that have happened since 2000 or so.

Assuming a continuation of the current trends, GC will likely be sold to Ares, their main debtor. Without the LBO they would have closed stores, etc, but would probably not need to transfer ownership. Shareholders wouldn't be happy, but it would "survive".

Once GC/MF et al are sold to Ares it's anyone's guess what will happen next. Will they liquidate everything in a hope to recoupe something? Will they try to shore up their losses, turn the unit profitable, and re-sell after a few years? No way to know at this point really, which is troubling when you consider how important GC/MF are to the industry as a whole.

Bain's buyout, if 2008 hadn't happened, and there wasn't a general decline in stringed instrument interest, would probably not have been a problem. Market would have continued to expand, LBO debt wouldn't have crippled their ability to operate. I'm not sure if they had a strategy to mitigate the myriad of problems that every other Brick and Mortar have run into in the past 10 years, but then again I'm not sure if the old Board/leadership did either, outside of the "buy competitors, especially if they're online" strategy.

From that standpoint, I agree, it's not fair to blame Bain. Their projections were on target and didn't anticipate 1) a major financial collapse and 2) a general decline in instrument sales.

LBOs are messy to begin with, and I have a "kid that watched 'Wall Street' at 10 years old" aversion to that type of business activity. When you combine that perspective with the current results of their buyout (20/20 hindsight and all) it's easy to villainize Bain.

You are correct on the Bain point, however, as there's a lot of blame to place here, shareholders, GC's board pre-Bain, etc.

 

[Boom762]

I dont even enjoy going into guitar centers anymore. Same bkring guitars all over, maybe 20 basses, a whole 1/4 of the store dedicated to keyboards and turntables and strobe lights. They dont have the best prices, for every one great employee they have 2 that dont k ow anything about music and 1 total d#$& that thinks hes yngwie malmstein because hes grown out his hair and wears a ton of hot topic jewelery. I hate seeing a wall of only 20 basses and seeing 8 fenders "all the exact same round boring body", 6 ibanezes, and the rest $100 knock offs. They never have the brand new items id want to test out. Im not real happy with guitar stores in general but guitar center is kind of embarassing these days.

The single biggest difference they could make for me wohld be ti have all stores order brand new items. Yoh read about the namm show and its a full year later before you see even a busted used one of something. A big compang should be able to at least obtain a not for sale floor model so chstomers could order it through the store... instead... we ebay fir a better price and links to all the info we cohld want.

 

[Gaolee]

We must be spoiled. The GC in Seattle seems like it is not too bad. It doesn't have the quirkiness of the locals, nor do I think they have quite the same level of advice, but it isn't near as bad as what others report. Maybe it comes down to the individual store manager. I guess we got lucky and got a decent one.

 

[MoreBeer]

My local GC in Ocean NJ is usually a ghost town when I go there. Not too encouraging to say the least. They did basically fail as a public company since the stock market looks for growth and it just wasn't there. Thus the reason why Fender pulled their plans to go public a few years ago. If Fender ever went through with that IPO, it would have destroyed the company.

 

[mapadofu]

I'm starting to hear some pushback in the media against the goal of "maximizing shareholder value",
e.g. Invalid Link Removed
which seems relevant to the discussion as to how one would evaluate the effects of Bain's acquisition on GC.

 

[arginator]

The writing is on the wall at my local Guitar Center. There's a sign at the register about Monster cable replacement, saying something to the effect that they're not currently restocking Monster products, and don't know when they will be again.

 

[Helaskold]

The writing is on the wall at my local Guitar Center. There's a sign at the register about Monster cable replacement, saying something to the effect that they're not currently restocking Monster products, and don't know when they will be again.

Gonna guess that Monster cable replacement is over for the foreseeable future. We stopped carrying their products completely... at least, in the stores. I haven't seen any brands get dropped out of our product line and then put back in the store later.

But then again, according to some very derogatory comments in this thread, the fact that I'm employed at GC makes me a complete moron without two brain cells to rub together, so take what I say with a grain of salt.

 

[BawanaRik]

The last time I went into one was a few months back. I was looking at buying a JamHub. I asked a guy behind the counter if they had them.

"Oh yeah, those are awesome...but we only sell them online."

I said "OK," and proceeded to browse the rather "blah" selection of basses they had. Then drove back home and bought a new Jamhub off eBay.

If the brick and mortar stores plan on staying in business they need to offer something you can't get online.

It doesn't sound like like this happened in your case.

 

[BigRedBassPlayer]

The GC in Omaha is a massive, impressive music shop. It also has the studios. Now, the one in Des Moines is one of those I can see them shutting down if times get troubled. I live between them both and would hate to see that one close. Thank goodness DM has another music shop that really impressed me. Bottom line is I do care about them closing cause it will cost jobs.

 

[fnordlyone]

What would happen if Guitar Center folded?
The sun will rise tomorrow and perhaps local shops and local manufactures will come into fruition. The horror! I will cry no tears.

fnord!

 

[Boom762]

I think if GC closes, itll just allow another store like SamAsh to get even biggerand lamer like Best buy after all thkse other stores closed. No competition means bare minimum effort and leaves customers with a blnd taste in their mouths. Ive actually asked about ordering a some stuff through guitar centers and am emediately uninterested when they say i have to pay shipling and handeling. WHAT?!? What would be the purpose of paying full prjce AND shipping at a store when I can prolly find it for cheaper online, and even if i do have to pay the o line shipping I can get itnsent to my door. If it costs all the same but one way allows me to get it in my underwear... guess which one Im picking.

If a small mom and pop store impresses me, I dont mind to pay and extra 10-20 bucks on something to help keep them in business but onlt if the store/stafc/owner impress me. Well versed on brands, prices, and models, friendly, will work with you. If its a place where the owner IS the staff, is irrotated that your even in his sto... I mean personal guitar locker, and wont work with you on pricing, ordering, etc... Aint nobody got time for that. This last place I have actually been inside of in Houston Texas. Just wanted us to leave so he could co tinue to talk to his friend and play guitar. Actually said "What does the internet say?" After every question we asked. Terrible.

EDIT: Off Topic
While im in a guitar center thread, Ive always wonder who the black woman with the blue guitar is in guitar center windows. Noone ever has annanswer and shes in front of most of them ive been to.

 

[Desirsar]

the only thing good about GC is that theres one next door to Sprint Campus where ma girl works. So I stop by and play bass sometimes during the week and wait for her to pick me up for lunch. So I do go in there and if the Overland Park Store is to close I will be slightly heart broken cuz I have friends who work there. However....

Looks better in there than Funky Munky or Big Dude's, but that's a square footage thing mostly. Maybe I don't look hard enough, I only go there for strings, and only because I work nearby.

Even the guys at Best Buy told me that they were one of the few music sections in a Best Buy that was successful at all, and I have no doubt it's because people weren't finding what they wanted at Guitar Center, and popped in to Best Buy since it's effectively no drive to get there.

Fair competition is always a good thing. I'd rather see as many stores stay in business as possible, no matter how many bad ones there are.

If it costs all the same but one way allows me to get it in my underwear... guess which one Im picking.

Same concept applies to the music piracy threads that pop up here now and again. Convenience *IS* a factor in the demand curve and contribution margin.

Most brick and mortar stores with an online counterpart drive me nuts with this. If I'm going to a store, I want the thing I'm buying to be on the shelf, at a comparable price, when I get there, and without having the contact the store in advance. This is not new with the internet, ordering out of a catalog as opposed to ordering through a store is no different than an online retailer opposed to a store. I especially don't want to have to sift through listings on a store's website to find the things that are actually carried in the store - it should take one button click at most.

If a small mom and pop store impresses me, I dont mind to pay and extra 10-20 bucks on something to help keep them in business but onlt if the store/stafc/owner impress me. Well versed on brands, prices, and models, friendly, will work with you. If its a place where the owner IS the staff, is irrotated that your even in his sto... I mean personal guitar locker, and wont work with you on pricing, ordering, etc... Aint nobody got time for that. This last place I have actually been inside of in Houston Texas. Just wanted us to leave so he could co tinue to talk to his friend and play guitar. Actually said "What does the internet say?" After every question we asked. Terrible.

Local stores everywhere I lived have been great, fortunately. At least one will even price match, but it'd be rare that they aren't already the cheapest for anything.

 

[P. Aaron]

I doubt it, I'm pretty sure MF is doing really well. Online retailers aren't the ones struggling these days.

Unlike MF, GC suffers from a Border's INC disease: Letting the public trash a solid 1/3 of their inventory and leave it on the floor only to buy elsewhere or not at all.

GC could curtail this and there would be much bitching...for a spell.

 

[SteveV74]

makes no difference to me. they carry nothing i want nor give any service i need. the most i ever stop in for is the occasional bag of picks.

FYI- I went there a couple of weeks ago to grab some of my fav picks......laughed at the price, bought them much cheaper online.....Im not a big fan of GC....I would rather support the local little guy, seems like every area has that special music shop where they know how to treat the customer,and I would rather pay a little more for the extra attention to customer service.

 

[PDGood]

I love em for used basses. I check out http://used.guitarcenter.com/usedGear/index.cfm?srch&category=38 almost every day. It'll suck if they go under.

+1. I've purchased three used basses from GC. Plus you have 30 days to try it out and if you don't like it you can return it to your local store or mail it back. I also bought two new basses at the store near me. My store has a good selection and would be missed.

 

[PWRL]

On the plus side, I went to my local GC today- Brookfield, WI (dang, now you now where I hole up)- and found that it's very much pulled back together. A little sparse, but gone were all those random off-brand things like Luna and all that junk. They had AVRI Fenders, a Rick and a whole bunch of good stuff. I'd buy something there again at that rate, so long as they aren't just sending them the B stock.

 

[jdwhitak]

My local GC is really cutting back on its inventory. Many of the high end Les Pauls, PRS, etc. are on clearance for half of what they normally go for. You can even get a USA Musicman Sterling Classic for less than $1300!

 

[Inertialsky]

As long as they never close the Hollywood location with the RockWalk I'll be okay.

 

[buldog5151bass]

To me the issue is all the money they owe to all the companies.

I think there is going to have to be a change in retail, but I think/hope it will re-surface. Thre will be a new model. As stores disappear, so do jobs.