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Guitar Center circles the drain Keyboard Synthesizers
Old 4th February 2015
  #61
I don't see a link to this Eric Garland article/essay in this thread yet, so...

The End of Guitar Center
Old 4th February 2015
  #62
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Cathedral Guitar's Avatar
Quote:
Originally Posted by Whitecat View Post
Fender, ... are in deep **** when GC finally puts the shutters down forever.
But Fender already has a contingency plan in place:
<Fender Moves To Sell Instruments Directly To Musicians | Times Record>
Old 4th February 2015
  #63
Quote:
Originally Posted by theblue1 View Post
I hadn't even considered the enormous headache -- not to mention the crazy expense -- of dealing with any consignment or other unpaid stock...
It isn't nearly so simple, and it is much bigger than a "nuclear level" problem. We are in ELE territory. Guitar Center & Musician's friend are consistently 6-12 months behind on payments to all their vendors. Not only that, but they have told their [smaller] vendors in no uncertain terms that if the stuff don't sell, they're going to sell their stock for whatever they hell they want and charge back the difference!!!

Given how their vendor accounts operate - without going into technicalities, think of them as lines of credit - what this means is that if they go into chapter 11, those vendors are out 100% of the money on unpaid stock. The previously mentioned delays are actually a [disturbingly common] business tactic to hedge against a cash shortfall/money crisis like Mr. Garland describes. In other words, they've set out to screw their vendors, who had no choice but to bend over or lose the account!

Really big manufacturers - Peavey and Fender are the only ones that really stand out - or ones with lots of cash and stability - PRS and Martin - will be fine. Those aren't the companies to worry about being taken down by GC's [not-so-sudden-in-hindsight] demise. It is the mid-sized guys who keep a lot of equity in physical assets like Taylor, Marshall, and Shure that you'd really have to worry about. Losing 25+% of their US investiture would be absolutely disastrous! Let's not even talk about Gibson and their insanity - they have problems enough...

What I'm trying to say is that if GC goes down, we are going to see a market consolidation like nothing else experienced before in this industry. That is bad for everyone, and I suspect may basically lead to the downfall of a whole lot of "old names"!

Quote:
Originally Posted by theblue1 View Post
...many big gear makers have been developing contingency plans for a while. One strategy you'll see in any immediate shake-out of such a 'nuclear' event will be makers doing more direct sales online as well as them putting more effort into other third party online sales outlets.
This is of course true, but most of the "big gear makers" (in corporate terms, only a handful of companies qualify) are going to have one hell of a transition to that new model, especially with the kind of capital shortfall that would be the result of a GC default. Fender can do it no problem - but they are almost the only one, being the 800lb gorilla in this situation. Think about Taylor or PRS - they have dealer agreements out the wazoo, meaning going direct (and therefore competing with their own dealers, a big no-no) isn't really a realistic option. There are always third parties, of course - that is what PRS has always pushed, and amazingly well - but that isn't as much of an option for, say, amp makers as it is for guitar builders...

I guess what I'm trying to say is this is a screwed-up situation of the highest order, and one that is a long time coming. Everyone involved should have known better, but...

Old 4th February 2015
  #64
Quote:
Originally Posted by dented42ford View Post
It isn't nearly so simple, and it is much bigger than a "nuclear level" problem. We are in ELE territory. Guitar Center & Musician's friend are consistently 6-12 months behind on payments to all their vendors. Not only that, but they have told their [smaller] vendors in no uncertain terms that if the stuff don't sell, they're going to sell their stock for whatever they hell they want and charge back the difference!!!

Given how their vendor accounts operate - without going into technicalities, think of them as lines of credit - what this means is that if they go into chapter 11, those vendors are out 100% of the money on unpaid stock. The previously mentioned delays are actually a [disturbingly common] business tactic to hedge against a cash shortfall/money crisis like Mr. Garland describes. In other words, they've set out to screw their vendors, who had no choice but to bend over or lose the account!

Really big manufacturers - Peavey and Fender are the only ones that really stand out - or ones with lots of cash and stability - PRS and Martin - will be fine. Those aren't the companies to worry about being taken down by GC's [not-so-sudden-in-hindsight] demise. It is the mid-sized guys who keep a lot of equity in physical assets like Taylor, Marshall, and Shure that you'd really have to worry about. Losing 25+% of their US investiture would be absolutely disastrous! Let's not even talk about Gibson and their insanity - they have problems enough...

What I'm trying to say is that if GC goes down, we are going to see a market consolidation like nothing else experienced before in this industry. That is bad for everyone, and I suspect may basically lead to the downfall of a whole lot of "old names"!



This is of course true, but most of the "big gear makers" (in corporate terms, only a handful of companies qualify) are going to have one hell of a transition to that new model, especially with the kind of capital shortfall that would be the result of a GC default. Fender can do it no problem - but they are almost the only one, being the 800lb gorilla in this situation. Think about Taylor or PRS - they have dealer agreements out the wazoo, meaning going direct (and therefore competing with their own dealers, a big no-no) isn't really a realistic option. There are always third parties, of course - that is what PRS has always pushed, and amazingly well - but that isn't as much of an option for, say, amp makers as it is for guitar builders...

I guess what I'm trying to say is this is a screwed-up situation of the highest order, and one that is a long time coming. Everyone involved should have known better, but...

I didn't mean, by any means to minimize the huge impact -- but I was unaware of the factors you cite in the first half of your post... that's brutal. Not to mention brutish...

Thanks for the additional info...

Last edited by theblue1; 4th February 2015 at 10:34 PM..
Old 5th February 2015
  #65
Our local GC has stopped carrying lots of brands. If you ask their sales staff or managers they will tell you that you can still order things off Musician's Friend but that too is becoming a problem since some brands seem not to be carried anymore. All I see in "Pro" audio are cheap mixers, interfaces and amplifiers. They do have one or two high end microphones but if you wanted a pair you would be out of luck. The manager is very good and so is my Pro Audio salesmen but corporate is feeding them a lot of misinformation about the health of the company. They still seem to think that the company is going to pull out of their downward spiral which, as many have pointed out, not likely.

FWIW
Old 5th February 2015
  #66
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Ironically onomatopoeiaic...

Bane Capital
Old 5th February 2015
  #67
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ionian's Avatar
The only real problem I've ever had with GC is their amazingly sloppy records of what stock they have in the brick and mortar stores.

They're great when I need something last minute and I know what I want but that's when they disappoint the most.

For example, I needed a new JBL speaker - a specific model to match the one I already had. I searched for local GS stores online and found one that had two in stock in a brick and mortar store. I figured on my way to the gig I'd stop off and buy it. I show up at the store and they have 2 but they're used stock. Really? You can't track which stock is new and which is used? Complete waste of time.

Another time I was running out to a session and wanted to bring a new module with me but I didn't have an SKB rack to transport it in, so I again searched online and found a different GS near me (I'm in NYC so there's multiple locations) that claimed to have one of the specific rack I wanted (2 units, shallow depth). I show up at the GC looking for it and I can't find it. I ask a salesman about it telling them that online it said they had one in stock. He said, "Oh yeah, but we're using it to display some stuff for sale." So I asked him, "Are you serious? So that's the one in stock?" He said, "Yeah. Listings of what we have in stock include whatever stuff we're using in-store for display purposes." Are you serious? That's one of the most bone-headed things I've heard. Another waste of time.

It's things like that, that turned me off of GC. Just little idiotic things that waste my time and gas driving around.

I mean, I have no real problem with them because I only go there when I know what I want so I can avoid the salesmen, and I don't mind buying stuff there last minute and paying sales tax (or what I call, "Last Minute tax") ;-) But when someone, or a company consistently wastes my time I lose interest real fast.

And if that's how they manage their stock, I can only imagine what a complete mess their books must be.
Old 6th February 2015
  #68
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djshire's Avatar
 

Quote:
Originally Posted by Whitecat View Post
GC is their biggest on-paper client and not only do they order the most inventory but there's also boatloads of it in stock at GC but not yet paid for. Fender's in it worse than Gibson as I understand it but both generate a massive amount of sales from GC.
I see
Old 6th February 2015
  #69
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Cathedral Guitar's Avatar
When Mars Music went out of business, they had some pretty good sales events to liquidate their stock. They put everything at 20% off and then every week or so they cut another 10%. They pretty much got rid of every last item. It was sad to seem them go under, and always wondered what Guitar Center was doing differently, as Mars (at least in Austin,TX) was always a much cooler music superstore.

Guitar Center Used is quite amazing, as they have their own Craigslist/eBay thing going, and their prices on used gear can be way low, sometime stupid low. You could easily have a nice sideline cherry-picking their under-priced items and reselling them on ebay if you were so inclined. Just this week I bought a Tubeworks 30w amp for $89 ($112 shipped), and it is the amp that has the Tube Driver circuit in it -- the stomp box of that sells for $150. Could not believe you could get a preamp, power amp, speaker, + cabinet added to the stomp box circuit and still save $50!!!

Last edited by Cathedral Guitar; 6th February 2015 at 06:30 PM..
Old 6th February 2015
  #70
Gear Nut
 

Quote:
Originally Posted by theblue1 View Post
I don't see a link to this Eric Garland article/essay in this thread yet, so...

The End of Guitar Center
The only problem I have with his article is that GC was in trouble before Bain purchased them. As a long term shareholder through the entire debacle, which led GC stock to go from $65 to the $30 range and back to $62 after the acquisition, GC was a horribly managed company. There were reasons the stock tanked and those reasons were related to the management's actions. Private planes etc?? The company's real prize was the real estate where the stores were located which GC owned. While I don't entirely agree with the Bain management strategies, it grows tiresome to constantly see comments that point to Bain as the only guilty party. They rescued shareholders that had been misled and betrayed by GC management.
Old 7th February 2015
  #71
Quote:
Originally Posted by 15ips View Post
The only problem I have with his article is that GC was in trouble before Bain purchased them. As a long term shareholder through the entire debacle, which led GC stock to go from $65 to the $30 range and back to $62 after the acquisition, GC was a horribly managed company. There were reasons the stock tanked and those reasons were related to the management's actions. Private planes etc?? The company's real prize was the real estate where the stores were located which GC owned. While I don't entirely agree with the Bain management strategies, it grows tiresome to constantly see comments that point to Bain as the only guilty party. They rescued shareholders that had been misled and betrayed by GC management.
No doubt there was plenty of blame to go around. There usually is in these cases. Thanks for the insight.
Old 13th February 2015
  #72
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Cathedral Guitar's Avatar
Talked to the worker bees at GC today. They all see it going down this year, not in April, but sometime after that. They are already going down to skeleton crews. One guy was running Pro Audio, Guitars and Drums. And they get yelled at for leaving the other departments unattended. Kind of sad.
Old 15th February 2015
  #73
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A GC had opened up here about 7 or 8 years ago and was really busy for many years, but now not so much. Being pretty much the only pro audio store in the state I live in would make it worse if it GC went out of business. The only other is a West Music and they only really sell school band gear, a few guitars and a couple workstation keyboards and pianos.

Well, I'm not too fond of GC but I would not like to see the end of 'try before you buy'.
Old 15th February 2015
  #74
Gear Addict
Quote:
Originally Posted by theblue1 View Post
I didn't mean, by any means to minimize the huge impact -- but I was unaware of the factors you cite in the first half of your post... that's brutal. Not to mention brutish
Not only brutish, but British.

Many years ago I worked creating HUD (head-up display) software for the F16 fighter. The company I worked for was based in Kent (England) and fabricated the entire HUD assembly in-house (we manufactured the combiner glass and the electronics and bought in a custom-built housing). A local company was chosen to create the aluminium housing that fits into the aircraft, and started production. My employer ramped up their demands and eventually wound up consuming over 80-90% of this company's production capacity, losing this small outfit a few clients in the process. Then "we" stopped paying the bills, or at least put a huge delay on them. Eventually the little guy hit a cash-flow problem and "we" did nothing, waiting for receivership. Guess who bought out the little guy at fire-sale prices and billed it as a "rescue".

My employer had enough wealth to have bought this place a million times over on day 1, but chose to do a deal this way. No wonder people talk about "business ethics" as though it's not quite your normal kind of ethics.

Quote:
Originally Posted by dented42ford View Post
Let's not even talk about Gibson and their insanity - they have problems enough...
I can recall years ago looking for an ES-355 and being warned that the quality was not always the best. This was just after their financial crises of the 1970s, I think. I was told that their solution at that time was to sell off a vast amount of air-dried timber to the Japanese companies - wood that had been naturally drying for many years, possibly more than 2 decades. The quality of guitars such as Ibanez and Yamaha took a major uptick about that time. I believe that my bog-standard 1980 Ibanez AR100 would now be illegal to supply. Awesome instrument, too, on a clear day you could measure the sustain with a sundial.

Of course Gibson's present problems also concern the woods, in a different way. They certainly seem to have a pattern of short-term thinking that's creating long-term problems.

+++

GC certainly embodies that toxic mix of "too big to fail" and "restrictive trade practices" that harms everybody. Taking the company down may result in buyouts at a local level that could bring back some diversity to the marketplace, and some much-needed competition. That would be the best outcome, I guess.

And what is it with US music stores that start out so well but always seem to end up in a death spiral? I was wandering up memory lane a few months ago and wondered how Veneman Music (on Rockwell Pike, MD) were doing, and it was the similar story of losing the plot and the customers in that order. After the poky little music shops in England (like small caves with hooks on the walls, and staff that communicated in grunts just to get into character) seeing that place was like wonderland...
Old 15th February 2015
  #75
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ionian's Avatar
Quote:
Originally Posted by Idealimage View Post
A local company was chosen to create the aluminium housing that fits into the aircraft, and started production. My employer ramped up their demands and eventually wound up consuming over 80-90% of this company's production capacity, losing this small outfit a few clients in the process. Then "we" stopped paying the bills, or at least put a huge delay on them. Eventually the little guy hit a cash-flow problem and "we" did nothing, waiting for receivership. Guess who bought out the little guy at fire-sale prices and billed it as a "rescue".

This seems to be standard practice in business. Commodore did the same exact thing with MOS technologies to buy the chip fabrication plant in the early 80s.

Commodore ordered massive amounts of chips and then defaulted on payment which forced MOS into bankruptcy within 6 months. Then after MOS declared bankruptcy, Commodore bought them for 10 cents on the dollar. This allowed all the Commodore chips to be fabricated in house which is what allowed them to pass Radio Shack and become the #1 selling computer. (The TRS80 was the #1 computer at the time, Commodore was #2 , and Apple, a very distant third).

Business is war, as they say I guess.

They also say that no one gets rich by being nice.
Old 15th February 2015
  #76
Gear Addict
Quote:
Originally Posted by ionian View Post
They also say that no one gets rich by being nice.
If they did, the world would be a better place, which explains why it's the way it is!

A subsequent company I worked for was tempted to make the same mistake and, although I wasn't exactly a board member, I had sufficient profile as a business analyst to recommend they kept their customer base diverse, and to my surprise they agreed. Once you start prioritising your customers rather than balancing them, it's one of those "pitcher plant" moments. Venture capital can lead to the same problems once the VC company has its hooks in and a few board members shipped in to represent their interests.

Having a good product in business is a bit like possessing the ball in a contact sport.
Old 16th February 2015
  #77
I went into Guitar Center on Friday for a pack of strings. The one on West Anderson in Austin, for reference.

I walk the store (as I always do) and while I was unimpressed with the offerings in the other departments, stuff looked relatively stocked, but certainly not bursting at the seams. There was very little Fender floating around.

This particular store always has some cool stuff in the synth room, albeit never very intriguing, but they have all of the fun toys, Aira line, Sub37, Microbrute, Bass Station 2 on sale ($325) etc.

Anyway, after about 10 minutes of browsing, I'm on my way into the guitar accessories section. My wife found a copy of Victor Wooten's new book, (http://www.amazon.com/The-Music-Less...4109491&sr=8-1) and at $16, it was one of those, "I'm sure I can get this on Amazon cheaper, but that's the published price." So, on top of the pack of strings I went in for, I was ready to spend another $16. Both are high-margin items for Guitar Center.

So, it's me and another guy just floating around this section with no staff in sight. I say to the guy, "the joys of shopping at guitar center" and get an understanding chuckle. The kid comes in and I defer to let the other guy get his stuff first.

So, now it's me and the sales kid. He asks me, "checking out?" For anyone who has a background in sales, this is a big no-no. Don't just take the order. I reply "no, I'm going to need a pack of strings too, but I'm going to make you guys price match since the last time I was in here, I got hosed buying a set of flatwounds for $15 that cost $10 everywhere else." At this point, I've got my phone out and am pulling up the website to have them match to. While I'm pulling it up, the guy starts saying "well, it's more expensive to run a brick-and-mortar store..." and I'm half-listening because the policy is they'll price match so either honor that policy or don't have it. The next thing I heard was what triggered me to walk out. "...you have the option to just not buy here." At this point, I look up and say "That's a valid suggestion." And then I leave the store. I gather my wife and say "we're going." She can't figure it out until I explain in the car. I'm not going to argue with the guy or complain, I'm just going to vote with my feet and my wallet.

TL:DR version: I went in to pay $5 for a pack of strings that they have on the wall for $8 and was willing to add an additional $16 of non price-matched sale to it.

The next morning, I picked up the same pack of strings for $8 at Strait Music, a local chain because I couldn't wait for shipping (had a gig that night and needed new strings. I would have preferred to put them on the night before which is why I went to GC in the first place as Strait was already closed.) They don't price match. D'Addario Medium tension nylons for the record.

I normally don't get into these GC-bashing threads, but I agree that they maybe have a year left
Old 17th February 2015
  #78
Gear Addict
Quote:
Originally Posted by donsolo View Post
"...you have the option to just not buy here." At this point, I look up and say "That's a valid suggestion."
Absolutely. Complacency like that is laughable. The guy that comes in for low-margin accessories one week may later come in for something they can make a killing on. Local musos are a resource for stores, and they forget that at their peril. You have to keep the locals on your side; if you're not bothered about walk-in business, then why have a bricks & mortar store to begin with?
Old 17th February 2015
  #79
As long as I deal with two people (the pro audio salesman and the manager) at the GC near here I get treated well. If I deal with any others I feel like I have just walked into Moss Icely, from Star Wars, and I am about to get mugged. It is not a good feeling. I feel like the lone canary in a room full of cats. They are all so hungry that they follow you around and ask all type of questions hoping you are there to by something on the spiff list or a big ticket item. Anything you pick up or stop and look at is reason for them to come over and start exposing their views on how GREAT this product is even if it is a POS Behringer mixer. If you try and tell them that you are just "looking" they seem to get upset. If I have to buy something when the pro audio salesman or the manager is not around I get quoted list price which is not what price I normally get and then they want to add a lot of stuff to the purchase including the infamous two year service warranty.

I needed some mic cable for a gig. I was in a hurry and all I wanted to do is buy the mic cable and get out of the store. Instead I get the salesman offering me a chance to look at some different microphones and some microphone stands. It told him I was in a hurry but that did not seem to make any difference to him as he extolled the virtues of some Shure knock off microphone that they had "on sale" and, I imagine, were on the spiff list.

When GC first opened their doors they had real salesmen working there who understood that not everyone is the same and would work with you. Lately it seem like they have a barrier net over a street and the first one caught gets the job.

I hope they get their act together but I fear it is too late.
Old 17th February 2015
  #80
Gear Addict
I hate being crowded by a sales person - to the point where I will lose interest in something I came in to buy! I had this high-pressure nonsense in NYC many years ago and remember it really well. It was just an obnoxious salesman convinced he could sell me anything (what do Brits know? They're always a soft touch...) and although I ended up with a lot of money off the thing and a few other bits thrown in as extras, in fact quite a decent deal, it had become a matter of principle for me to walk away - I was so set on it I just walked out. This was at an age where I was incredibly polite. Life smooths off some rough edges, but it can sharpen others!

I know where you are with the variable staff thing, we have a local camera shop that gets close to online pricing, and I will pay the small amount extra for a lens for the chance to get some hands-on and also the social aspect of dealing with people I've grown to like, and to trust. Some people will do anything to save a tenner, I consider it some kind of an investment.

The atmosphere in many London music shops has altered over the years, I think because the staff now in don't have the same interest in striking up a relationship, and maybe don't even know how to. They have so little to talk about that I wonder sometimes whether they're even musicians. Time was that you could walk into a shop in Denmark Street or Tottenham Court Road and feel like you were interrupting a meeting, and that it was okay!
Old 21st February 2015
  #81
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I don't have any real complaints about Guitar Center. There are lots of them and Ash stores around and I pretty much use them as a 3-d catalogue. Then I buy from Ammusical or zounds.... which I think are the same but I can never tell for sure. I do sometimes buy little last-minute things from the various GCs around. If/when brick mortar stores go down, the long term replacement will of course be holographics.... but why get into that here in 2015.

I can't speak for GC's current aging/billing/payment routine and if I did, I probably wouldn't want to spout off about it on public forums. Big trouble for little people can start that way, esp with larger or public company reputations.

However...... as to the "small vendors" and the "we'll sell it for what we want, return the rest (including opened stuff) and charge off/chargeback some/most/all the balance.... yeah... that happened to me with them in the 90s. I cut them off after a couple of years of it That was a long time ago and not unheard of in most any major retail chain small vendor relationships. For me, it was costing too much to do biz with them, plus, I was selling direct anyway.

So.... if that particular tactic is still going on, it's not new, it's not limited to GC, and it by itself certainly isn't an indication of much except who has the leverage (between reseller and vendor that is).
Old 21st February 2015
  #82
Gear Nut
 
DanielVranic's Avatar
As a former (as of Sept 2014) NO LONGER, a Sales Manager at a Guitar Center..... This is accurate. We have known since December of 2013..
Old 25th February 2015
  #83
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Oldone's Avatar
So do you think I can get the 12 months free financing on my GC card when they have the closeout sales? (sic)
Old 11th March 2015
  #84
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For as long as I have shopped at Guitar Center I've always wondered why they offer extended warranties on products that are specialized and made in the USA? Doing some research on the web I found this video.

https://www.youtube.com/watch?v=DT0MrTlIn4o
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