Guitar Center files for bankruptcy
reuters.com
reuters.com
Edit: Another thing- part of the problem for US based retailers in general is MAP. Its price fixing, and in many cases I can go to, say Thomanmusic.com and order something from Germany for ~85% of the best price I can get at major retailers here, including shipping, tarriffs and foreign transaction fees. Personally I think MAP is ridiculous and leads to TREMENDOUS waste of resources. Im buying something that was shipped from China to Europe, then shipping it back to Texas all for less money than US retailers will allow. WHY IS THAT?
I owned a bike shop and sporting goods store in a past life (I've written about it here: http://www.sciencerocketry.com/blog/great-work-and-new-begin...) and the effects of Shimano's inability (or really, refusal) to control pricing from its European distribution was catastrophic to my business and my peers. And not only that, I found that many of those sellers would defraud customs on expensive items by declaring the value just under thresholds that would result in them paying import taxes and tariffs. It was a profit destroyer for us but Shimano moved units, and that's all that mattered to them.
When some of those parts customers purchased from Chain Reaction or Wiggle or whatever didn't work, the customers who bought those parts overseas would come into our shop asking us to handle the warranty process. We were a Shimano dealer, after all! If we politely refused or tried to collect a handling charge, we were the ones that would face the customer's outrage.
The end result is that there is less sales tax in your community because of the absence of that brick and mortar retailer. There are fewer jobs. There are fewer local communities built around hobbies, crafts, trades, or whatever. But you can get products cheaper and your dollars have greater purchasing power. Maybe that's a worthwhile trade-off - YMMV.
Multiply your experience by a million and stretch it out over decades, and this is middle America getting sucked dry.
Most of my consumer products are sold directly, online, but I also sell titanium weed pipes to a local chain. COVID definitely slowed retail sales. I looked into getting my motorcycle parts onto big corporate retail shelves, but the margins are tight. I’m working on that. Business has been good, so I can afford to try new things. Cutting blanks with plasma rather than waterjet and milling steel with air blast rather than coolant, together, might make big box retail rational, for me.
The economics of manufacturing: extremely multi-faceted. There is a tendency for successful manufacturers to allow costs to escalate until flexibility is gone. Their employees unionize. Management borrows against the future. Then, the market changes.
It’s a rough game. I chuckle when people talk about the right to a job. Sure; that can work if I have a right to sales.
Really, retail has largely been gamed past the point of no return. "Win the Holidays", as Best Buy put it a few years ago. Consumers evangelize their hookup, not their service experience.
Maybe bike consumers don't need the support and service the bike business traditionally offered. Camera stores are gone, but camera sales have never been better. Cameras are better and more accessible than ever before, too. Maybe the bike business will follow the same path. Time will tell.
EDIT: Funny enough, cameras are still subject to MAP and it is generally enforced fiercely.
In regards to dirt cheap OEM parts from Europe, that's largely stopped. Most of those online retailers won't ship Shimano groupsets to NA anymore and while you can find good deals online, I tend to see them being sold from US-based companies. In any case, with the way manufacturers have shifted away from standards, being your own home mechanic has gotten prohibitively expensive, with the need for various presses and extraction tools, etc... I tend to see many more high-end factory bikes on the road than bespokes and forget doing your own suspension work on modern MTBs...
Medical supply is probably a different category, where expertise is more important than others. But in more common examples, when I would go to a store and already knew more about their product lines than the salespeople, the local price difference was a turnoff. I'm happy to pay a reasonable uplift if a vendor can educate, guide or support me as a customer. But when few of them can, I literally have no reason to patronize them.
As fast shipping became an option, there was less and less reason to go to a showroom other than to independently look at a product person. In 2020, I don't even care about that, because return policies are liberal.
My favorite case example is CircuitCity [1]: "In 2003, Circuit City converted to a single hourly pay structure in all stores, eliminating commissioned sales. Many previously commissioned sales associates were offered new positions as hourly "product specialists", while 3,900 salespeople were laid off, saving the company about $130 million per year. Many company insiders later revealed that they thought this was the most influential company decision that would ultimately lead to its demise."
Lowering costs by eliminating qualified and experiences salespeople, attempting to become an expertise-less local storefront competing on price with businesses that have lower costs was a suicide move, and endemic of executives attempting to run companies based _purely_ on a bottom line, without actually understanding the market they are in. "Excel Excutives" in my words.
On the other hand, I have begun doing more business with BestBuy this year. Not because they have changed their level of in store expertise, but because when I need something, they can compete with Amazon in some cases on a combination of price and convenience. I can find if their store has something, the quantity, and have it in hand with no more than drive time. In the work-from-mode many of us are in, this can be a big deal. Plus, I can get appliances from them with installation, and office furniture from their delivery services that is a bit of a gamble from Amazon, who so far is not as convenient for "big box" shipping.
I hope BB continues what they are doing, because they seem to have figured out some of the variables to _adapt._ IMO innovation is not the problem, adaptation is. No business can survive if they don't adapt to fickle consumers where a significant portion of them will always use the resources available to them while simultaneously seeking to save money.
Are Shimano and others just gouging in the US market because they can (and damn the impact on local retailers)?
And somehow the bike retailers get furious at their own customers for seeking out the lower-priced options, instead of being furious with shimano for ripping them off.
- It's common for global manufacturers to sell products at different prices depending on regional market conditions. So EU distributers may get better pricing than US distributers.
- Some retailers may be able to purchase products cheaper because of volume or preferential relationship.
- Most commonly, the products beings old are actually OEM products originally sold at a significant discount to a bike brand (who have massive minimums, arbitrary product mix requirements - think a mountain bike brand buying road parts because that's the "package" Shimano sells to get favorable pricing, and big incentives to prevent them from purchasing from SRAM or some other parts manufacturer). The bike brand takes its excess parts and sells them "under the table" to a retail outlet (that they may have actually discretely partnered with at the outset).
My opinion is that yes, Shimano, specifically, doesn't care about brick and mortar retailers. Shimano considers it a relic of the past and are partially unaware (or apathetic) of the reality that their actions and distribution model is accelerating the death of the brick and mortar shops. That said, Shimano USA might care about US brick-and-mortar retailers, but they don't have enough influence to prevent Shimano Global (Japan) to affect any real change.
Shimano has seen steady growth, so they have no incentive to change. But that growth has been at the expense of the very partners that played a significant role in helping them gain market dominance.
I'm generally of the opinion that, at least in the bike industry, the shops and online outlets selling massive volume at discount aren't really in any better financial shape than their mom and pop competitors. When I first got into the industry I was regaled with stories of success of competitors like The Clymb and how they were 'killing it'. Turns out, the only thing they were killing was themselves. The Clymb, despite assurances of their brilliance, sold back in 2015 for $100,000 despite millions and millions in sales (the buyer assumed 18.5MM in debt) - https://www.oregonlive.com/silicon-forest/2016/01/the_clymb_...
In the UK (and perhaps other parts of Europe) manufacturers aren't allowed to force retailers to sell at a particular price. The manufacturer can 'recommend' a price (or indeed print a price on the package) but the retailer can sell for whatever price they want [1]
Any binding 'minimum advertised price' or 'resale price maintenance' agreement would be price fixing, violating competition law.
[1] https://www.gov.uk/government/publications/resale-price-main...
They should simply sell parts at competitive costs, but price labor for repairs, adjustments, etc. at a fair rate.
Alternatively, charge a transparent markup in exchange for “free” service on the item should something go wrong.
Still, feel you on the retail apocalypse, and how every other new internet darling can somehow skirt taxes or... and the problem is unfixable until right after it doesn't matter anymore. It took something like twenty years for Amazon to start paying US sales taxes most of the time, in many cities Uber's business model was price dumping etc.
Seems like addressing this problem is important. Why is wholesale cheaper in Europe than the US?
MAP is outright illegal in the EU.
I think Wiggle and Chain Reaction have now merged, but both are struggling.
I was wondering if you could explain why bike components are so expensive in the first place? For example, why can a bicycle, which is mechanically quite simple, cost as much as a motorbike or small car? Is this a patent situation?
My general understanding of the economics on the product side of the bike business (which isn't as deep as my understanding of the retail side) is that the manufacturers aren't making much money either. They've got lots of hands in their pockets, a lot of pricing pressure thinning margins, and a low barrier of entry for new competition in the marketplace.
In regards to Chain Wiggle, I'm not surprised they are struggling. The graveyard is full of businesses that won on price and their is no business strategy easier to emulate than being the price leader.
A bike manufacturer cannot produce a better man, but they can keep optimizing the bike itself and they will keep doing it until even the wealthiest customers balk at the cost. Which is why the best gear is out of reach for most people.
You can easily purchase a bike that is not that heavily optimized - they are $100 a pop in Walmart.
The details of these optimizations are numerous and elaborate, but they are only a consequence of the weight/power balance.
https://www.thebalancesmb.com/what-is-minimum-advertised-pri...
Why should they control pricing, or why any producer should control pricing in stores?
"The end result is that there is less sales tax in your community because of the absence of that brick and mortar retailer. There are fewer jobs. There are fewer local communities built around hobbies, crafts, trades, or whatever. But you can get products cheaper and your dollars have greater purchasing power. Maybe that's a worthwhile trade-off - YMMV."
I'm not here to claim that the answer is convincing (or not), but I think it does qualify as an answer to your question.
There is always a retailer willing to undercut the rest in pursuit of a sale. Some retailers are even willing to do so in a predatory way, willing to absorb losses until the competition is eliminated or in pursuit of add-on sales that might help recoup lost margin. But those brands strictly enforce the prices their products can be advertised and sold at because it helps maintain the customer's perception that their products are valuable and in demand.
Products in bike shops are almost always considered "premium". They don't sell the big box $100 bikes and cheap parts. They typically sell higher quality products targeted at aspiring enthusiasts or enthusiasts. So a price control is exactly how you can differentiate your product from the cheap schlock on the shelves at Wal-Mart or even Academy and Dick's Sporting Goods.
The second major reason is because (although this benefit has diminished over time) having products on store shelves provides enormous marketing benefit. Most customers that walked into my store didn't come in knowing explicitly what they wanted. Many of them had done some research to be generally aware of their options, but our recommendations were often a massive influence in their purchasing decision.
Bike, component, and apparel brands were often pretty myopic when it came to their marketing efforts (and that's why they are always exactly the same from brand-to-brand). They genuinely thought the average consumer in the market for an entry-level carbon bike (say 1500-2000 USD) was influenced by having a Tour de France team or having some great rider win races on their bike. While that sometimes made a different at the prosumer level, the meat-and-potatoes bike shop customer isn't influenced one bit by that type of marketing. But seeing an attractive bike at a compelling price on the floor of a reputable bike shop is how most sales begin. So brands making sure retailers can be profitable selling those options is essential or retailers won't bother stocking their stuff.
If the bike shops can't be profitable, there will be fewer bike shops. And that means there will be fewer opportunities for customers to see you brand and your products. And it also means there will eventually be fewer riders - at least among bike enthusiasts. Because in my experience, bike shops are the hub of bike culture in most communities.
There's still a lot of brick and mortar retail, and it does not seem to be disappearing, but it is not really about re-distributing the goods anymore, but mostly about paid support. For instance, a lot of bike shops in my area are turning into repair and assembly workshops, where you are welcome to bring the bike that you bought cheaply from an online retailer and they help you assemble and adjust it. I guess the earnings for that usage are much larger than for re-distribution, since 100% of what the client pays is directly for the shop.
EDIT: also, I have issue on the fact that you call buying cheapest goods a "loophole". There's nothing wrong about it in an efficient market.
The service-only shops will never be anything more than cozy lifestyle businesses. And a few of those that own service-only shops actually live in the business to make ends meet.
They however were excellent at expanding into online sales (in roughly the same timeline as Amazon) and became Europe's largest online retailer. So one could argue that Guitar Center not improving their online offerings and maybe cutting back on physical locations had also something to do with it.
Edit: Also Ive tried getting a lower price on gear in the US by showing the all in Thomann price, and the response I get:We do not honor non US pricing.
I don't really understand how leveraged buyouts are legal, and I suppose I should learn a bit.
Source: I helped build a product to track MAP violations, and there's also a bunch of articles and books written on this stuff.
I dont disagree, but it leads to scenarios like the above where arbitrage exists. I can buy something from Europe and then sell it on Reverb under MAP and still make a tidy profit. This sort of thing doesnt scale and introduces risk to me if I do that(how do you handle warranty claims, most gear is shipped with EU power cords so you have to buy US power cords to ship to customers, etc)
For retailers, most do not have the resources to differentiate so 1 store selling for MAP is interchangeable with another. There are boutique stores that have passionate/knowledgeable staff that can guide less informed or newer customers. Sweetwater does this at scale, and I do buy from them for this reason when its something Im not completely up to speed on when I purchase.
This is not an easy problem, but I do think an unofficial price floor is not good for the consumer. I also acknowledge that there are stores that will discount privately via chat or in person, but ironically Guitar Center was very inflexible on several items I wanted to purchase there in the last 5 or so years. I ended up going to smaller retailers.
Reverb.com completely kneecapped this side of their business, and probably lots of their new product sales also. Between competition from Reverb (who have minimal warehousing overhead and no physical retail overhead), online-only sellers (who have no retail overhead), an expanded boutique market (pedals / eurorack), and much of the overall market turning to software and direct sales (much easier to download Ableton and start making music on day 1 rather than spend years learning guitar), the writing has been on the wall for large-scale brick and mortar operations in the music creation trade.
On the other hand, I prefer getting the package myself in the car, so as to avoid surprises when the thing arrives --I didn't have any issues with Thomann's courier, though.
I had always assumed that a salesperson immediately offering me a discount, or that weird "price shown when you add to cart" pattern were just people being shady to increase conversion... while that may be true some of the time, I had no idea there was a legitimate reason why they might not tell you the "real" price upfront.
How does it work with musical instruments?
Some examples of brands I can find cheaper in Europe vs US: - Jomox - MFB - Roland - Behringer(In some cases by 50%(!) For instance the Behringer X32 mixer is a pretty popular 32 channel mixer used throughout the world at Thomannmusic.com its currently $1,495/€1,262.93 vs $2498.99 at GuitarCenter.com)
https://www.thomannmusic.com/behringer_x_32.htm
https://www.guitarcenter.com/Behringer/Digital-Mixer-X32-133...
YMMV but I can assure you there is arbitrage/huge discounts to be had out there.
Having everything flow into a Amazon Monopoly of retail isn't great. Even just going in the stores to talk and get a literal feel for instruments is great.
The biggest issue with online retail is it erodes one of the last community functions. Particularly for older Americans retail shopping might be their only social interaction all day.
If 2050 is this dystopia where everything is ordered online, all food is dropped off by drones, it's going to be very bleak.
That said retail, particularly non essential retail ( my various instruments are all effectively toys, I'd guess the working musician to hobbyist ratio to easily be 1:100) is getting hit hard. No one NEEDS a news 1500$ Gibson.
Edit : Worth while to add a with concerts being shut down the professional market is effectively dead as well. I wouldn't count on this returning until late 2021 at best
Been a happy Sweetwater customer ever since. I've had 3 different reps and I know them all quite well at this point.
I am glad some local stores have survived, either battling GC valiantly or being far enough away from them. Having a hub for lessons, repairs, expertise, etc. is very nice to have around still.
However, Guitar Center would be just fine if it didn't have all the debt Bain Capital loaded it with.
Guitar Center needs Chapter 7 bankruptcy, not Chapter 11. Discharge the debt, dump underperforming stores, let the major players bid on the remains, and restart.
Chapter 11 is just playing a shell game with the Bain debt instead of nuking it.
It's amazing how little things like that make the sale.
Now, as someone who lives online and has a solid misanthropic streak, I find this human interaction slightly annoying. However, for a lot of musicians this really seals the deal.
That said, I'd love to go to a GC in person and try before I buy. Just...not during a pandemic.
If GC ends up closing, hope more local shops can benefit.
But I feel for my buddies that make electronic music. They loved GC since they could try out the synthizers and drum machines before they bought.
It doesn't help that with Gibson's quality control, you're maybe getting a $300 instrument for your $1500.
I know a lot of guitarists. Professionals. They all are buying new guitars frequently. There's too many niches to fill and variation between instruments. I know quite a few who cycle through a couple of dozen guitars bought and sold every year just to find instruments with the right sound.
anecdotal case in point: did once try out a new guitar, sounded good there - get it back to my house and line feedback like no other. i have many other guitars that work fine on this setup, but this one wanted to be a complainer...no way that any hands-on demo would have stopped that, unless i haul all my gear in there as well.
I agree that if sales go to Amazon instead, that's a loss for customers and the community. On the other hand, online retailers can't really compete when it comes to being able to actually try out the exact instrument you're buying. Guitars aren't completely homogeneous; one might sound better than another, or have different wood grain, or whatever.
Also, physical stores can provide guitar setup and repair services. Local setup can help a lot: manufacturers will often set the action very conservatively at the factory because they don't know what kind of humidity conditions the guitar will endure in transit or at its final destination, and they don't want the frets to buzz when someone takes it out of the box. Consequently, the strings are higher than they need to be which makes it unnecessarily hard to play. Fixing that is pretty simple and makes a big difference.
I hope that if Guitar Center closes a lot of their business goes to smaller local music shops for those reasons. However, I expect that if GC is having a hard time, a lot of other music stores are in just as bad of a situation and a lot of them are going to close.
> That said retail, particularly non essential retail ( my various instruments are all effectively toys, I'd guess the working musician to hobbyist ratio to easily be 1:100) is getting hit hard. No one NEEDS a news 1500$ Gibson.
Back around 2007-ish, there was a surge in sales of ukuleles, as a large number of recently-unemployed people with a lot of time on their hands were looking for a cheap hobby. My own anecdote from this last summer was that I made a pond and in early fall went looking for koi to put in it, but a local supplier was sold out and couldn't get more. Apparently there was more demand than has been seen in a long time, which makes sense. If you're stuck at home and need a project, why not make a koi pond?
If you’re in a city though, I can’t recommend local music shops enough. So much about what makes a guitar (or any instrument) great is how it plays for you. How it feels.
I’ve bought dozens of guitars online. I’ve returned maybe 95%. I’ve returned 0% of the guitars I’ve bought locally. It’s all about how they play.
The abundance of cheap gear / equipment to fill the shelves makes it feel more like a big lots of music with premium prices.
Once it looked like GC was in trouble in 2007-2009ish, those large brands worked on other sales channels and stopped extending GC so much credit once they were established.
Guitar Center had to sell Harmony Central off to Gibson to cover its debts years ago and basically has nothing else going for it. None of their instrument brands are any good.
I do. Donations accepted. ;-)
(Sadly a Gibson [not Epiphone] Les Paul Standard is more like $2500, though a Special or sub-$1K Tribute looks like it might be a pretty good deal for a US-made Gibson...)
That’s my line in the sand
if online has enough real value it will stay
if just enough, long term sufferings will happen then it will be removed
otherwise people will reopen things they need (just like vynil and newspapers)
No it won't. That will free up space so that your social interaction isn't the hardware store, but instead some place meant for entertainment. Hell, we might even build some public spaces. If you enjoy mumbling some words to a cashier you life might be a drag, but the arcade pub that replaces that market is gonna be rad.
Well my sister used to work as a cashier at a local hardware store when she was a teenager before they got obliterated by Lowes and Home Depot and pretty much everybody would go there to buy their sundry needs for various projects. Turns out that you strike up a conversation with someone who lives in your neighborhood, you find out about their projects, then their family, then their lives. It's you know, community, not mumbling words at some faceless person that is a poor cog for megacorp whose only plan is to literally extract more money from the community than they inject.
Local hardware stores are actually doing well. They are a little more expensive, but have made up for it by having someone who knows where to find what you need quickly.
The independent music shops are so much more welcoming and helpful.
Small shops always gave better service to the little guy because that was their business.
Normally I am totally ad-blocked, but my Mac refuses to reconnect to my OSS Airplay Raspi contraption, and I just don't feel like rebooting ( already killed coreaudiod ).
I wired up my tuner with a dipole and am listening to radio through the ether mind you. No adblocking though.
Amazon is almost absent in NL at the moment, but they will crush the competition in a couple of years.
Amazon should be broken up.
For offering more products and better service at a lower price? They don't have a monopoly on anything.
The governments role should not be to subsidize uncompetitive businesses. That hurts consumers.
The US defense sector requires domestic manufacturing for good reason. The US recently got bitten hard with an inability to manufacture 5G equipment.
The loss of skills accompanying loss of industry is a huge problem that can take decades to fix.
There is a reason pilots prefer flying two engine aircraft, even though you really only need one engine. Redundancy is important.
In the absence of outside influence, scale produces monopolies that haven't the slightest interest in serving consumers, much less competing to win their favor. Have you ever BOUGHT anything from Amazon and gotten screwed by them? Have you been given random stuff by third parties working (successfully!) to game the Amazon system so their garbage is full of fake testimonials and is #1 recommended Amazon product in their category?
Competitive businesses gotta start from somewhere or there will NEVER be any others. It will just be 'what was competitive, once, and forever' because infrastructure and scale lock in and then you're monopolized and it no longer matters.
Show me the alternative to Amazon. Show me the alternative to YouTube. There is by definition no competitive option to any of these things because they locked in controlling positions, and now it doesn't matter what they do: they are NOT subject to any sort of competitive forces because it's too late. It doesn't matter what they do to consumers: there's nowhere else to go.
In the US retail market? Walmart (2x the size of Amazon), eBay, Kroger, Home Depot, Lowes, HEB, Costco, Target, Walgreens, Staples, CVS, Publix, Albertsons, Aldi, Macy's, Best Buy, OfficeMax, Nordstrom, Kohl's... I can continue if you want. Those are just off the top of my head.
>Show me the alternative to YouTube.
Netflix, cable, Hulu, Amazon, HBO, Disney, Sling, there's a few more. It's a very competitive market and it's why YouTube hardly makes any money, if they actually make any at all.
I think you are making the common error of conflating "big company" with "monopoly". Amazon doesn't control supply in a market like say the USPS with first class mail or your utility with electrical supply.
Tons of competition to Amazon. Tons. For anything you want to buy, there are other places that sell it.
there aren't any other companies that offer the full range of what you can get from amazon (cloud services, audio/video streaming, physical goods, etc.), but there is viable competition in each of those markets.
for cloud: google and microsoft
for streaming: spotify, google, apple, netflix, hulu
for physical goods, walmart also has a huge inventory of many different SKUs and they offer free two-day shipping on a lot of them (without needing a subscription). there are also tons of specialty retailers like newegg and microcenter.
LOL, Amazon makes up maybe 30% of my online shopping. Less if I can get away with it. The rest is _all_ other places to go.
This is similar to anti dumping taxes we have against chinese products.
One thing I would do if I were running a brick-and-mortar retailer is to figure out how to manage same-day deliveries, using the retail locations as distributors.
Buy a used UPS/FedEx truck for every retail location, and send a guy out in the morning to make onsite deliveries.
People can come back to the store for returns, and they can order large items that would otherwise be undeliverable or heavily delayed from the likes of Amazon.
The idea of blended warehouse/retail locations could make the logistics simpler and speed up delivery, even if you use a shipping carrier to do the delivery and/or serve areas that are not within ~100mi of a retail store.
Yes, but it is worth pointing out that COVID is killing already-sick businesses. Guitar Center was doomed from the moment that Bain Capital bought it in the early-2000s and started raiding it.
COVID will be listed as the immediate cause-of-death for many, many businesses, but what made them susceptible to a shock is the private equity vampire.
100% agreed. I should have written that COVID-19 has been a killing blow for many already-sick companies.
Still, if you're running a distressed company, your attitude must be, "we are not dead until we're dead." Channel your inner Dylan Thomas and rage against the dying of the light.
I have a mid-60s relative who teaches music privately, via Zoom. Her business is more active now than it was when she was teaching in person, due to fewer costs for transportation and less downtime between lessons. I'm not sure how sustainable that surge in activity will prove to be, but she has at times asked me to help her buy musical instruments online for new students. It's anecdotal evidence that suggests music education isn't going away just because brick-and-mortar retail is under pressure.
School closures aside: if someone is going to sell guitars and drum kits, why can't it be Guitar Center?
Amazon has put retailers in the position where they have to compete on price, information, ease of returns, and shipping speed. A dedicated retailer (music store vs general store) should be better at competing on price and information. A local store should be better at competing on ease of returns and shipping speed.
why would it be guitar center? I don't see anything that would give them a competitive advantage. I only ever go there to try guitars. if I really like one, I'm probably just going to go home and order a pristine example online. there's no way I'm gonna drop $800+ on a guitar that's been sitting in the open air and manhandled by customers for an unknown length of time. it's not a local business, so I don't even feel bad about it.
as I see it, a brick-and-mortar retailer has three possible functions: an inventory, a showroom, and a service center. it's hard even for a large physical store to beat an online retailer on inventory. guitar center in particular does not seem to be trusted as a service center. musicians I know would only take their guitars there for repairs/setups if there was literally no other option. this basically makes it just a showroom. it's hard to make money showing other people's products that can be bought cheaper elsewhere.
it seems to me that the only way forward for third party brick-and-mortars is to somehow monetize the showroom role. maybe they could get paid directly by the manufacturer to show their products or have some sort of referral system. integrate it with a service center and let the customers play with the display guitars while you fix theirs.
It's been really good business for guitar stores. I talked to someone at one and this has been the best year in a decade, and this was a small, independent store that also has a web presence. Guitar Center must have been pretty mismanaged leading up to this. It's also been a rough decade for rock music--there just isn't as much guitar music as there used to be.
FedEx just uses standard Sprinters or box trucks so you could find a used one of those anywhere.
How does this work exactly? Why would the company lend an acquirer money?
So from the point of view of a bank or bond-holder, it's not such a bad deal if the company survives. It's not a bad deal either for the past owner who does cash out. Then, after the acquisition, they put the debt on that company's books because they were technically costs incurred from that company, and there is nobody to stop them anyway.
In practice it’s a little different as you arrange the debt financing before buying the company, but conceptually it works the same way. As the new owner of the company you can saddle it with debt (as long as lenders are willing to lend you the money).
They find a public company that's not doing great. Maybe they're just stagnant or they had a down year. Either way, you find someone who wants to sell a publicly traded company.
Then they put up a small amount and have the company itself take out a loan to buy back its stock.
So now the company is paying interest on the debt it took on to buy itself and also paying "management consulting fees" to places like Bain Capital.
In short: Toys R Us should have never had to close its doors. https://theweek.com/articles/761124/how-vulture-capitalists-...
Guitar Center voted to give Bain Capital money by one person wearing two hats.
The structure of the Sears deal was really interesting and suspicious. Sears bought a small number of Kmart stores for an enormous cash price, which sent Kmart stock into orbit, then Lampert used the inflated Kmart stock to acquire Sears. Pretty shady.
Another difference is Lampert is a black sheep, but Mitt Romney is for some reason still socially accepted despite having wrecked dozens of American companies.
Our democratic governor Deval Patrick went to work for Bain after he left office.
* Are their success stories quiet and their failures heavily publicised?
* Are they not as creative/clever at strategy as they could be, resulting in them exhausting options and going for "run into the ground" too early or too frequently?
* Do they pick an unusually large number of unhealthy firms that are prone to this endgame? In which case, why aren't they getting better at due diligence?
COVID really increased the rate of change for everything. Companies playing online first saw the boost, while companies doing it as if 30 years ago failed fast.
[1] Lee from Andertons was telling lockdowns are nothing to complain about, bussiness wise.
[2] https://www.guitarcenter.com/Fender-American-Pro-II-Guitars-...
For online, ship to store/pickup in store is super important to me (and probably many others). I'm not sure why more places don't offer it.
This also being said, I don't believe I've ever found GC/MF in person to be useful or any better than Amazon. No one working there was actually knowledgeable about their lines of products or about instruments in general, they just kept harassing me over buying worthless GC-offered third party warranties that they refuse to pay out and covers nothing
I ordered an XLR cable from their website and went to pick it up at the store in person. When I arrived, it took about 10 minutes before someone could help me, then they spent several minutes finding someone who could get the cable. That person then walked past a wall of XLR cables for sale, into a back room. I asked "cant we just grab one off that wall?" Nope. Another 20 minutes go by, and the person returns from the back of the store with a cable, and several sheets of paper. This next part is going to sound like a joke from the hitchhiker's guide from the galaxy but it's very real: they then had to run my card to ensure I was the buyer; I had to sign two forms; and finally I had to have a third form stamped twice. All for a $20 cable.
Guitar Center was cool for browsing in person. Beyond that? Trash. Bankruptcy makes perfect sense.
Second, I got it home, and it was all sorts of wrong. Every single fret had buzz, the neck was warped, and while the guitar “felt” great, it just wasn’t playable especially for a $1300 guitar. I had no choice but to return it.
Then I went to Sweetwater. Completely opposite experience. I ended up buying a 7-string Ibanez RG752M (again, the yellow one), sight unseen. The customer service was absolutely stellar, I got phone calls from two people asking me how and when I’d like to receive it, etc. The guitar came completely and properly set up, ready to play. Sweetwater has a 50-something point setup for all guitars over like $300.
No wonder GC is going under.
For instance Crutchfield now has “SpeakerCompare”
“To try out SpeakerCompare, select two or more pairs of home or car speakers to audition, then select your model of headphones from our menu. (We currently have more than 100 to choose from, with more on the way.) Pick a genre of music to cue up a song sample, and hit play. You can then toggle between each speaker in real-time using two listening modes: equal power mode lets you hear differences in loudness as they naturally occur, while equal volume mode gives you a more direct comparison of tonal differences between your selected speakers.”
https://www.crutchfield.com/S-MgU7GRLTDvu/speakercompare/def...
Whatever headphones or speakers you use to listen to the samples will add their own dynamics to the sounds. It still won't really give an accurate representation.
Its not going to be perfectly accurate, but should get you into the same (or possibly better due to lack of noise/business) ballpark as auditioning in a store.
I can see the comparison system working alright for some things. It's just not a replacement for listening to something on hardware and if I were out to spend some money on a good set of speakers, i'm going to want to listen to them in person first.
All hearing is 'feeling the sound' - that's what sound is a, a feeling of vibration of air.
> I can see the comparison system working alright for some things.
So it's got value?
> It's just not a replacement for listening to something on hardware and if I were out to spend some money on a good set of speakers, i'm going to want to listen to them in person first.
So it's not perfect? Why does everything have to be perfect?
If you know what you want, you know why you want it, and you know what brands/models will give you the sound you want. If you don't know what you want, a fairly standard pair of monitor speakers will sound terrific.
Like I have a hard time believing someone who picks up set of HS series Yamaha monitor is going to be like "Oh wow, these sound too forward for me".
That being said, I do think speakers can make a big different. I have a buddy who has a set of Ohms speakers from 72, and listening to music from that era (like Led Zepplin) does sound better than listening to it on something more modern, because it was mixed with similar speakers.
It's cork sniffing at a certain point to me, but people who are really into it can really hear it.
Citation needed. Sometimes they can, but a large part of the time they are claiming things that they cannot hear if tested. They of course refuse scientific tests.
headphones in the $100-200 range are already pretty good in terms of total harmonic distortion. frequency response is a large part of why you might prefer one set of headphones/speakers over another. this is basically equivalent to a final EQ stage, which can be compensated for earlier in the signal chain. I highly doubt they can make my hd555s sound as good as hd800s, but I wouldn't be surprised if the software could give at least a general sense of what hd800s sound like.
If it could then you would just use the software on all your music and have high end audio for free.
You can say "this model of headphones produces peaks at 4kHz, 11kHz and 26kHz compared to a flat reference model" and add that effect with a DSP or pre-rendered sound clips.
That will give you some of the "voice" but it won't add the performance aspects-- power handling capacity, responsiveness of the drivers, sharpness of the crossovers, etc.
TBH, it's a fascinating idea and I wish it had existed last time I bought speakers-- I recall going all over town to Best Buys and Fry's back when they still had stock to listen to floor samples in rooms completely unlike the ones I would be listening in, using sample media and amplification unlike what I was going to use.
I don't understand? Don't you audition an artist, not a piece of equipment?
2: the act of hearing
especially : a critical hearing
// an audition of new recordingsI doubt comparing the sound quality of multiple pairs of headphones is going to be something VR can simulate.
For a more obviously untenable example:
Imagine using an old VR headset to test out newer, more capable VR headsets.
How can you try out a new computer when buying online through your old computer? You don't. You rely on Specs.. reviews.. brands.
It's not good to generalize, I concede.
In his case he was fortunately able to pivot to a very niche market and is doing quite well.
You'd be stupid not to get the instrument over the counter, unless the online deal offers more than a modest discount.
Not worth the return headaches if something is wrong: twisted neck, fret being out, bad wiring, cosmetic issue and whatnot.
Or is it a choice thing? People try in the store, but get something a bit different online, like a very similar model that the store didn't have?
Well, either complete neophyte, or a seasoned pro who can absolutely shred on anything blindfolded, and convince others that they should buy it, too. :)
I chose to buy from Guitar Center when I made my thousand-dollar purchase. And yes, the sales staff were difficult to work with, but I kept my receipt and when, two days later, I found an obvious defect, I was able to walk back into the store and get a replacement.
I was happy to pay a little extra up front because I was able to take the instrument out and actually use it before buying. (And I was able to bring it right back two days after I bought it.) It was well worth the slight surcharge to be able to inspect it before buying.
I wonder what my "extended warranty" means after the company is out of business? I'm pretty sure it's not worth the paper it was printed on.
There's a ton of variance. Buying guitars in person (or better, built to order from a luthier you know) is always preferred.
But not wrong in that same way whereby you compare three identical, well-made acoustic guitars side by side and one of them obviously "projects" the tone more.
Most of the are minor issues, but it helps a lot in narrowing down something to buy. Brand reputation doesn't mean much these days, especially with electric guitars. The way those are priced you'll see a huge spectrum in cost and construction techniques and the economics of electric guitars mostly means labor priced towards zero and cut corners.
11 and 13 piece laminate necks are a trend that I would like to see go away. It's a "look" that nobody can really see, usually means worse tone and says you couldn't find one good neck out of the wood you had. Same with the relic look.
We usually find a couple of good Hall E brands every year with a 1-3 year waitlist for a good custom guitar. Some of those are today's "good" brands (Aristides...). Martin always has a few beautiful acoustics to sell out of the custom shop that cost as much as a car.
Every year we usually find a different model Yamaha that's probably $1000 cheaper than it should be.
Honestly all guitars are pretty solid now. CNC has made the lower end significantly better than they used you. You don't often have misaligned necks and stuff like you used to because it fits pretty dang good already out of the CNC machine.
Not only the the CS rep get me a predicted availability date by talking to their internal supply guy, but he also checked back in with me about a month later to see if I was all set.
I'm now highly biased towards buying from them.
EDIT1: Credit where credit is due: The CS rep was Calvin H.
EDIT2: As an interim solution I had to build my own AC-DC converter to meet the unusual specs. It was surprisingly cheap and easy. I can post details if anyone is interested.
I've got stuff from them, even large quantities of stuff. I leaned on them for special pricing seeing as I was spending thousands of dollars with them, and got some traction with that: moderate extra discounts and price breaks. I didn't like the candy thing, so I told them not to do that. They stopped doing that.
They badgered me to see if everything was okay. I got phone calls while I was making livestreams, stuff like that. I told them not to do that: in fact, to never speak to me again and I would call THEM if I wanted to get anything else. They stopped badgering me.
It's been maybe a year now. Not a phone call.
I did also tell them not to send me postal mail advertising either, because I will just recycle it. They have not honored that one. So: their service extends to listening when you tell them NOT to badger you for more sales, and they listen ALMOST completely.
On the opposite end is the Chicago Music Exchange (they own/operate Reverb.com) which is the coolest damn store you'll ever go to if you're a guitar nerd.
you'd think musical instruments above all else would be a key retail buy, it's amazing how badly GC missed the target on this. 'Tryable' retail stock levels are hitting a point of no return in multiple market segments right now, ugly situation
The salesperson was interested in selling an expensive ass guitar to a beginner and less interested with her concerns as a beginner.
She felt very uneasy about the whole thing.
Luckily she found a smaller teaching school where the sales person was more personable and even helped her find a nice used guitar at a reasonable price and she took the time to talk to her about how to go about beginning.
My point being: when some of the big guitar stores have a reputation of having people try push and rush to sell you expensive stuff and, also, chastise and sometimes even mock people trying out instruments. Then it's no wonder people would go elsewhere to look for instruments, even online.
At least they can take the time and get comfortable and compare even though they can't hold the instrument.
Worst job I’ve ever had.
Disclaimer: I am terrible at sales.
Our managers chased after him and tackled him in the parking lot.
Afterwards they were reprimanded for creating a litigious situation...
Other than that just a lot of teenagers butchering their Dad’s favorite songs on guitar.
I also bought my last guitar there, and some audio/recording equipment. It's one of my favorite retail places, especially since I don't like shipping acoustic instruments if possible. Although I have started to order more of my stuff online through Sweetwater. With the pandemic I try to avoid brick and mortar stores as much as possible. Although I do still occasionally order from them if they have what I want in stock and other places don't.
I don't order audio gear from Amazon due to the proliferation of counterfeits.
And both of these companies, being national chains, have the capital to out-compete local independent book / music stores, but because they're a chain, they won't inspire loyalty. I might feel like I should pay a little more to buy a book from Greenlight Bookstore instead of Amazon; I don't really feel like I should extend this courtesy to Barnes & Noble.
How do we solve this problem in a sustainable way?
Guitar Center was cool and all, but really, I don't need 168 perfectly mass-produced bass guitars to choose from. If I'm going to drop $2000+, well, that goes a long way towards something custom from a local luthier. So much of music is about expressing yourself... If you want to sound like everyone else, play the same guitar the same way as everyone else. That said, Guitar Center and Sam Ash really do a great job making pretty good equipment affordable and more importantly, easy to get.
Other stores solve this problem by using the brick and mortar locations as warehouses that can ship as fast or faster than amazon at a competitive price. This also enables same day pickup at a lot of stores, which amazon struggles to do.
Stores that don't have the volume or margins (like guitar center) to support the physical locations are in for some hard times.
As for Barnes and Noble, I'm not sure they provide a particularly valuable service. I can see previews of a lot of books online, read reviews as I browse, and get most things in print in a couple of days. I'm actually not sure the last time I was in a B&N.
Instead I see most companies looking out at the street, waiting for people to walk in. I even had some restaurants that turned me away because I refused to go inside. However some of those restaurants also walked the food out - I just had to wait for the right staff member.
In any case - if this isn't the penultimate test of all companies' willingness to adapt fast and intelligently, I don't know what is.
It's funny that in Music City, the Guitar Center is one of the few places to actually go and get a selection of gear. I know there are a couple of small places and of course pawn shops and one used gear place that's been around a while, but we have lost places over the years that used to offer equipment and lighting. Guitar Center has been the go-to place for me and many others for years - glad their newish store opened when and where it did.
If they close that store, we'll need something new to pop in and fill the void for sure.
Is it just me, or does this seem like a pretty wide estimate range?
[1]] https://www.guitarworld.com/news/fender-has-sold-more-guitar...
I was comparing studio monitors and headphones with the intention to buy there in the near future and got good advice from the guy working there about everything I asked, he had first hand experience with all the stuff I was looking at.
What I don't understand is "filed for Chapter 11 bankruptcy" == "Guitar Center, which owns nearly 300 stores across the country, said business operations will continue without any interruption."
?
Chapter 11 has different rules, you are trying trying to stay in business, but need to not make payments for a time.
Usually the company is more valuable as an operating business and has a better chance of paying off its debts that way, so it's in everyone's interest for the company to keep operating. The creditors get some say in how the company is run at this point, though, and they may demand that the company sell off some assets to help pay the debt.
It's Baumol's Cost Disease. The 99% can't afford small stores anymore.
What makes more sense to me is that people are earning less (in real terms), and/or have less income security due to cheaper labor from abroad and productivity improvements from automation all flowing to owners. If people’s wages did increase, they could also be allocating less of their money for leisure purposes, opting instead to prepare themselves for healthcare expense or income instability, or saving for education so their kids can competes. Either way, it’s a reduction in funds available for leisure.
Hope most of the employees land OK.
Worse, Bain takes the money that would have been used on corporate reinvestment in the absence of an acquisition, and which should be used to pay down the acquisition debt arising from the acquisition, and uses it to pay themselves hundreds of millions in "management fees" despite not actually managing anything. Also, PR to congratulate themselves for the wonderful job they've done "cutting expenses," meaning the tens of thousands of jobs that were cut so that Bain could get paid.
Bain is parasite. They've always been a parasite, to the point that they even found ways to turn their few successes (like Staples) into failures.
Most likely they will just use the bankruptcy filing to get out from under their tremendous debt burden, then be back in business at some point.
Guitar C. was my favorite place to go and not buy anything because I don't have 1000 drum machine disposable income.
Almost all of the people I met working there were pretty talented musically and it was a shame how little money they were making.