Guitar Center's woes

[jimmyl51]

What is really happening here with Guitar Center is the slow death of retail shops with just about everything moving to online purchasing. Every state that I have lived in here in the USA shows the same trend. Mom and Pop stores are ruined and put out of business by the Bain Capital boys with those stores in turn over time closing their doors as they are being outcompeted by online buyers. Remember it is China who has all of the money these days. Forget what the newsmedia is saying regarding how China is going down the tubes economically. I worked in Mainland China for a few years for a US company. I can very clearly remember going into a Gibson store in Shanghai where all you would see were 'kids' aged 14 and above buying with CASH just about every Gibson that we all would swoon over in the 'private' section of your local Guitar Center in Hollywood or Manhattan........Our country is being outcompeted by these countries plain and simple......AND all of these buyers pay only with CASH to boot.....jim in Maine

[charlie brown]

Guitar Center's are like a lot of "chain stores." They're good or not so good,

depending on the manager, and staff...just like any other business. When I lived

in Los Angeles, I had 3 GC's, within my area (Glendale) that were great! Hollywood,

Sherman Oaks, and Pasadena. Good management (at that time, anyway), nice, knowledgeable

salespeople, and a great stock of merchandise, in all price ranges. Those 3 seemed to

take better care of their display merchandise, than other similar stores, as well. But,

that was nearly 8 years ago, so who knows what's going on there, now? Hopefully, more

of the same, or even better.

 

CB

[jimmyl51]

I too used to frequent the Guitar Center in Hollywood when I lived in the Los Angeles area (San Fernando Valley) a number of years ago. I can clearly remember walking to the back of the store where they had all of the super high end stuff. Can very clearly recall this Chinese guy in a business suit from Mainland China pulling down an absolutely gorgeous '58 ES-335 in faded cherry i.e. the Lee Ritenour guitar, not the reissue Gibson but a real 1958 ES-335 in like new condition........the guitar as I recall was around $75,000 which of course was 'hey this was 'Hollywood!'.........the guy could 'maybe' play a 'C' chord in the first position and basically nothing else........regardless he pulled out 75 $1000 bills out of this attache case........like it was nothing........jim in Maine

[charlie brown]

I too used to frequent the Guitar Center in Hollywood when I lived in the Los Angeles area (San Fernando Valley) a number of years ago. I can clearly remember walking to the back of the store where they had all of the super high end stuff. Can very clearly recall this Chinese guy in a business suit from Mainland China pulling down an absolutely gorgeous '58 ES-335 in faded cherry i.e. the Lee Ritenour guitar, not the reissue Gibson but a real 1958 ES-335 in like new condition........the guitar as I recall was around $75,000 which of course was 'hey this was 'Hollywood!'.........the guy could 'maybe' play a 'C' chord in the first position and basically nothing else........regardless he pulled out 75 $1000 bills out of this attache case........like it was nothing........jim in Maine

 

Yeah, those kinds of folks are the "Vintage Shop's" Wet Dream!

I.E. More money, than sense! Then again, he may take it back to

China, and double his money? Who knows?

 

 

CB

[Searcy]

Really..? Thousand dollar bills you say? That's incredible.

[pauloon]

I once had a fifty pound note.

[Hogeye]

I must say that when this thread started, and I added to it, i never wanted it to turn into a GC bash. That's not the point. The point was to ponder what would happen if such a whale were to die because it looks like a possibility. I mentioned in my own reply some bad things that would come of it. I have never liked the company myself and I had bad experiences. I also understand that many stores are run very well and people have good experiences. I am a competitor of theirs and that has it's angle too of course.

 

Basically i am saying that there is no need to bash them. Everyone here already has their opinion one way or the other. I think it's a good to discuss what changes could come if they fell, and whether or not we think that will happen. I would like to find a way for the industry to be better if that were to happen. I hope this thread can go in that direction. As a hypothetical: what would you like to see happen if GC disappeared or shrunk drastically? how good the independents do better for everyone?

 

Also, I have to thank Hogeye for saying "Clay Bailey is my hero". HaHa! he is my boss and i deal with him on a daily basis. He is a tough guy to work for... that's for sure. But we try to do things the right way. It's REALLY HARD sometimes to do that. Serve customers well, keep the business running, etc.... but we try. I will say this though: no one in the industry takes it more personally than him. That guy will do anything he has to do to make the company successful. Usually that can lead to some really bad service for customers. But Clay really does realize that he only has 2 things going for him if he wants to make it work: Surrounding himself with really good employees, and having happy customers walk through the door. I will tell Clay that you said it. I am sure it will give him a smile!

 

 

Clay Bailey has sailed that ship of his thru several major recessions the invasion of the big box stores and a couple of huge hurricanes that I can remember. That would make anyone just a little grumpy but.... He is one of the best business men I have had the pleasure of working with. What he is doing is truly amazing and deserves a chapter in the book of "Music History". You said, "he is my boss". Lucky you. If you ever get the chance to own your own business you will be successful as you are learning from the best.

 

I hate to have to say this but the music industry is ageing a bit and that is a big problem. Where are the next Stan Jays, Stan Werbins and Sam Ash coming from? Where are the next Mike Fuller and Fred Deckers coming from? What happens when the guys like George Gruhn and Fred Walakie retire. I know that Fred and Mike have sons that are doing great things with their stores but....Only time will tell.

 

My advice is to shop where you live and support your local stores. Doesn't make any difference if its music or hardware. Keep Main Street alive.

[rct]

...My advice is to shop where you live and support your local stores. Doesn't make any difference if its music or hardware. Keep Main Street alive.

 

Does it make a difference that where I live the local stores sell 100 dollar JayTurserAgileUSLuthierSeagull garbage, along with Gorilla amps? If you moved here would you start using them so you could "Keep Main Street alive"? Fender and Gibson have franchise priced the local shops out of business with their half a million inventory requirement years ago. If it hasn't happened in your area, it probably will.

 

rct

[BobF_]

Does it make a difference that where I live the local stores sell 100 dollar JayTurserAgileUSLuthierSeagull garbage, along with Gorilla amps? If you moved here would you start using them so you could "Keep Main Street alive"? Fender and Gibson have franchise priced the local shops out of business with their half a million inventory requirement years ago. If it hasn't happened in your area, it probably will.

 

rct

 

I just called my quasi-local shop a couple of days about a not-expensive-Fender. He hasn't been a Gibson dealer for quite a while. During the conversation, he mentioned that Fender is also upping the ante on the shops, so he's not sure where he'll end up with them. He offered to get the specific guitar I'm interested in into the shop and use it for inventory if I decide against it after trying it out.

 

The downside is that where he is, the sales taxes add up to close to 10%. I refuse to use him as a showroom for internet purchases though. If I find something there I like, he gets a shot at selling it to me. The convenience of being able to touch something without a 5 hour round trip drive is worth a bit of premium, even though the Gubment is where it goes.

 

He does have high end acoustics ... Taylor and Martin. Fender electrics and basses. Lotsa' Ibanez, ESP and such.

 

I buy from him when I can, always giving him a shot before I go online or drive even further to a GC.

[zigzag]

I really only have one problem with GC. I will never buy another guitar there. If it comes off the wall, chances are that it once belonged to someone else.

 

The real problem I have with GC is really with the state of US business and MBAs. Gone are the days of small businesses run by people who know and love the products they make and sell.

[matonanjin]

 

 

Gone are the days of small businesses run by people who know and love the products they make and sell.

 

I'm trying to sidestep around the GC bashing. However, I have to add that my good friend from high school ran a small guitar store here in Omaha for decades. He was the lead guitar player in a high school band and saved his pennies and ultimately had enough to start his store. He lived for that store and music. And a great guitarist, BTW. He and I are both on Medicare now so that will give you an idea of how long he had it. He would go out of his way to help guitarists and guitar students.

 

GC came to town. I stopped by his store last fall to pick up something. It was purely by accident that I stopped the day they were having there clearance sale and the last day of business.

[Hall]

I'm trying to sidestep around the GC bashing. However, I have to add that my good friend from high school ran a small guitar store here in Omaha for decades. He was the lead guitar player in a high school band and saved his pennies and ultimately had enough to start his store. He lived for that store and music. And a great guitarist, BTW. He and I are both on Medicare now so that will give you an idea of how long he had it. He would go out of his way to help guitarists and guitar students.

 

GC came to town. I stopped by his store last fall to pick up something. It was purely by accident that I stopped the day they were having there clearance sale and the last day of business.

 

 

 

Sad. Says it all.

[SteveFord]

My "local" Guitar Center has been really good to me so I don't want to see them close up.

 

Us old duffers can remember what it was like before these big chains and the internet; you had to go to NYC (or similar) to find a monster selection of guitars. It's great to be able to take a short jaunt and check out all of the new (and some used) stuff.

 

 

 

 

 

[milod]

While in a lot of ways I'd like to see the little guy compete with the big guys, I think we have to consider the degree to which "the world" has changed over the past 20 years or so. If you want to look back 50, it's even more radical a change.

 

Last night I was "shooting" a high school basketball game and a big regional daily photog came up and we were BSing. I didn't even start using digital photography until around 97-98. But I started using Photoshop 2.5 around '94. That's 20 years ago. I built my own machines and was using "desktop" computers since '81, before he was born - and it was almost old hat for me since I'd already been using them in the late '70s. I didn't get on the web until around '97.

 

The web? How many people under 25 do not remember it being around?

 

How many under 40 remember "home computers" not being available, whether or not they had one? How many under 30 cannot type?

 

Businesswise? How many don't remember Kmart/Walmart, especially the latter, being a significant competitor of everybody on Main Street? How many remember Coast to Coast stores, Gamble stores, etc., that sold everything from light bulbs to firearms?

 

In towns under 50,000, how many radio and TV stations and newspapers were "local family owned" until around 1970 and the parade to "group ownership" began?

 

Now...

 

Ask why.

 

Bottom line is that various federal and state regulations, taxes, complexity in insurances of various sorts, etc., kept increasing from the late '60s forward. The Ma and Pa that survived the Depression, WWII and the burst of new small businesses in the late '40s and '50s well into the '60s started by skilled military veterans... well, it was time to sell to a "group owner" or find a regular job because technology was changing and so was tax and regulation for small businesses.

 

Do I like it? No. Do I see an option? Not really, except a hope that either there will be a degree of competition.

 

Again, if you ain't started a small business, you ain't got a clue; if you have, you had a lot more cash than "we" had from circa 1935 through 1980, because it's not enough to have a couple months rent/lights and a six-month inventory, not to mention you'd best have an attorney and accountant enlisted for help - and that latter is because of regulation and taxes. And wait until Obamacare in the US really hits. That's how much overhead added even for Ma and Pa?

 

My concern as a guitarist is different from my concern for buying a mail order camera in the same price range: If I can't play it, I don't want it if it's over $500.

 

As a result, I have a hunch I'll mostly not have a high end Gibson or Martin in the near future.

 

m

[jimmyl51]

Yep that is exactly the point. To people from other parts of the world that ARE doing incredibly well they simply don't have to worry about money like we do for better or worse. Yeah that guy at the Guitar Center in Hollywood DID pull out $1000 bills. In his world it simply was not that big of a deal. When I was doing some contract work for a US company in Shanghai,China and walked into the Gibson store in that city I can't tell you how many young Chinese kids were buying basically the best that money could buy in Gibson guitars. They absolutely LOVE sunburst Les Pauls! Every single one of these kids paid cash for these guitars on the order of at the time $10,000-$15,000....simply not a big deal for them. They LOVE USA made stuff in that country plain and simple. jim in Maine

[zigzag]

I suspect that regulation affects some businesses more than others. The biggest threat to small business is foreign competition and cheap labor, and purchasing power and material costs. The problem with modern business is that the one and only goal is to make money.

 

Business should also not be responsible for providing health insurance coverage for their employees, Obamacare or not.

[milod]

Ziggy...

 

The only reason anybody has had any kind of "business," which means from the earliest times mankind was involved in any degree of trade, is to make what is perceived to be a profit - in terms since "money" was invented, "to make money."

 

The biggest threats to small business are not cheap labor, purchasing power, and foreign competition. Material costs are relatively minor in some ways.

 

The true biggest threats are regulations followed closely by taxes. Period.

 

It's not just that the taxes and regulations increase cost money which increases the price tag to the consumer and/or lower wages for owner/few employees. What's worse is that they further increase overhead costs by the necessity to have an accountant and a lawyer advising how to handle those regulations, taxes and additional paperwork overhead. Or... to be a franchise and pay as much or more for similar services. I did the former, friends did the latter. In both cases is was a matter of buying a job; the only difference was that your "boss" was your bank account and the government instead of another paycheck person.

 

Been there, done that.

 

m

[zigzag]

Ziggy...

 

The only reason anybody has had any kind of "business," which means from the earliest times mankind was involved in any degree of trade, is to make what is perceived to be a profit - in terms since "money" was invented, "to make money."

 

The biggest threats to small business are not cheap labor, purchasing power, and foreign competition. Material costs are relatively minor in some ways.

 

The true biggest threats are regulations followed closely by taxes. Period.

 

It's not just that the taxes and regulations increase cost money which increases the price tag to the consumer and/or lower wages for owner/few employees. What's worse is that they further increase overhead costs by the necessity to have an accountant and a lawyer advising how to handle those regulations, taxes and additional paperwork overhead. Or... to be a franchise and pay as much or more for similar services. I did the former, friends did the latter. In both cases is was a matter of buying a job; the only difference was that your "boss" was your bank account and the government instead of another paycheck person.

 

Been there, done that.

 

m

 

Of course the main reason people start a business is to make money. But there are other reasons- pursuing a dream, having a purpose, fulfillment, providing meaningful employment, forming relationships, etc. Believe me, once a holding company takes over a business, the only goal is to make money... period. I know, because I've seen what a holding company does to businesses and their employees.

 

I been there and done that myself. I've worked for small companies and large. I've had to deal with federal and local arms of the EPA, FDA, and OSHA. I've been involved in purchasing, customer service, and in middle management on technical and facility management levels. I know how a business is run AND run into the ground. From where I sit, this is what I see.

[milod]

But have you tried to run your own biz?

 

I've done the other side too, and won't claim that I like what I tend to see. It's a matter of feeding the corporate bureaucrats and stockholders, not necessarily serving the public or doing much in the communities where they do business. And that includes doing well by employees.

 

On the other hand, "gov'ment" tends to take the response of adding tax and regulation that simply adds to those guys' overhead, so they cut where they can, which tends to be what makes the money in the first place.

 

Some 30 years ago I would have said, and did, that we need another Teddy Roosevelt to bust up the big outfits that are too big. But there's so much complexity and so much "incest" in the money business that I wonder if that's even possible. What I mean by "incest" is the cash from various union and other retirement funds that are invested in these big companies and are among the more demanding of "profits."

 

That puts a spin on what neither of us care for that makes it more difficult to have much of anything work. It's a complex Gordian knot that defies simplistic sloganism because among the greater supporters behind the scenes of the worst examples are "the left" that in theory should be against such stuff.

 

An example: Do you like to eat beef, pork, chicken? Basically there are four or five companies that have a lock on the market. Farmers and ranchers take the short end of the stick for a number of reasons I won't get into here, and consumers likewise take what they can get. The bigger food wholesale operations are in bed with 'em too. End result? Producers, processor/retail employees and consumers get the short end of it all.

 

But... does anybody have the courage to go after that stuff? Nope. They're pretty much protected by "consumer" lobbies that some day may have to wonder what they've done.

 

m

[zigzag]

m, no, I've not actually started my own business, but I have been involved in business start-ups. My perspective is from a manufacturing and sales perspective, which may be very different from, say, an ag-business perspective. My experience has been with businesses that compete on a local, national, and international scale.

 

I also see states competing for businesses by offering huge tax incentives. It may be that the differences in our perspectives are due to the differences in the businesses that we have been involved in. I was looking at the challenges that GC faces. I am familiar with the way that companies like Bain Capital operate. I also see what MBAs do to business. If this is the future of US business, as you say, I'm glad I won't be around long enough to see what it will look like in 25 years. I hope that there is a resurgence in small businesses, but I don't think it is going to happen. If it does, they will be the bottom feeders or very specialized (custom), and if they are hugely successful, they'll be snatched up and quickly dissolved or they will become another major player.

[darling67]

We're not going anywhere.

[badbluesplayer]

The main reason I see why big stores do better than mom & pops is economy of scale. That's the primary economic reason. Whether it's dealing with suppliers or dealing with regulations, being bigger makes it easier and more economical. That goes without saying.

 

Guitar center is owned by money people. Not guitar people. Their idea is to realize the maximum current value of the company without necessarily having to worry about the long term value of the company. That tends to make them short sighted.

 

Regardless if the economy's great or everything's going to heck in a handbasket, economies of scale still apply.

 

Ever remember the day when rich guys banked their money and it got loaned to small entrepreneurs with names like Vitale and Pulaski who really broke their butts 80 hours a week. That's what the problem is. Rich guys don't do well trying to manage businesses that they don't know. They're not interested in the product. They're interest is in extracting the maximizing the value from the asset so they can be positioned to turn it over and wipe their hands of the whole thing.

 

Regardless if there's a thousand bogeymen hiding under every bed, or how far health insurance premiums are going to go down, Bain still aren't guitar people.

[BobF_]

Everybody that really knows how and why Bain and other like concerns end up owning another company, raise your hands!

 

Everybody that really believes these people are short-sighted simpletons, raise your hands!

 

Everybody that really believes Gibson and Fender are philanthropic organizations whose primary goal is to put quality instruments in the hands of the unwashed masses, raise your hands!

 

Everybody that really believes that liberals, democrats, unions are for the little guy, raise your hands!

 

Everybody that really believes that conservatives and republicans are all for starving the little guy, raise your hands!

 

 

Jeez - Wake up people. The little guys are the commodity Everything else is smoke, mirrors, distractions

[OldPlucker]

Maybe I have been lucky or unknowing; but, the managers and some of the help at the four GCs in and around Maryland (Towson, Glen Burnie, Rockville and Lancaster, PA) I have visited have always been knowledgeable and helpful. The local main street guy is nice but doesn't carry a large assortment of the leading brands. The ones that do want list prices.

 

Time to try negotiating for a vintage amp.

[cookieman15061]

Everybody that really knows how and why Bain and other like concerns end up owning another company, raise your hands!

 

Everybody that really believes these people are short-sighted simpletons, raise your hands!

 

Everybody that really believes Gibson and Fender are philanthropic organizations whose primary goal is to put quality instruments in the hands of the unwashed masses, raise your hands!

 

Everybody that really believes that liberals, democrats, unions are for the little guy, raise your hands!

 

Everybody that really believes that conservatives and republicans are all for starving the little guy, raise your hands!

 

 

Jeez - Wake up people. The little guys are the commodity Everything else is smoke, mirrors, distractions

 

I'm all outta hands!!