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Bain Capital and GuitarCenter - is the end coming soon?


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I have no idea if this is accurate or not (so yeah, I'm spreading unsubstantiated rumors, fair enough) but was listening to the radio today, and a caller called in talking about Guitar Center being owned by Bain (it was a liberal AM show) and the caller seemed informative enough. He said GC was about $1.7 billion in debt from being owned by Bain, and that some of the big companies like Fender and Ibanez were starting to pull out because they were not being paid by GC. And at some point, the chain would just go under. No idea if this is true or not, probably not too hard to find out how much GC is in debt. I know this website is owned by the GC conglomerate, so there's that too.

 

Anyone know if this is true, and whether or not Fender, etc. are going to pull out of GC in the near future? I don't think it's happened yet, but it could be on the near horizon apparently.

 

Or maybe this is all some liberal Romney bashing lie, who knows.

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I would say that makes very little sense.

 

While it's true Guitar Center is owned by Bain Fender and Ibanez both rely heavily on GC and its other companies (MF, M123, etc...) to move their product.

 

I know that Fender is not as profitable as many may have thought due to their recent financial disclosure but if they were to stop selling to the biggest retail outlet they have I can not imagine it would be a good move.

 

I would say it was (under informed) Romney bashing, as he is no longer with Bain Capital.

 

For the people who want a Mom and Pop revival, I have to ask - were you around before GC? While there is some romantic notion of the days of small town music stores in 90% of the ones I remember they were way worse then GC.

 

I remember the days of seeing 4 strats (black, white, red, burst) and maybe 1 Tele (maybe!) on the wall and a couple LPs. Want a special color? No problem - 20% down special order and no returns. Usually these places were staffed with people who were much bigger douchebags then the typical moron that works at GC. Strings were $9.00 a set at one place and most of them were not open on Sunday or Holidays.

 

There were some exceptions - and many of the stores that were exceptions are still open today and doing well.

 

I don't like GC, but I can remember being excited when they came to my town in 93/94.

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Can you imagine GC going under? Talk about a mom and pop revival.
:eek:



i wouldnt be able to afford to buy gear anymore if GC went under. i think a lot of people would be affected the same way, even if indirectly. w/o gc setting the lowest price points (most of the time) i bet the little stores and even sam ash would go {censored}ing crazy with very high prices.

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I know that Fender is not as profitable as many may have thought due to their recent financial disclosure but if they were to stop selling to the biggest retail outlet they have I can not imagine it would be a good move.

 

 

I get where you are coming from... but if GC isn't paying Fender, Fender isn't really "selling" them anything. They certainly can't give away millions of dollars of guitars to a company who isn't paying for them.

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There are a lot of good alternative to GC these days though, mostly online shops, like Sweetwater, American Musical Supply, PGS, etc. Plus their own MF and Music123. I never really understood why both MF and M123 both exist, since they're the same company (or maybe they aren't anymore).

 

And if Fender etc., are owed money - and again I don't know this to be true, just saying "if" they're better off pulling out than staying in, just common business sense really. Unless GC can pay up their bill.

 

I know my local shop was hurt when Gibson pulled out because they didn't meet the minimum $100k order, so basically many of the small m&p shops were hurt because they no longer had access to the same gear to sell. Understandably it's easier for the manufacturers to deal with less stores - all they have to deal with are a couple of distributors to sell a lot of product, instead of dealing with hundreds of small shops that sell not very much. Until the GC of the world decide not to pay you, and then you're pretty stuck. Sort of like Walmart, they can sell a lot of your goods, but then they have you over a barrel as you don't have any other distribution set up.

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i wouldnt be able to afford to buy gear anymore if GC went under. i think a lot of people would be affected the same way, even if indirectly. w/o gc setting the lowest price points (most of the time) i bet the little stores and even sam ash would go {censored}ing crazy with very high prices.

 

 

you greedy capitalist pig!

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As far as I know, the knock on Bain is that they buy up companies that aren't doing so well and totally streamline (or gut them) as much as possible to make sure they turn a profit so they can sell them off at a profit, but the way the do it is more of a short term fix and doesn't set the company up for sustaining itself. Theoretically, there's no way of telling that those companies wouldn't have went under anyhow, but I guess it's disingenuous for Romney to say he's creating jobs because it's different than being an entrepenuer or a venture capitalist which is what the attacks on him are leveling more or less.

 

As far as Guitar Center goes, it's hard to say what being a Bain company would really mean. What costs could Guitar Center really cut? Do they really even have comparable competition putting the heat on them? Their workers don't get paid much, they don't actually make the stuff in their stores. All they could really do is either jack up prices or try to stop selling a bunch of products that aren't profitable?

 

I really think of GC goes under it's probably not because of Bain, but ultimately because their niche as a brick and mortar store is disappearing. The same thing is happening to Best Buy and Barnes and Noble too, but at different speeds.

 

TL;DR It's the internet's fault, probably not Romney or Bain although they wouldn't have been the solution in any case if the goal was to keep GC open at all costs.

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I remember the days of seeing 4 strats (black, white, red, burst) and maybe 1 Tele (maybe!) on the wall and a couple LPs. Want a special color? No problem - 20% down special order and no returns. Usually these places were staffed with people who were much bigger douchebags then the typical moron that works at GC. Strings were $9.00 a set at one place and most of them were not open on Sunday or Holidays.

 

 

Holy {censored}, you mean you couldn't shop every day of the week? How did you cope?

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Holy {censored}, you mean you couldn't shop every day of the week? How did you cope?

 

 

Honestly? There were catalogs - MF, AMS, Veheman's, etc... and there was a big classified ad book that cost $1.50. I would buy that every week.

 

If you were not in a fairly large city most stores really had very little when compared even to a poorly stocked Guitar Center.

 

I remember when I would go to one of the larger cities near me when I was growing up and they would have Fender and Gibson that my local dealer didn't ever have (only seen in Frontline!) and there would be pedals and amp brands you may see on MTV or at a show but wouldn't see in the store.

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i grew up in a town with a {censored}load of music stores, so maybe my perspective is skewed. but i remember the days before guitar center and the prices certainly weren't higher. i mean, they were way cheaper but that was a long time ago, so adjusted for inflation they were probably similar. plenty of shops had great selection on a lot of {censored} and it was awesome. you could make a day og going around to different shops and seeing all the cool {censored} they would have looking for something to spend your money on. the employees were generally total {censored}ing douchebags, but no worse than the morons at guitar center. post gc, a lot of those stores shrank, had less and less stuff, and finally went out of business. even some of the really good ones.

 

guitar center is great when you're on tour and need an easy to find, easy to get to place for everyone to get some strings and pics and drum heads and cables and replace some broken part. they always have a store in some {censored}ty strip mall right off the highway. but other than that, i don't think they've done some great service to musicians or made prices lower or anything. i'd be happy to see them go, although i know that with the internet we won't return to the same situation we had before.

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Honestly? There were catalogs - MF, AMS, Veheman's, etc... and there was a big classified ad book that cost $1.50. I would buy that every week.


If you were not in a fairly large city most stores really had very little when compared even to a poorly stocked Guitar Center.


I remember when I would go to one of the larger cities near me when I was growing up and they would have Fender and Gibson that my local dealer didn't ever have (only seen in Frontline!) and there would be pedals and amp brands you may see on MTV or at a show but wouldn't see in the store.



I remember it well. Relying on mail order ruled :) I miss those days. More choice and more opportunity to spend/waste cash isn't good for humans.

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The days of the larger independent store are over with I fear. I remember stores like Whittier Music and Hanish Music here in SoCA when I was a teenager. Good stores - and as big as a typical GC... but you don't see many of those sized stores anymore. There are a few small mom & pop places around still, but many of those are gone as well. It's hard for them to compete with the Internet. I worked in stores when I was a teenager, and I know the drill. I remember asking one store owner what their policies on discounts were and he showed me the tag on a Tele, and said "see that?" That's the retail price son - that's what Fender says we should sell them for, and that's what we sell 'em for!" Of course, with a Guitar Center a couple of miles away and other larger stores nearby - all of which offerend discounts off the MSRP, stuff tended to sit on the wall in this place for a LONG time. :lol:

 

I don't have all the insider info on GC's corporate finances. I do know they're owned by Bain, but I believe they were a profitable company when Bain purchased it, so I don't think it was with the intention of buying it, gutting it and breaking it up and profiting off that. In fact, they've been adding new stores regularly, and I don't think they'd be doing so if that was their intention. :idk:

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GC probably has the same problem Best Buy does. Folks drop in, test potential gear purchases, make a decision, then buy online at the lowest price.

 

 

 

Probably some of that. But GC has an online store too. If the point of Bain is to make them more efficient, I do wonder why they have 3 different online stores available, with basically the same content and same prices? I would've streamlined that by now, but what do I know.

 

It is nice though to walk into a shop and feel the instrument first. If you buy it online, even the same guitar, you aren't getting the same thing. Maybe for pedals and strings that's fine, but not quite as good as feeling an actual guitar, although I've done both myself with pretty good results both ways.

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I don't have all the insider info on GC's corporate finances. I do know they're owned by Bain, but I believe they were a profitable company when Bain purchased it, so I don't think it was with the intention of buying it, gutting it and breaking it up and profiting off that. In fact, they've been adding new stores regularly, and I don't think they'd be doing so if that was their intention.
:idk:

 

Apparently they were in debt when Bain bought them. I remember Steve and Barry's strategy was contingent on getting one time payouts from landlords at malls/strip malls for opening new stores, they expanded like wildfire and then collapsed. Though, it's a totally different kind of product and ideology from Guitar Center I guess to me how totally {censored}ed up and convoluted business can be so nothing surprises me :lol:

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My guess is the combined market share of MF/GC/M123 is worth more than trying to herd the existing customer base into one storefront. If Music123 closed up shop those once loyal customers might end up at Sweetwater or AMS rather than MF or GC. I know nothing of MF's operations but if the call centers and warehouses are the same for all entities the only extra costs of maintaining all three are the websites.

 

I know what you mean about buying a guitar online. I want to play a bunch of them and choose the guitar I gel with the most. That said I have bought used guitars from guys across the country with only a few pictures to go on.

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Bain bought GC in 2007, after GC hired Goldman Sachs to find a buyer for them. Way back then there were bloggers predicting that this would mean the demise of GC. It hasn't so far. That's not really their business model. They buy companies that they think aren't living up to their profit potential and they make them more profitable. They don't generally try to liquidate them.

Bain has purchased other companies that are still around, some that they still own, including Toys R Us, Sealy mattress, Burger King, and Dominos Pizza.

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Brick and mortar is over. So over. I hate it, too, but too bad, so sad.

#1) Too many people on the payroll, any business' largest expense.

#2) Too much real estate, which never goes down in price, except when it does, and then it's a "huge loss", no longer a "good investment".

#3) Too much inventory on hand, getting more and more beat up every day.

There's really no longer any upside for maintaining a brick and mortar presence, except to try to please the dinosaurs.

The people profiting from all this will be the shipping companies. Buy, try, and return is the future. Look for even longer exchange policies, and automatic return labels included in your shipment. UPS and FedEx already offer these.

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Brick and mortar is over. So over. I hate it, too, but too bad, so sad.

#1) Too many people on the payroll, any business' largest expense.

#2) Too much real estate, which never goes down in price, except when it does, and then it's a "huge loss", no longer a "good investment".

#3) Too much inventory on hand, getting more and more beat up every day.

There's really no longer any upside for maintaining a brick and mortar presence, except to try to please the dinosaurs.

The people profiting from all this will be the shipping companies. Buy, try, and return is the future. Look for even longer exchange policies, and automatic return labels included in your shipment. UPS and FedEx already offer these.

 

 

Was just coming into say this.. Really sucks I personally don't like buying a guitars off internet. To many times I've gotten guitar and it wasn't right. I wanna play them hear them before I purchase them.

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Come to Portland.

 

You have to drive a ways to get to a Guitar Center... both are out towards the burbs... and there are dozens of guitar / instrument stores where you can find cool deals and unique bits of gear you might not even find on ebay / craigslist very easily.

 

Heck. ProGuitarShop opened a store in the fancy part of town... Centaur Guitar has been around forever... Old Town Music expanded into a larger location... and Trade Up always has cool deals with its rotating stock of used gear.

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