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Guitar Center - Enjoy It While You Can?


Anderton

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Looks like GC is getting caught up in the same kind of woes as other brick-and-mortar retailers, which is compounded by major debt issues. If GC goes, the ripple effect through the industry will be deep and problematic...we'll see what happens. But frankly, I think they should have listened to me when I told them they should close the big stores in the smaller markets, replace them with a smaller space, and make it a more musician-friendly hangout with hooks into the local music scene (including schools) than solely a box-moving experience. The smaller stores would carry only the most popular SKUs, but also have lots of demo models with next-day delivery from the warehouse.

 

We'll see what happens...

 

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People have been predicting the demise of GC for years now. Lucky for me, there's some new mom-and-pop music stores in the area. I remember being amazed when GC opened their first store here in Dallas, and we had some pretty good music stores back then. But they had a great selection and what seemed at the time to be very low prices on gear. It was a real "candy store" destination for many years.

 

I'm not ready to write them off yet, I've strolled through stores that are struggling, (Circuit City, Best Buy, RadioShack) and they seem to have a common vibe. Large open areas on the sales floor (due to shrinking inventory), merchandise on the shelf is disorganized, and of course very few customers. Have you been to a Sears store lately? If you're not depressed already, you will be when you leave.

 

But it's not that way when I go to my local GCs. The stores seem to be well-stocked and generally well staffed, the merch is organized, the store is clean and all the lights work. I had to wait in line to make my last purchase. It's not always that busy of course, but it's not a ghost town either. People are shopping there still.

 

 

 

 

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Well, the nature of biz is to expand on other peoples' money and other peoples' real estate and then if enough buzz, go public and get your cut that way... if you're the guy holding ownership. If it all fizzles, it fizzles. Being a littler version of the big bang project doesn't really do it for anyone in the venture itself.... imo.

 

If it all falls apart, someone else still standing just takes up some of the slack. If that route is just too small a pipeline for xyz manufacturer, they go a new model by opening more company stores...or..... go back to the original model of pipelining to teeny tiny stores.... which ain't gonna happen.

 

What really happens when things at the top fizzle is that other hungry entrepreneurial, capital-savvy youngins step in to try a new set of behemoth projects. Like....well what if Mars Music had actually been successful at that moment in time? Doesn't matter. If GC goes under, Elon Musk or (plug in a name) simply jumps in to do the same thing because its a pet project (he is a metal guy in his precious spare time right?) and.... hey... in a way.... it's cool to open 1000 stores, knowing that you don't actually own anything in the store because the manufacturers keep title, you have unlimited returns.. and 8 years to pay any particular invoice. No down side for any one of the typical billionaires who might read of GC collapse and say hmmm......the real estate alone will be worth it.... ain't gonna open in any strip mall either. Profit?... Plenty....ala the old pay to play for the manufacturer... which is sort of a reverse way it works now anyhow.

 

At that point, a savvy guy opening 10000000 stores at once can easily say...."hey Fender.... you wanna be in my 10000000 stores? Here's my price of admission (whatever the terms). At that point, no manufacturer is gonna blink. They're in. What else would they do? Or, they open their own megastores with their own single line.... which won't work on a mega scale and ain't gonna happen. Except Carvin.

 

Regardless, if GC goes under, something else comes along. Or even if Amazon becomes the only model in town (of course supplied direct by the manufacturers and fulfilled by Amazon.... "here let me drone your Les Paul to you by 2pm.... oh you didn't like the finish on that?.... well let me drone another to you at 4pm..).., you get an appearance of two or three NAMOS shows appearing a year. What is NAMOS? Why, the "National Association of Musicians Off the Street". Paying $85 to get in to a for-the-public show that EVERY manufacturer on earth exhibits at so that guys can play that fuzzbox and then order it from Amazon.... or better yet.... pay with their phone and walk out with it now.

 

I don't really see an entrepreneur opening 100000 brick/mortar stores but I forsee a lot of guys considering it if the slack is there. It's all a matter of the core profit potential at the real estate level and ...not having to pay for stock very fast or at all :) like a consignment deal.

 

 

There's always a solution somewhere. Whatever happens with any industry from here on out, I firmly believe the real winners are UPS and FedEx. And Bob's drones.

 

 

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I don't really see an entrepreneur opening 100000 brick/mortar stores but I forsee a lot of guys considering it if the slack is there. It's all a matter of the core profit potential at the real estate level and ...not having to pay for stock very fast or at all :) like a consignment deal.

 

 

Are you saying that big retail is a safe investment because of the real estate? The vast majority of retail outlets lease the premises, don't own them. I googled up "Guitar Center Financial Statements" and in a minute was able to peruse their 2011 10-K SEC report - it says

 

The initial lease terms for our Guitar Center stores typically range from 10 to 15 years and allow us to renew for two additional five-year terms. The initial lease terms for our Music & Arts stores typically range from 5 to 10 years and allow us to renew for one additional five-year term. Most of the leases require us to pay property tax, utilities, normal repairs, common area maintenance, and insurance expenses.

 

As of March 22, 2012, we operated 225 Guitar Center stores consisting of approximately 3.4 million square feet, including approximately 3.3 million square feet of leased space and approximately 54,000 square feet of owned space. As of March 22, 2012, we operated 103 Music & Arts stores consisting of approximately 325,000 square feet, all of which is leased.

 

Real estate for Corporate and warehousing is a mix of owned and leased. But the stores - almost all leased, and add up to a ton of "down the drain" rent paid, no upside unless sales are sufficient to cover all the bases and then some.

 

Nat

 

 

 

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Are you saying that big retail is a safe investment because of the real estate? The vast majority of retail outlets lease the premises, don't own them. I googled up "Guitar Center Financial Statements" and in a minute was able to peruse their 2011 10-K SEC report - it says

 

The initial lease terms for our Guitar Center stores typically range from 10 to 15 years and allow us to renew for two additional five-year terms. The initial lease terms for our Music & Arts stores typically range from 5 to 10 years and allow us to renew for one additional five-year term. Most of the leases require us to pay property tax, utilities, normal repairs, common area maintenance, and insurance expenses.

 

As of March 22, 2012, we operated 225 Guitar Center stores consisting of approximately 3.4 million square feet, including approximately 3.3 million square feet of leased space and approximately 54,000 square feet of owned space. As of March 22, 2012, we operated 103 Music & Arts stores consisting of approximately 325,000 square feet, all of which is leased.

 

Real estate for Corporate and warehousing is a mix of owned and leased. But the stores - almost all leased, and add up to a ton of "down the drain" rent paid, no upside unless sales are sufficient to cover all the bases and then some.

 

Nat

 

 

 

 

 

Heck no, real estate is not a saving factor for GC. It might be for a bunch (or at least some) of Sears locations as whats-his-name (the guy holding all the loans) bought the land for some standalones and uses that for security when.....er...if... he pulls the plug on the operation after selling off all the other goodies (craftsman etc).

 

In general, I don't believe in brick and mortar for huge conglomerates any more. I don't believe in malls either. I was just spouting a thought that SOME future entrepreneurs may buy big patches of land, and then plunk an operation(s) that way in order to own the entire egg. It certainly happens now... as it always has. A deep-pocket type looking for a fun journey in the neighborhood of his/her hobby.....rather than a debt acquisition type guy/group. But that's just me spouting off-the-top-of-my-head stuff.

 

I was reading some article yesterday about the GC story and it ended with the line "nobody buys a $1500 guitar online". Intimating that a $1500 purchase is tied to a trip into a store.

 

That may well be. But I'll tell ya, except for about 3 situations where I was already in a store in the 1970s, I have ALWAYS bought my $1500, $2500, $4000 guitars online, over the phone, site unseen, ship it to me next day, "I''m sure I'll like it". And I'm not the only one who does this.

 

Back in the pre-internet days, I decided I wanted two different Gretsch White Falcon models one week. I called around the country (there used to be these things called music store ads in Keyboard or whatever) and found one store in I dunno, West Virginia or somewhere, that had the double-cutaway I wanted for a couple grand. "Is it clean?"...."Yep"....."Has it been in the showroom?". Nope. "Ship it to me, here's my cc".

 

Did the same thing with the second Falcon via a store in New York that had it.

 

I admit that I'm not super picky about my guitars (what's that blemish under the pickguard.... why is there a hairline mark in the finish when I hold the guitar up at 26 degree angle under a desk lamp at 11pm....).

 

I dunno how many guitars I've ordered and had shipped from Sweetwater under that basis in recent years.

 

The purchase of a $1500 guitar certainly does not require a trip to a store by 100% of the population.

 

I'm in LA and actually jazzed about someday ordering a nice guitar from Amazon and hearing a knock at my door 2 hours later with the package. That'll be fun.

 

Brick and mortar is kinda boring now that I think about it. I even often have groceries delivered from ordering online. I still buy clothes in stores, but maybe that'll eventually change. Let's just close every brick/mortar everything and build apartments.

 

I forsee a new slogan from Amazon..."All your shopping are belong to us"

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I try to avoid GC as much as I can.

 

If my local Ma & Pa music store can get it, I'll use them. Even if they have to order it. I do it for a couple of reasons:

 

1) My band is a small business, and I feel small businesses should support other small businesses or else we have no right to complain when the local club brings in out of town acts. Do unto others.

 

2) The extra services provided by a good M&P store are worth any extra money you may pay (and most M&P stores know what the gear sells for on the 'net, so they remain competitive).

 

For example:

 

My local M&P owner gave me his cell phone number and said if anything fails on the job, no matter what time it is, call him and he will open the store and bring me something to finish the gig with.

 

Another:

 

I wasn't happy with the way the SM58 made my sax sound. The M&P owner went to the studio in the rear, gave me a Sennheiser 421 and told me to try it out. No deposit, no credit card, no security. --- I loved it. --- He ordered a new one for me, told me to keep the loaner until it arrived, and when I bought the new one, I checked with Sam Ash, and found that I paid a few dollars less than if I would have ordered it and had it shipped to me.

 

There are many others.

 

I don't wish GC any ill, but they seldom get any of my money.

 

Insights and incites by Notes

 

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There has been recurrent buzz about this for years, starting when Mitt Romneys company owned their holding company for a while. We'll see...

 

FWIW, I bought both of my most expensive guitars online, sight unseen. One was a new Godin LGsX (hexaphonic piezo synth pickup plus dual humbuckers) from a Florida music store. Because I called them, they threw in a AAA flame wood model at the price of the AA model.

 

The other is a 1991 ES355 Gibson Lucille model bought used from ebay. My favorite guitar ever!

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I bought two Parkers on-line. I tried my local M&P shop first, but he told me he couldn't handle them, even if I went through the factory. Since one was a custom model, I went through the factory and chose Sweetwater as the local dealer. US Music was protecting their dealers, which is a common and ethical business practice.

 

And I'm definitely not disappointed. I hardly ever touch my Gibson, Epi, or LTD anymore.

 

But I do remember the days when Local M&P shops handled major brands of guitars and saxes (Gibson, Fender, Selmer, etc.) but the "Big Box" and E-tailers seem to have cornered the market on that. Things change so my buying habits change.

 

Insights and incites by Notes

 

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I tend to not like buying online, but I'm probably more picky about things like neck size and shape than a lot of players - I really want to make sure I'm going to be happy with the instrument before I commit to buy it, but I have bought some instruments online. One in particular I really lucked out with, and that was my '01 Casino. I took a chance on a Ebay BIN and it turned out to be one of my favorite guitars.

 

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I'd prefer to try before I buy.

 

Many years ago I bought a new Selmer Mark VI sax - this was top of the line and today as classic as a pre CBS Strat.

 

There were 3 in the store. I tried all 3 in front of a tuner. No sax has perfect intonation. All 3 had close serial numbers and one had much better intonation than the others, which means less lip adjustment on each not to play it in tune. I bought that one.

 

I no longer have that luxury. I'd have to drive about 3 hours to Miami to find a new Selmer top-of-the-line and they would only have one in stock.

 

When Leilani bought her Parker PM10 it was at a small SamAsh store. By the time I wanted a Parker, the only way to get one was via Internet order. So I couldn't try it out before I bought. I did get one I liked though and bought a second custom job. Both play identical, except for the pickup configuration and sound they are essentially the same guitar. But I guess when you have robots cutting the parts out, that's how it is.

 

My newest sax was straight from the manufacturer, no middle man. Again a custom job. But I bought it with the condition that if the intonation wasn't good, I could return it with no restocking fee. It was a choice between two boutique manufacturers with excellent reputations on the SOTW (Sax On The Web) forum, and I chose the one that offered the guarantee. I love the horn and kept it.

 

I play music for a living, and my instruments are my tools. I have to like my tools or I won't do my job as well,

 

I suppose if I wanted to be "Normal" and play Gibson or Fender, a GC would be the place to look. And although I have nothing against GIbson or Fender, what I was looking for wasn't offered by either at the time.

 

The Parker is light weight (5lbs) which is important because I switch instruments all night and may pick up and put down the guitar 20-30 times per gig. It is comfortable, like wearing the guitar instead of holding it. It has no neck dive or rise, take my hands off and it stays put. It has a single volume knob near my picking hand so even if I'm using more than one pickup, I can blend with the band or pump up for a solo. It has a 25.5" scale and a 14" Radius which is very comfortable for my fingers. And it has other features that are extra and delightful (the previous ones were the necessity).

 

If Fender made a 5lb Strat with a 14" radius neck, I might have gone that way. Then I could have purchased it at a local dealer.

 

Notes

 

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My attitude about "try before you buy" was modified after Gibson started Plekng their guitars. The first time I pulled a Pleked guitar from its case, I was kinda blown away that I didn't need to do any setup. Sweetwater has a Plek machine...I know they'll Plek guitars but don't know if they also Plek guitars as a matter of course. But the bottom line is as manufacturing processes become more consistent, there's less risk in getting a random "lemon."

 

However like Notes, I also try to support the Mom and Pop stores as much as possible, and local merchants in general. For example I try to do as much banking as possible with local banks, not scum like Wells Fargo or Chase.

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That's really interesting. Never knew about Plek. So every Gibson gets the treatment before shipping? My commitment to online is now even higher. Although I do like my various local Guitar-Center-3d-holographic-catalogues that let me feel like I'm actually in an online store trying out stuff.

 

As to banking, I use both Wells and Chase and they don't bother me. Their windows driven atm machines are also getting pretty cool features-wise.

 

The last time I kept track of banks that were actually local was 1967 (and I think all the ones I knew then were absorbed by larger banks eventually). My mother still uses a local bank I think. Banks can't rip me off any more than a gas station can. Like that scum Chevron :)

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My attitude about "try before you buy" was modified after Gibson started Plekng their guitars. The first time I pulled a Pleked guitar from its case, I was kinda blown away that I didn't need to do any setup. Sweetwater has a Plek machine...I know they'll Plek guitars but don't know if they also Plek guitars as a matter of course. But the bottom line is as manufacturing processes become more consistent, there's less risk in getting a random "lemon."

 

However like Notes, I also try to support the Mom and Pop stores as much as possible, and local merchants in general. For example I try to do as much banking as possible with local banks, not scum like Wells Fargo or Chase.

 

 

I live in a small area, and the small Mom and Pop shops in the area do not carry instruments that I would purchase. One is a Fender dealer too. I order instruments online. I have yet to return anything, as I'm not an impulse buyer. My last Fender guitar was purchased back in the late 80's, although I did buy a few Gretsch guitars from there professional collection over the years. My last Gibson was purchased a few weeks ago.

 

By the time I'm ready to lay down the cash, I know what I want..

 

I tend to buy picks by the gross, and string in Pro-packs sets of 10.

 

Sweetwater, Musician's Friend, Wildwood, 8th Street, Sam Ash and other online retailers, to me are great places to do business. I have purchased many amps from one private retailer that is an hour and 15 minutes away. So for me it's not all or nothing. I have purchased one guitar at the GC in my lifetime.

 

 

My banking is mostly done at a small local bank that has a few branches in the area. I can walk in that bank on a Saturday morning and they know me and my wife by name.

 

 

 

 

 

 

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The reason why M&P stores no longer have a good selection of instruments to try before you buy is too many people are saving a few pennies at the big box or e-tail store.

 

I'm old enough to remember when your local music store had scores of guitars on the wall, and could order anything you want.

 

When I bought my Selmer Mark VI sax there were 3 in the M&P store with close serial numbers. There is not a store in a half days drive that now carries one top of the line sax at all.

 

Basically, people have traded the excellent extra services most good M&P stores used to offer for a chance to save a couple of bucks. During the life of an instrument, that couple of bucks is very insignificant.

 

But it's not only music. The world gets more and more corporate every year.

 

So we have no choice but to go with the flow.

 

Insights and incites by Notes

 

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The reason why M&P stores no longer have a good selection of instruments to try before you buy is too many people are saving a few pennies at the big box or e-tail store.

 

I'm old enough to remember when your local music store had scores of guitars on the wall, and could order anything you want.

 

When I bought my Selmer Mark VI sax there were 3 in the M&P store with close serial numbers. There is not a store in a half days drive that now carries one top of the line sax at all.

 

Basically, people have traded the excellent extra services most good M&P stores used to offer for a chance to save a couple of bucks. During the life of an instrument, that couple of bucks is very insignificant.

 

But it's not only music. The world gets more and more corporate every year.

 

So we have no choice but to go with the flow.

 

Insights and incites by Notes

 

 

I hear ya.

 

I don't play sax, but it's the same with guitars. You walk into a small shop these days and it's all import low end instruments.

 

My older Gibson and one Fender strat came from a small shop. The guy sold Fender, Gibson (and Heritage), Rickenbacker, Ampeg, Marshall gear out of his garage. He did have some lower end stuff too, but not much.

 

I ordered an SG Standard, a Les Paul standard and Marshall JCM 800.

 

 

 

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My banking is mostly done at a small local bank that has a few branches in the area. I can walk in that bank on a Saturday morning and they know me and my wife by name.

 

 

Do they give you extra money? I don't want anyone at a bank knowing my name. I'd feel creepy.

 

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My first guitar was a used Gibson ES-330.

 

But the shop had new GIbsons, Fenders and Gretchs all along the wall, and it was just one space deep in a shopping center.

 

The local M&P shop that I now use, at once had a double space in a nice shopping center. He was growing his business and wanted to hand Epiphones. Gibson required that he carried a large number of guitars and required a huge mega-thousand dollar down payment.

 

They held his money for over a year and a half while behind his back they were negotiating with a Guitar Center store who wanted to build a new one about 2 miles away. Then they awarded the franchise to GC and held his money another 6 months before returning it.

 

Now his store is a single bay in a smaller shopping center, instead of hundreds of guitars he now hangs a dozen or so, the drums are gone, the amps are gone, the keyboards are gone and he makes most of his living now by giving lessons.

 

He doesn't even carry a good selection of strings anymore, because people drive to GC to save one dollar on a 3 pack.

 

I still support him in any way I can.

 

Another small store in the next town south was a big store with pianos/organs and a small one slot guitar oriented music store on the side. When the owner retired, the musicians who worked in the guitar store bought it. Little did they know that 2 years later, after doing great business for those 2 years that same GC opened up. They are no longer in business.

 

The economic system of the US is quickly going towards Corporationalism - and instead of people owning their own businesses, they are just becoming wage slaves to faceless corporations.

 

Insights and incites by Notes

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I mostly buy online (Musicians Friend ) too. My closest music store is 35 miles away. It's a great place and I go in there when I'm going by the place, but it's just too far to drive to get strings or hangout. I'm in the boondocks and looking at stuff online has replaced Saturday mornings in the music store...just like hanging out with musicians online has replaced hanging out with musicians in person. It's the world we live in. Bad for personal connections..great for buying strings and pedals at midnight in my jammies. :0

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Do they give you extra money? I don't want anyone at a bank knowing my name. I'd feel creepy.

 

 

I find it advantageous if you're known as a regular customer. They notarize things for free, if I ask they can monitor my debit card activity when I'm traveling, they're great about foreign currency exchange, etc. But, it's a local bank so it's just part of the deal that they're friendly.

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I go to my local GC..try out what I am interested in purchasing...I will usually 'throw them a bone', buy a set of strings, a tuner, strap, etc.

Then I will go home..order what I just tested from Musicians Friend.. still a subsidiary of GC I believe...

...

free delivery, .6-18 months free financing if you have good credit and qualify for their platinum card... no sales tax. I space my payments to avoid any credit fees..

if I bought from my local GC store..tack on an additional 7%..

 

big savings...

 

easy return..if you want to return something...(only had a problem 2x in 17 years) .they will offer you a good discount to make it right...20% to 30 % rather then restock....

 

 

I am speaking from my experience, as a long time customer...with an excellent credit rating...ymmv.

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