CF Martins' business policies and small shops...

[Berkleo]

I subscribe to the newsletter of a small shop where I bought my H&D. It's a great little place that stayed open well after closing on a Saturday night as I tried out a bunch of guitars. It's a friendly, no pressure atmosphere and I should note what brought me in the door in the first place was two 000-28ec's that I'd wanted to check out....

So this email was in my inbox this morning:

 

 

Dear Friends of Maple Leaf Music, It is with great sadness that I wanted to let you know that we have dropped our CF Martin dealership. As a small store, we are not able to compete price-wise with the deeply discounted prices at the BIG BOX STORES and at many mail-order outlets. But the crowning blow from the Martin Company is its minimum stocking policy which requires us to carry too many guitar models that we simply are not able to sell. Having been a Martin dealer since the inception of Maple Leaf Music in August of 1979, this was a difficult decision for us to make. But with the current direction of Martins' business policies, we felt we had no choice in the matter. With display space at a premium, we have decided to concentrate on carrying more guitars from our five major dealers- Froggy Bottom, Collings, Goodall, Huss and Dalton, and Bourgeois. We intend to emphasize the standard models from these companies, as well as ordering more unusual and hard to find models that we customize as the inspiration arises. We will continue to sell used Martins that we either buy outright or take on trade. With regret and sorrow at the end of a long tradition, Kate, Aaron and Christian Maple Leaf Music 23 Elliot St. Brattleboro, Vermont 05301 May 18, 2007

 

 

 

and am I naive to think how freakin' sad that something else couldn't have been worked out? Eventually will you have to go to a GC or Sam Ash for a Martin?

[DonK]

Well, I won't call you naive , maybe just wistful...for the good old days.

 

There are two things at issue regarding your store. The first isn't one Martin can do much about, at least not without shooting itself in the foot. On the whole, people tend to buy where they can get the best price, all other things PERCEIVED as being equal (I didn't say they actually were). That's human nature, and the more choices people have, the more that tendency is made obvious. 50 years ago people shopped at local stores on main street, where price competition was more limited, or they bought through catalog mail order houses. In today's information age, we can see the price of anything from multiple sources online, and our generally efficient delivery systems make it possible to buy from almost anywhere. Even big-box retailers have to compete with online merchants. I regularly notice that for smaller office electronics, Amazon sells stuff at 30% - 50% than my local Staples or Office Depot, and I can have it at my door two days later with free shipping. I bought a San Disk SD card for $24 on Amazon a few weeks ago that Staples was selling for $49 at their stores. Now, if you have no idea about SD cards except that your camera needs one, you'll probably head for Staples and pay $49, but many people won't.

 

So, Martin wants to sell guitars. They don't sell directly to the public, they sell to dealers. Dealers offer their customers a choice of guitars. If Martin wants their offerings to be competitive, they have give the stores the flexibility to price the guitars according to what the stores' customer traffic demands. Sure, Martin could strictly require their dealers to sell at a specific price, which would protect smaller retailers against price competition, but Martin doesn't offer a niche product the way, say, Apple Computer (or Huss & Dalton) does, so they're going to lose sales to other makers if people won't buy at the prices they set. Martin is in business to sell guitars, not make dealers happy (unless it helps them sell more guitars). In the end, it's kind of silly to wax sentimental, as some people do, about how business should be more altruistic. I sell my labor at the highest amount I can get for it, don't you?

 

We can go on and on about getting better service at local stores, but buyers have voted with their dollars and their feet, and for the most part what they've consistently said is, "we don't see the service difference, or we don't care; it's not important enough." Personally, I tend to feel that way myself about most products, since most consumer products are more reliable than they were when we counted on small local stores to take care of us. Consider this: a VCR that would have cost at least $400 twenty-five years ago was a throwaway item at $50 or less when DVD's basically knocked them out of the market. Now the DVD player is a $50 throwaway item (even if you buy a $250 model, you'll probably replace it rather than fix it if it fails).

 

The minimum stocking thing is another matter of staying competitive. It costs money to service a dealer. Every dealer has a sales rep, has to be furnished with marketing materials and signage, gets co-op advertising dollars, etc. Think of a bank: they guy depositing a $500 paycheck every week and carrying an average balance of $250 requires nearly as much teller service and overhead as a business depositing $10,000 of receipts every day and carrying an average balance of $5,000: which type of customer would you prefer? BTW, sales reps hate having to deal with low-volume customers, because it sucks up their time without providing a commensurate benefit. A waiter at a restaurant would rather wait on a party of four that spends $200 on dinner than a party of six that spends $100.

 

I don't know that we're going to end up with GC and Sam Ash as our only choices. We have a large, local store (huge actually) called Chuck Levin's that regularly sells at 10% - 20% below GC (there are at least 7 of those in the Washington-Baltimore metro area). I almost never go to GC; haven't been there in at least a year. I actually bought my EJ Strat a a different local dealer for $1,329 when Chuck's was asking $1,429 and GC wanted $1,629. Chuck's does HUGE volume; I'd be shocked if any two of the GC's combined even come close.