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Guitar Center files for bankruptcy

296 points| lisper | 5 years ago |reuters.com | reply

350 comments

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[+] S_A_P|5 years ago|reply
Guitar Center definitely shifted to "mainstream" and de-contented stores after bain got involved. Maybe that is the only real path forward, but I dont ever stop into Guitar Center anymore since they usually only have the prosumer-ish gear that Im not interested in. They also seem to have much less used gear in each store, despite the influx of 'sell yer gear here for cash' emails I get from them.

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?

[+] trentnix|5 years ago|reply
MAP loopholes (like the thomanmusic.com example you mentioned) have killed brick and mortar retail. Some of those prices you're paying from those European outlets are less than the local retailer can buy it wholesale. So you're asking your local retailer to lose money to make the sale.

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.

[+] mjh2539|5 years ago|reply
Can you please define "MAP"?
[+] nr2x|5 years ago|reply
Online it’s easy to open the chat window and just ask for the best price they can give you and get a really competitive number. I just don’t think people realize you can do that.
[+] rossjudson|5 years ago|reply
Near as I can tell, Bain loaded up Guitar Center with a pile of debt, and that debt was one of the primary reasons it went into bankruptcy.

I don't really understand how leveraged buyouts are legal, and I suppose I should learn a bit.

[+] iamthepieman|5 years ago|reply
What is MAP. That's a really hard term to search for so I'm not finding anything obviously relevant.
[+] tacitusarc|5 years ago|reply
MAP is really important for manufacturers. It is valuable to have multiple distribution channels for your product, and in the age of online retail, this is especially true. Because cultivating a distribution channel is not zero cost, if those channels are destroyed by one distributor taking a loss and undercutting everyone else, it can be highly detrimental to the manufacturer. That's because if you only have a single distribution channel they can pressure you to cut manufacturing costs through outsourcing or decreasing quality.

Source: I helped build a product to track MAP violations, and there's also a bunch of articles and books written on this stuff.

[+] ssalazar|5 years ago|reply
> They also seem to have much less used gear in each store

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.

[+] pantulis|5 years ago|reply
Regarding the Thomann competition, I am from Spain and constantly checking popular synthesizers and digital piano prices and the local shops advertise prices that are mostly on par with the german juggernaut. Thomann is great, but a decade ago they sent me a Korg synth with the printed manual in German, I guess this has changed.

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.

[+] toby|5 years ago|reply
Thank you for introducing me to this concept. I hadn't heard of MAP and ended up reading about it.

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.

[+] porknubbins|5 years ago|reply
Maybe missing some background but I’m curious what mainstream and de-contented mean in this context? I’ve heard the term prosumer referring to appliances like espresso machines, but with guitars would a $2000 Gibson be prosumer?
[+] ksk|5 years ago|reply
For most international retail products, local pricing is based in-part on the cost of service centers/staff that are required to maintain local operations.

How does it work with musical instruments?

[+] christiansakai|5 years ago|reply
Wait what? I try to get some Suhr model from Europe since some of the models aren't here in the US, but the price there is more expensive, also need the shipping cost here to US.
[+] jozzy-james|5 years ago|reply
unrelated, but kraft music is a good spot for domestic orders in my experience
[+] offtop5|5 years ago|reply
Very bad news imo.

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

[+] aczerepinski|5 years ago|reply
For me anecdotally, it’s Sweetwater that’s been killing Guitar Center, not Amazon. Like many, I bought a ton of music gear during the pandemic. At first I split my purchases between GC and Sweetwater, but over time it became clear that SW shipped more reliably, had better inventory, was quicker to respond to questions, and sent candy in every order.
[+] kampsduac|5 years ago|reply
Agree that extra online market is not good, but I am lucky and have an awesome, locally owned family shop right by my house (Guitar city / drum land in wheat ridge colorado). They are great, usually beat Guitar Center prices by ~10% via bonus gear or cash discounts, and has a more legit musician feel to the store.

If GC ends up closing, hope more local shops can benefit.

[+] busterarm|5 years ago|reply
> No one NEEDS a news 1500$ Gibson.

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.

[+] amyjess|5 years ago|reply
Unfortunately, this pandemic has made it necessary for people to not have social interactions when they go to buy things. And that goes double for a store where you expect to take your time, get a feel for things, put your hands all over the merchandise, and try things out. I feel bad for the employees who have to wipe down the demo guitars after customers use them. Ultimately, I think the only stores we'll see survive the pandemic are the ones where you just get in, grab what you need, and get out.
[+] elihu|5 years ago|reply
> 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.

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?

[+] dangerbird2|5 years ago|reply
Amazon is still pretty second-tier when it comes to instrument sales. I'd imagine that Reverb.com has hurt GC's sales much more than Amazon has: especially since it gives both new and used options for anything GC might be selling at any given time. And although I don't know a lot about sellers' relations with reverb, it makes it much easier for me to buy from non-chain music stores from around the country.
[+] ryanSrich|5 years ago|reply
Amazon is irrelevant for music gear. It’s reverb, eBay, and sweetwater that has killed Guitar Center.

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.

[+] jozzy-james|5 years ago|reply
GC/sam ash have been pretty lackluster for quite some time - other than maybe some traditional instruments. don't feel like paying out the nose for some patch cables? want some actual pro-audio level monitors? good luck finding them there. places like sweetwater/vintage king/etc fill that need for the most part, but good luck living in the radius of the actual stores...so in this case, online ordering is paramount.
[+] totalZero|5 years ago|reply
It seems like COVID-19 has been a killing blow for many companies.

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.

[+] francis_t_catte|5 years ago|reply
Every Guitar Center I've visited in the last year or two had that 'going out of business' feel. Not surprised to find out Bain Capital was involved.
[+] gokhan|5 years ago|reply
I was under the impression that lockdowns increased instrument sales, especially guitars [1]. guitarcenter.com seems to have online sales but it's not designed to preferably sell online, it seems. And somewhat neglected? For example, Fender link from New Arrivals page gives 404 [2].

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-...

[+] ev1|5 years ago|reply
Compared to Sweetwater or any of the other ones, GC's webstore is one of the worst I've ever used. Pre-COVID, GC's irlstore was generally overpriced, they refused to price match anyone, things like earplugs would be double the price of most places, and their brand/stock lineup was not very useful. It felt like you were nowhere near the prosumer/power user/pro user lines, but at the same time you were incredibly overpriced past beginner items.
[+] noitsnot|5 years ago|reply
I went to Sam Ash a few months back and surprisingly they probably had triple the amount of traffic.
[+] warent|5 years ago|reply
This doesnt surprise me in the least. Their online shopping platform is a joke. I've had multiple bad experiences, and I'll give you one as an example.

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.

[+] mark-r|5 years ago|reply
I hope they make it through to the other side. When I was looking for headphones a couple of years ago, Guitar Center was the only place I could find where I could physically compare them side by side. Online will never replace that.
[+] systemvoltage|5 years ago|reply
It's bitter sweet. It was a soulless store with underpaid and often (rightfully) rude employees. The customer base was completely asinine where I used to go shop - some dude on the drum machine for way too long. Sweet, because when I was little I didn't see any of this and it was a marvelous store to go to and it made me learn music.
[+] rubicon33|5 years ago|reply
Makes ya wonder if all of that existed when you were younger, but if the naivete, innocence, and wonder of being a child were enough to shroud you from the reality.
[+] gokhan|5 years ago|reply
Being underpaid does not legitimize being rude.
[+] dboreham|5 years ago|reply
Odd because according to a friend who works for one of the major guitar manufacturers, they are recording their best sales numbers ever thanks to quarantine instrumentalism.
[+] acwan93|5 years ago|reply
Maybe they over leveraged?
[+] patwolf|5 years ago|reply
I have a friend that owns a small mom and pop instrument store. He had to finally stop selling guitars because too many people would use his store to try them out before buying online. I can only imagine Guitar Center experiences the same problem.

In his case he was fortunately able to pivot to a very niche market and is doing quite well.

[+] 8f2ab37a-ed6c|5 years ago|reply
Wonder if we'll see Sweetwater & Musician's Friend open physical stores in the future around major hubs. Or if small boutique music stores like https://www.perfectcircuit.com/ will become more of the norm, instead of the big chains.
[+] franksvalli|5 years ago|reply
The Amazon effect, which I am guilty of supporting. I walked into a Guitar Center earlier this year and tried out some of their cheaper nylon acoustic models, but wanted to splurge on a big higher quality model, none of which they had in-store. They said they'd have to custom-order it. At that point it was easier just to order from Amazon and deliver to my address... which I did (ended up being shipped from a store in Chicago which listed on Amazon).
[+] wyclif|5 years ago|reply
I'm a Fender electric guitar guy (Telecasters, Stratocasters, Jazzmasters, Jaguars). Fender has really ramped up their mail order and online business plus customer service. So why should I go into GC where the available model choices are slim, or they have floor models that have been flogged to death with 'Stairway to Heaven' when I can order exactly what I want right off the production line at Fender and get it delivered to my door and can return it if there's any issues?
[+] racl101|5 years ago|reply
I will say this. I've gone to a guitar store, not unlike Guitar center, a couple of times with a friend who was interested in getting into it.

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.

[+] jpseawell|5 years ago|reply
I worked there once as a sales associate.

Worst job I’ve ever had.

Disclaimer: I am terrible at sales.

[+] ChuckMcM|5 years ago|reply
Not going away, just restructuring. I have fond memories of hanging out in Guitar Center. I hope that this is just a blip and not the first in a series of moves where stores selling music making gear become extinct. That has been happening to electronics making stores and it doesn't bode well for the future.
[+] geofft|5 years ago|reply
Guitar Center seems to have the Barnes & Noble problem, that is, they provide a valuable service in allowing you to browse, compare, and try out products, but they attempt to make their money from the product itself, which you can buy online from a non-brick-and-mortar store for cheaper. I've been to Guitar Center much more often than I've bought anything from there.

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?

[+] coding123|5 years ago|reply
There are a lot of companies that started to do really really well because of the pandemic. Can you imagine the pizza chains that started pumping out commercials for curbside EARLY and repeatedly? All reports are that pizza chains are doing BETTER than before. It's because people need to see that the chain is doing something specific that adapts to their needs.

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.

[+] stevenicr|5 years ago|reply
Sadly, two days ago I clicked to unsubscribe from emails from them. It was just too many the past month or so - I{ hate when companies come off that desperate - and I never know who to blame.

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.

[+] w0mbat|5 years ago|reply
Another case of Bain Capital destroying a useful store chain, like they did with Toys R Us.
[+] ChickeNES|5 years ago|reply
This has nothing to do with Bain and everything to do with retail sales being down due to COVID-19. Besides, Bain doesn't even have a controlling interest in Guitar Center anymore, they sold their controlling interest to a company called Ares Management in 2014.
[+] asdff|5 years ago|reply
I called guitar center a couple months ago about a potential repair job and the guitar center tech flat out just recommended a great local shop to take my business to instead. "If you come here you will get the work around"