Build too many stores too fast full of this, and you could wind up in debt. Guitar Center could face a new owner and restructuring. Photo (CC-BY) Judi Stevenson / Flickr: chascar.

Build too many stores too fast full of this, and you could wind up in debt. Guitar Center could face a new owner and restructuring. Photo (CC-BY) Judi Stevenson / Flickr: chascar.

While the biggest US name in pro audio made headlines last week with uncertain financial news, so, too, did the biggest US name in music retail.

Yes, we were so caught up watching Avid, makers of Pro Tools, Sibelius, and Media Composer, as they were dropped from NASDAQ and delayed earnings reports once again, we missed the latest on Guitar Center. The big box music giant may not be able to keep up with its debt. The Wall Street Journal [paywall] reports that the retailer’s largest creditor is in “advanced talks” with owner Bain Capital to take over the company. (That’s the same Bain Capital made famous by former Presidential hopeful Mitt Romney, yes.)

One element in common: both companies saw aggressive growth plans curtailed at least partly by the economic crisis. Guitar Center ran into trouble shortly after acquisition by Bain in 2007, growing head-first into a slowing US retail economy. Eric Garland, a writer, consultant, and “future trend analyst,” has some harsh words for the music store on his blog on the “transformational economy”:

I said that the debt-laden big box model was not built for the long term. I stand by my assessment. The events are playing out to make my point for me … In the mean time, you should think about the future of local retail – the kind that doesn’t end up billions in debt. It may have quite a future.

That seems a fairly black-and-white view. The question is whether the chain’s debt problems owe to the big box model fundamentally, or to a growth plan unhinged from reality.

Here’s the situation. Guitar Center has amassed some US$1.6 billion in debt, “much of it stemming from Bain’s $2.1 billion leveraged buyout of the company in 2007,” according to the Wall Street Journal. The talks would convert that debt into ownership by the creditor.

Note the numbers there. A large portion of the debt in Guitar Center came from the original, highly-leveraged buyout. In other words, you may be able to draw more conclusions about Bain from what’s happened than you would about the music instruments industry or big box retail in general.

There could be serious implications for music manufacturers, anyway, particularly the titular guitar makers. The big box format means accumulating lots of inventory, and that inventory means revenue for makers. Guitar Center is such a market force that it could pass its own financial woes onto those makers, exacting leaner margins. Then again, it was presumably doing that already.

What worries me in terms of the industry is that smaller players have already been marginalized, and online sellers can’t offer the hands-on experience musical instruments in particular might demand.

Consultant and music producer Bobby Owsinski, writing in response to the above story on his own blog, makes some dire predictions:

Ares wants their money, so watch as they squeeze GC by making it leaner and meaner than ever, all at the expense of the customer. If you think doing business with them now is hard, just wait until this comes down. Fewer sales people that turn over even more frequently, less stock on hand, only the latest products and no deep inventory – that’s what you can expect. It’ll be the way it is now, only worse, if you can imagine.

And expect to see some of your favorite small manufactures either struggle or go out of business, as GC cuts its inventory and SKU’s even more. For all those companies depending upon GC for a good chunk of their business, times are about to get a lot tougher.

The Beginning Of The End As Guitar Center To Be Acquired

Owsinski echoes the same concerns we heard about Avid last week (including from at least some financial circles):

Once again, this is a small industry filled with creative people. It’s too small for a company to go public, roll up smaller companies, or grow to big box levels without the customer suffering.

He also predicts, however, that the bright spot may be the return of mom-and-pop stores. Whether that happens remains to be seen.

In fact, the irony of all of this is that Guitar Center kept adding retail even when their sales growth wasn’t keeping pace. (If that isn’t a recipe for debt, I don’t know what is.) Note the contradictions in a story for National Public Radio’s Marketplace back in 2012:

Guitar Center strums a new tune

That story sounds some positive notes: demand for instruments is up alongside lessons. But it also observes that Guitar Center continued its march to expansion even as online retailers gobbled up a lot of the actual sales growth, and that other big box retailers had run into similar problems with debt.

If you want to look to who would be threatened by troubles at Guitar Center, a New York Times story from the same year posits one answer: Fender.

Analysts say Guitar Center is crucial to Fender, accounting for roughly a sixth of Fender’s sales — and the ties between the two run deep.

A Guitar Maker Aims to Stay Plugged In

But if under Bain ownership Guitar Center has mostly managed to acquire junk debt, we’ll see if the creditor is able to restructure the business back to health. Bain absorbed Guitar Center in 2007, so the stock GTRC is now defunct, in case someone was trying to go on NASDAQ to trade in either GTRC or AVID.

It’s worth revisiting the original acquisition of Guitar Center.

As for how this impacts people making and consuming musical instruments, I think the scale of the implication really comes down to whether they’ve found other alternatives. Those whose fates are intertwined with Guitar Center may face tough times. But those who don’t may see this as non-news. If you’re a manufacturer, we’d be curious to know how much you rely on the big box chain – or its rivals.

  • Sunny Haair

    Well, that sucks. I guess a possible resurgence/need of Mom & Pop stores is good though.

    Guitar Center owns MusiciansFriend and Music123 (among others) right?
    I wonder what it means (if anything) for their online presence.

    • jonathan_m

      If this is truly the end of GC. They will be missed around here. Service has always been great, they’ve always matched and beat online prices, This is quite the bummer for me, and I know it will be for other musicians here in Seattle.

    • NWBassist

      American Music was there before and will be after. The REAL Seattle music store.

  • http://mboverdrive.tumblr.com/ Ifthenwhy

    Everyone on The Street knew that Guitar Center’s aggressive and dreadfully timed expansion would ultimately place them in an untenable position. My guess: the junk debt will choke them out of existence.

    And Sweetwater/Vintage King etc. wait with open arms.

  • mercury

    I don’t know that Guitar Center is a good model for the future anyways….I mean, let’s be serious here…do you think demand for guitars today is the same as it was before we had all of the electronic music toys that we have now? (and I don’t mean toys in a derogatory sense)…Tools are shifting to software and instruments are following that pattern. To make it worse, Amazon…do you really need to go into Guitar Center to fight with 100 teenagers to try a Moog? You can very easily assess if you want it with the infinite amount of reviews, sound bits, youtube videos, etc, and click on Amazon and get it almost immediately. I’m actually shocked that they lasted this long.

    Oh, and, it’s not accidental that Bain loaded them with debt that they cannot service. This is the “business model” of all PE firms…even in a profitable sector in a profitable economy, the private equity leaches can suck the blood out of any firm, it turns them on.

    • http://pkirn.com/ Peter Kirn

      Demand for guitars is higher, actually. But that doesn’t mean you want Guitar Center as the place to experience that instrument, or a Moog keyboard, or anything else.

      And yes, private equity has this approach…

    • Foosnark

      I really dislike the poor service, crowds and noise of Guitar Center. But I also want to sometimes try instruments before buying them. I prefer smaller, local stores. Unfortunately there are not many of those around, and their selection where it comes to electronics and software is pretty poor compared to GC.

      My only GC experience in the last 10 years was with Maschine. I tried to go to the store to demo it, but the one they had set up was turned off (and connected to a Mac, when I’m a PC user) and there was no salesperson in sight to help me with it.

      So I bought Maschine through an Amazon reseller… who shipped me a MK1 in a MK2 box. I returned it, went back to GC, had to wait in a line of about 6 people that weren’t getting any help for the first half an hour, and bought it there.

    • Mathew Silverberg

      You get poor service for $7.50 an hour buddy STOP blaming employees for the WORST music company on the planet.

    • dernge

      An infinite number of reviews doesn’t help when choosing a guitar, though. When we were looking for a first guitar for my son, he had his heart set on a Dean. That’s all he wanted, had it picked out in his mind and that was that. Then we went to GC and he tried all the Deans and he just didn’t like how they felt compared to the Epiphone he eventually chose. The mom and pop store where his guitar teacher rents space carries one brand of guitar and that’s it so the mom and pop route can be problematic as well. So, for all its problems, without a store like GC my son may have ended up with a guitar that was difficult for him to play, leading to him eventually quitting.

  • Nick

    The Whole Music industry is going through a major transition and there will be more fallout in the months and years to come.

  • Dbox

    Woohoo! I have one around the corner. Will pop in daily to scoop up all the reduced items!

  • Sasquatchfuzz

    It’s worth noting that Larry Thomas was the former CEO of Guitar Center and is the current CEO at Fender.

    • DPrty

      Fenders next? ??

    • Bill Willard

      Fender is what most everyone in the industry is really worried about if GC folds. Fender is hugely exposed as GC has literally millions of Fender product on the walls. Then, probably before Fender even gets paid pennies on the dollar by the creditors, that product will be sold off to the auctioneers, thereby flooding the market with Fenders at stupid low prices. It will be extremely hard for Fender to sell newly manufactured products into the market for some months due to this flood of auctioned off GC stock. So, Fender will be screwed financially on both fronts and this scenario will really hurt and possibly put them on the rocks as well.

  • joel sampson

    I buy everything at GC Pro. I get great service and killer prices – far below the “street” price. I’ve been very happy with GC. We now have a Sam Ash in Dallas, good for me because they have wind instruments (which I also play) and keeps everybody honest.

    joel in Dallas

  • DevilSucker

    I think there’s another economic factor to consider regarding the entire musical equipment business and that is the aggressive use and enforcement of Minimum Advertised Price (MAP) schemes. Retailers, either storefront or online, do not have the ability to set their own prices — at least not without the burden of “secret sales” or “call-in only” deals — such that customers pay the same price anywhere they shop. The only differentiation then is selection and convenience, since you can mostly write off the relic known as customer service.

    The big box model has always relied on buying large quantities of products from the manufacturer at low unit prices, then selling to the end customer at a lower margin than a local mom & pop could ever endure. MAP essentially prevents this. Which, in theory, is nice for the M&P, but as we all know they are a relic of the 20th century as well.

    If it’s any consolation, Radio Shack is going through the same thing.

    • Bill Willard

      You are slightly off base here with your assessment. MAP is Minimum Advertised Price, which means that is the lowest price the dealer the dealer can advertise the product at. UPP is Universal Pricing Policy, and that is the pricing model that products must be sold at in order to maintain the dealership (think Apple products). MAP does not prevent a dealer from selling for a lower price, while UPP does prevent the dealer from selling for a lower price.

      MAP and UPP are both good tools for manufacturers, who know that the dealers must make X amount of margin in order to survive, stock their products, market their products etc. etc. These policies also serve in helping to deter / prevent dealers from “whoring out” their products at stupid prices just to get the deal. You bought a $1200 Strat for only $600? Great deal right? But, do you have a $1200 Strat or a $600 Strat now? The true value of the Strat was NEVER $1200, but really $500. Manufacturers hate to see their products devalued like this, as it cheapens the value of the product, harms the manufacturers’ good reputation for quality, etc.

      Manufacturers seem to understand the dealer ecosystem on a macro scale, while the dealers are just looking to get the next sale no matter whose expense it comes at.

      GC is toast, while Music & Arts and Musician’s Friend will likely be sold off and survive.

      I’ll be the first to say that GC going into the toilet will be the BEST thing to happen to American musical instrument manufacturers in a long time. GC, like Wal-Mart, squeezes mfrs. relentlessly on price, forcing most to manufacture in China. With GC gone there will be less sales into the MI market overall. Less sales will mean that brands/manufacturers will pay higher prices to the Chinese manufacturers. When manufacturers compare the higher prices they’ll be paying, factor in the shipping expense and 5 week shipping time from Asia and then also factor in the current level of product quality they are getting from China….the situation will justify bringing manufacturing back into the U.S. because it will make business sense in all regards.

  • Max

    NASDAQ
    Guitars
    Who cares?
    What happened to cdm?
    Is this the home for elderly ppl? no?
    Let’s get back to create digital music, please.

    • dbell

      Your statement (particularly regarding guitars) is a self-limiting perspective & shows a shallow understanding of the musical history of your preferred genre. If you don’t want to deal with old tech, you should probably not use synthesizers at all (the birth of the Moog synth and the Stratocaster are only about a decade apart), or, in fact, work with electronic music at all; as it, as a genre, could be argued to have come in to its own about the same time as arena rock. It is easy to think that what you’re doing is new when you’ve not investigated far enough in to the past; the groundwork for a lot of what is considered modern dance music can be found in Tangerine Dream and disco. Also, get off my lawn.

      Guitar Center closing, aside from the people losing jobs, good riddance, especially if the mom and pops come back. GC’s weakness has always been the monotony of their offerings.

    • Max

      Dont worry about my musical education.
      Do you read cdm because you always wanted to know more about elvis and the stock market?

    • gunboat_d

      *somebody* has to worry about your education.

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      “GC’s weakness has always been the monotony of their offerings.”

      Have you been into a Guitar Center recently? I just bought a Martin D15 here in Emeryville CA. I tried about 30 guitars of various brands in a closed off demo room. I was there for hours without getting bothered. The inventory is impressive, varied and contains many quality items.

      I got a very good deal, and the people helping me were informed, non-pushy and very easy to deal with. I also have a no questions asked 30 day return policy.

      If GC bites the dust, it will be a major loss to many musicians.

    • dbell

      I have been in many GCs in several different states. They are the Harbor Freight of guitars, purveying mainly low end imported guitars from the major manufacturers (in what color would you like your squier strat?) Several of the “other brands” that GC sells are just a version of another carried line (epiphnone/gibson, ESP/LTD, Sterling/Ernie Ball) so the number of different brands is not as varied as it might appear. I think when you get down to it, they carry a few major distributors product lines.

      I understand that it’s a business model where the low end sells, and I was fine with Musician’s Friend; but GC has forced local music stores either 1. out of business or 2. into another version of Guitar Center.

      It was once possible to go to many different local stores carrying a variety of well known and less well known brands. That is literally impossible now (at least in my area) and has taken all of the fun of visiting anything but the used section.

      People enjoy prophesying the death of the guitar, but if the death of the guitar is nigh, it is in part to stores like GC making the guitar boring (plus the ultra-traditionalists who won’t let the guitar evolve).

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      Respectfully, I think you’re being unfair.

      I understand what your saying, but I dunno…I saw lots of beautiful Taylor and Martins in my local GC. Hardly knock off’s? And every guitar is different..even at Guitar Center. That’s the joy of the instrument. So playing lots of them is super helpful…

      Yes, they offer a selection from major manufactures, I don’t think anyone has an expectation that they fulfill a niche of people looking for boutique luthiers latest creations?

      “People enjoy prophesying the death of the guitar”

      Wow. That’s a weird crowd.

      “plus the ultra-traditionalists who won’t let the guitar evolve”

      I dont know what that means. But if loving Jimmy Page makes me an Ultra-Tradionalist then count me in!

    • dbell

      Good music is good music regardless of when it was made or who made it IMO.

      Embracing the past and being stuck in it are very different.

      Compare the evolution of the synthesizer from 1954 to now compared to the evolution of the guitar- the only comparison is that there is no comparison.

      Guitarists get too fixated on what a new technology can’t do (which is usually to sound like 50+ year old guitars) to embrace what it can; guitar synths are a niche market and an overall failure.

      Keyboard players in the 60′s could overlook the shortcomings of a monophonic instrument (no velocity sensitivity, etc.) to embrace its strengths (pitch bend, new sonic palette); the synth has evolved in many creative and unexpected ways because of that attitude.

      Many of the current crop of guitars have no ambition besides trying to be convincing replicas old instruments. That attitude is obsoleting the guitar. GC has no ambition other than feeding that market.

      I’m glad that you found a great guitar at GC; in my opinion it’s like trying to get a truly great steak at Chili’s.

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      Perhaps I’m misreading, but it just sounds like you don’t like the culture of Guitars?

      But I’d remind you that this culture not only lovingly embraces the past (Jack White, Dan Auerbach ) but is also feverishly progressive (Johnny Greenwood, Fred Frith). Guitar Center provides the tools that celebrates both of these musical perspectives.

      So yes, I now clearly understand why you don’t like Guitar Center.

      But in my book, comparing creative tools (or their comparative lack of evolution) is intellectually lazy.

    • dbell

      Ok, so let me get this straight: Looking at the radically different evolutionary trajectories of roughly contemporaneous instruments is intellectually lazy, but the major manufacturers pumping out the same basic guitars for the past fifty years is what? Intellectually ambitious? Do you think the same about the copy guitars which differ from those archetypal guitars only because of the headstock shape, and only then because they get sued if they used Gibson or Fender’s headstock shape?

      The guitar lovingly embraces the past and is feverish about the future as long as it’s “cool”. The bands you discuss are pretty much all just rock bands. Not very far apart, really- oh, and next time you see Johnny (sic) Greenwood at guitar center say “hi” for me.

      You wanna know what you won’t see? The Synthaxe. The Stepp Guitar, the Midiaxe, the Arp Avatar, the Oncor Polytouch or any of the other attempts to bring synthesis into the guitar world, because all of those companies failed. Why? Because guitarists are unwilling to trade off the comfort of an instrument for the advantages of another, regardless of the possibilities.

      Guitar center is not special. It’s Musician’s Friend with sales tax. For the benefit of the people who work there and for you and others who enjoy it I hope it makes it through this- but it has little value other than convenience.

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      “Looking at the radically different evolutionary trajectories of roughly contemporaneous instruments is intellectually lazy”

      Yes.

      “Why? Because guitarists are unwilling to trade off the comfort of an instrument for the advantages of another, regardless of the possibilities.”

      Yeah, right. Or maybe, just maybe, guitar players knew those instruments, that tried to make a hammer into a screwdriver, generally sucked ass?

      And an approximation of Greenwoods set up can be cobbled together at any Guitar Center. Which is pretty cool.

      http://thekingofgear.com/jonny

      And if you think that he’s never purchased gear at Guitar Center, then you’ve never been on a national tour of the USA.

      I have no invested interest in convincing you to like Guitar Center. But your argument is elitist. Unless you can prove that Guitar Center is some kind of metaphor for a corporate musical culture in stasis, and that the musical tools purchased there have never been used to make anything of worth.

      Which, of course, you can’t.

      Guitar Center is just a place for Musicians to buy stuff. It’s nothing more than than that. And It’s not their fault that you don’t like the culture of guitars/players or the aesthetics of the place.

    • 52telecaster

      I’ll take Gary Clarke Jr. over any of the weird ass crap you listen too that’s so ahead of it’s time. You just don’t understand history or appreciate it. Give me a 1963 split window Corvette any day over this new wanna be Ferrari GM has now produced to please people like you. And, if the past is so bad, why is Chrysler building a new Challenger, Ford a new Shelby Mustang, and GM a new LS1 Camaro? Because the originals were bad ass. And the new ones with todays technology are even better. But all three of the manufacturers are still paying homage to the originals. Go listen to Kraftwerk cassettes and leave the rest of us alone.

    • http://www.shakkirules.com/ SHAKKI

      ULTRA-TRADIONALIST

      LOL!

    • 52telecaster

      Harbor Freight? I would not call my 1960 Custom Shop Relic, Johnny Marr Jaguar, Gretsch Elliot Easton Duo Jet, Sunburst Jazzmaster, Les Paul Standard Plus top, Matchless C15 amp, and all of my Eventide stomp boxes from a Harbor freight type guitar shop. All of it came from GC. GC does not normally sell Matchless but I grabbed a $3700 Matchless for $1700 and I’m loving every minute of it. Maybe because you live in an area where GC regional managers know the market will not move products like I own. If you are in Podunk Iowa, you’re going to buy your clothes at Walmart and your appliances at Sears. Even Boise Idaho has a GC and a pretty well stocked one at that. You need to move.

    • 52telecaster

      Ifthenwhy is right on the money. Not only do I buy my new gear from them but I also get such smoking deals on used gear, I can’t stop going in there every other day to see what Les Paul or Custom Shop Strat is going used for 45% less than the guy who bought it new. Mom and Pop places don’t stock anything either. I love looking at 15 different color Tele’s before dropping my hard earned money on it and as previously noted, they don’t give you any crap if you bring it back with no damage in less than 30 days and want to go from the purple one to the Sunburst. The used market was the best thing GC ever did. I just bought a three week old Fender Eric Clapton Vibro Champ amp with the cover for under $600 out the door. The local music stores are either some snobbish bunch of arrogant wankers IF they have decent gear and then they are 20% higher than GC. Even all of the Pancho’s and Pedro’s here illegally figured out they exist and the GC’s located near their neighborhoods are full of Ranchero instruments. It’s hilarious because Pedro will bring his english speaking kids in with him to ask for strings for his Aye-Caramba 12 string. It will hurt everyone if GC goes. Sam Ash just can’t do what GC does. They try but it’s not the same. The only independent in L.A. who is great to deal with is Norm’s Rare Guitars in Tarzana because he stocks new and used and his Fender and Gibson prices are competitive because he has two GC’s around the corner from him. Plus, Norm is a really nice guy too.

    • Donk

      You know that music stores like Guitar Center sell more than just guitars, right? Like those toys you use to make your “music”.

    • Greg Lőrincz

      How narrow-minded you are!

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      I’m happy that you don’t edit this site.

  • Sir Barken Hyena

    I refuse to go to Guitar Center, and buy all of my instruments and supplies at local retailers. These stores are all doing well in fact one guitar shop I have bought from just doubled it’s size. The advantages of not buying your stuff from ignorant teenagers (sorry, harsh but true) but instead, from a fully invested owner are many, and enduring I think.

    So no love lost on GC here

    • Mathew Silverberg

      “Ignorant teenagers” is what you get for $7.50 an hour pal so slow you fuckin roll. It’s A holes like you that ruin that teenagers day when you shop anywhere and why you wouldn’t blame the company for the way they run there “business” not the workers who do what they are told when they are told it. Think before you open your mouth about the little guy again moron

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      ” ignorant teenagers (sorry, harsh but true)”

      That’s not my “truth”.

  • dick van dango

    What is a guitar?

    • foosnark

      An acoustic or electroacoustic sound generator, the output of which is usually processed with electronics and/or software, and occasionally containining onboard DSP itself. Example guitar manufacturers include Moog and Line6.

      ::thwap::

  • Aaron

    Ares is a wannabe Bain. Bain builds up an inflated assestment/ “audit” (cough), leverages you against that, takes over, then instead of stepping back puts every cent into growth and builds debt to the point of no return, then pieces you off based on the original over evalutated debt they took you with along with the bloated current inventory. Ares is coming in for some crumbs. Guitar Center is as good as dead.

  • Leonard

    It goes without saying that GC is a mirror of the times, and the bankrupt U.S. economy in particular. “Thar she blows!” What’s waiting around the bend? More reshuffling the deck chairs on the Titanic; the proliferation of portable floatation devices (Mom & Pop’s); and increased perspiration as we approach the crescendo of what really amounts to a national debt emergency, unprecedented in scale.

    That said, I remain indefensibly optimistic that a decidedly bright future awaits us around that hairpin curve. But what a hairpin…

  • Tony Scharf

    I could see the return of mom & pop shops. If I had the capital, now would be the time to start something small and focused. In particular, I could see the return of dedicated Guitar and Drum shops. Electronic music, which has gone largely to software anyway, will go the way its been going for years anyway: direct buys online.

    Also, Sweetwater seems to be doing just fine. I’d bet they will be a big winner in this.

  • REGEND

    Music community internet marketplace. While I am not 100% sure this is the way to go, it expands on the model of Ratings and Reviews combining classifieds.

  • chaircrusher

    I don’t know where the Mom & Pop stores will come from, if they have to buy and hold inventory when their competition is the whole world of on-line retail, starting with Zzounds and Sweetwater. Already the ‘mom and pop’ internet outlets like AudioMidi.com are being priced out of business.

    I’m out in Flyover country, and having a Guitar Center around was great. Not that the store was that amazing, but they carry a pretty comprehensive pile of pro audio and DAW software and hardware, not to mention cables & such. If you need something today, nothing beats a nearby brick & mortar store. The local music stores are great for what they do but when you need a Supermarket, a corner bodega can’t really help you.

  • chaircrusher

    You know, criticizing Peter for writing about big trends in the music gear business is out of order. If you look at the posts for the past month, CDM has hardly turned into CNBC.

    This is the news in our world today. It isn’t as though CDM is writing boring stories about finance and missing something grand happening in the world of electronic music.

  • SFM

    Peter excellent write up as usual. I have been waiting for this to happen for quite a while. After working in retail music for most of my adult life companies like this have taken the soul out of the industry. The way the big companies i.e. fender, gibson, and roland treat the mom and pops is atrocious. I hope GC takes them down a notch and see how long it takes them to come crawling back to the companies that made them successful in the first place.

  • James Husted

    The difference between the success of a brick and mortar store vs. the internet lies mainly in the instruments bought. There is little differences between the same model of electronic instrument from another of the same brand/make whereas since guitars and acoustic instruments are still mainly hand made (with the aid of machines) there are differences between each guitars necks, wood grain, action etc. It is really easy to by electronics without seeing the unit your getting and that can’t be said for guitars and other acoustic gear. There will always need to be a physical store for those. Hopefully it will be a smaller store or specialty store where the crew takes personal interest in what they sell and weed out the chaff from the quality product.

  • gunboat_d

    if i want a guitar, i drive to Elderly. If i want cabling or high-end gear, i call VK or Analogue Haven. if i want a mic stand, i’ll drive to GC. there is no money in mic stands and cheap pedals. and i get better service from Sweetwater (calls from my rep every now and then to ask how my last purchase went; even suggested models that SW didn’t carry when i was shopping. they do that for everyone, but it still feels good) than a trip into GC.
    So GC will go down for a variety of reasons, bu that said, we’re seeing the Bain Way in action: buy a company, lard it up with debt to get a smaller tax bill, pocket the difference in the tax bill, and *then* turn the company around. if it works, Bain gets paid. if it fails, Bain still gets paid and the company goes under. Why anyone thought that he’d make a good president is beyond me.

    • amoun ra

      Actually you’re quite wrong. There’s more money in mic stands, cheap cables, and strings than the guitar you bought at Elderly. Accessory sales sustain the market….it’s like the gas you put in your car.

    • gunboat_d

      apparently not enough money to support a nationwide chain. my point is that if i want good stuff (including good accessories), i’ll go to a good retailer with good service and a good vibe. i only go to GC if i *have* to. Guitar Center is why we can’t have nice things. nobody needs 7 different variations on a tele, each with 7 different color schemes.
      i’d like to see the sales breakdowns between places like GC and Elderly. i don’t disagree that acc. sales are huge, but it’s probably not as healthy a margin as selling instruments.

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      “Guitar Center is why we can’t have nice things. nobody needs 7 different variations on a tele, each with 7 different color schemes.”

      And who are you to tell me what I “need”? Personally, I think all those Tele’s are “nice things”.

    • GCguy14

      Coming from a former GC manager: Typically, the gross margin for accessories sales is more than double & sometimes triple that of guitars, drums, basses or keyboards. Accessory sales are the life blood of any brick & mortar retailer.

    • Benji Koshy

      bad financial management has got nothing to do with the stores and chain. It’s just bad management, and like with all chain stores, what happens at the head will affect all of them. guitar Center has some great stores, I’m in the LA, California area and people love to hang out there, pay, jam and buy equipment, used and new.

  • Puffer @ digitallofi

    I have no pity for the guitar manufactures in this case. They’ve dug their own hole, and a lot of the blame people throw at GC for killing local music shops is equally their fault. All the big 4 (Gibson, Fender, Taylor, Martin) are operating as completely unsustainable factory operations. Which is all well and good, other than wasting huge amounts of wood and flooding the market with mediocre instruments. But because they need to move a huge amount stock to support their manufacturing operations they insist on quotas for all shops, regardless of size. You want to sell Gibson guitars? Ok. You have to take at least 30 instruments a year, regardless of whether you can sell them. If you can find an independent music shop that has new instruments, chances are they on carry 1 or 2 brands (Fender and Martin seem to have pretty acceptable quotas, anecdotally, or are just easier to move). There’s a reason most local shops sell either indie brands or used.

    This can probably be extrapolated to a lot of stock in the stores. I’m sure, say, Alesis and Mackie and Pearl et al, have inventory agreements with GC that they’re obligated to require of all music shops no matter the demand.

    This is a late period capitalism problem. It’s hubris to think anything can have unlimited growth. Sure it was nice to be able to see if anything odd or useful had turned up in clearance or used, or when one didn’t want to wait the 3 days it will take to get whatever bog standard bit of kit from Amazon. And it’s gonna suck somewhat for the local economies effected and the folks losing their jobs, even the idiots who try to upsell you magical cables or extended warranties. But, frankly, just die already. I look forward to seeing what comes next.

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      All apologies, and your insistence in wedging in a “late stage Capitalism” argument aside, calling a company like Martin (who’s plant I’ve extensively toured) “completely unsustainable ” is just disingenuous.

    • Puffer @ digitallofi

      I’m not saying that any of those companies are unsustainable. I doubt any of them are going anywhere. And, you’re right, I don’t know Martin’s operation first-hand. What I do know is that Taylor and Fender in particular has scaled their operations up to such a volume that they have to move X number of guitars to make a profit, whether or not their is a demand for X number of guitars. I do know, first hand, that they place inventory quotas on independent music stores that make it prohibitive to carry said manufacturer. So, if I misspoke about Martin and sales quotas I stand corrected. But by completely unsustainable I mean that there is not an unlimited market for new guitars, that the market there is not growing at the rate that these companies need to continue at the pace they are. I look at the wall of GC and see all those shiny new Martins and then look at any random day/city craigslist and you see where the problem lies.

      Look at Moog, or some boutique synth manufacturers, at how to sustainably manufacture and sell musical instruments.

    • http://mboverdrive.tumblr.com/ Ifthenwhy

      “Look at Moog, or some boutique synth manufacturers, at how to sustainably manufacture and sell musical instruments.”

      Respectfully, I don’t understand your argument.

      A disproportionate amount of people play guitar over boutique synths. Guitar Centers foolish rapid growth aside, their is a reason they stock more guitars, yes?

      If Moog had the same demand for product, compared to, let’s say, Gibson, I can guarantee you that their model of sustainability would dramatically change.

    • 52telecaster

      Sorry Puffy, but I live 5 minutes from Fender’s Corona plant and the Custom Shop. They have the most modern and efficient equipment and also must meet all of the business killing rules and regulations the State of California has implemented because you moron’s buy into Moonbeam and Al Gores theory we are destroying the planet by building guitars or allowing job producing companies to exist while the air is cleaner now in California than in the last 50 years. They have run all of the manufacturing out of L.A. down to Mexico to have the “cheaper” guitars built but they spray hundreds of higher end guitars each week here in Corona only to charge more money so they can pay the taxes, fees, permits, and every other program so they can continue to do business where there home and roots are. Fullerton is 15 miles from Corona and the land was much cheaper in Corona when Fender expanded after the buyout. If the county of Orange or the city of Fullerton gave a rat’s ass about the Fender legacy, they would have given incentives and property to keep them there. It’s all about the liberal whack jobs trying to scare us into giving them control of everything so they can continue to make rules and regulations to make them rich while hurting the common business man. Screw California, Jerry Brown, Dianne F*%kstein, and the rest of the job killing asskissers of Obama. Gibson is proof of the whole damn conspiracy when all of the supposed illegal wood was seized. What about Fender, PRS, and Martin? I’d bet they are donors of the liberal screwballs and Gibson, being a conservative ran company, was made an example. Facts are facts. Plus, Fender’s manufacturing operation in Mexico is so close to our border with San Diego, how does painting guitars in Mexico stop the dirty air from making it to San Diego. I don’t see a big fan at the border blowing all of the fumes from Mexican manufacturing plants and poorly maintained diesel trucks running all over the border towns. Then they let the Mexican trucks with no emmissions guidelines come in and compete with American truckers who have to spend $20,000 on emmissions upgrades for them to be legal to operate here. Not to mention the diesel fuel in Mexico is 30% cheaper giving Mexican truckers a bigger advantage to come here and move freight. That makes alot of sense. Punish Americans and reward Mexicans.

    • Puffer @ digitallofi

      Hahahahaha. Hahahahaha. Yeah, sure, dude. Whatever.

  • Charles

    Hardly surprising. Romney is a vulture capitalist and this is a common affliction of companies unlucky enough to be targeted for suction by Bain. Can’t say as I’d miss GC much though.

  • ExasperaTron 5000

    Good riddance. GC represents everything bad about what the brick-and-mortar music gear industry has become: Generic, crowded, noisy, impersonal, cold – Just awfulness. It’s the Death Star of music retailers; What we need is a return to smaller, mom n’ pop stores that are run by people who genuinely care about what they’re selling and their customers, not by big faceless corporations. This may or may not be possible in the modern world of online retailers. Back in the early 80s on 48th st in NYC, Electro-Harmonix had their own dedicated showroom (all grey carpet, low light and grey acoustic foam on the walls – Very 1980) where you could walk in off the street and play through little guitar and bass rigs with headphones (so no cacophony of idiots playing “Eruption” to contend with, unlike all the other stores adjacent) to try out their pedals. They didn’t actually sell them – You had to go to the other shops on the block for that – But they had a knowledgeable staff of actual musicians and a stage set up in the back where they would have jams which would show off the various EH products. And every few months, Mike Matthews would organize “open mic” jams where people could bring their own instruments and play – It was a very enjoyable, personable atmosphere and the whole vibe of the place reflected Mike’s highly personal vision of what a cool and inviting music tech retail space should be. The antithesis of GC. Whether something of this ilk could exist today is an open question, but the stark contrast between this and what GC and Sam Ash have become is extreme. We could use a return to far more personal, small and interesting approaches to brick-and-mortar music gear retailing – This moment might be a great opportunity for some appropriately Steve Jobsian entrepreneur (a young, hungry, modern successor to Mr Matthews) to introduce a better experience for the world of musicians looking to buy gear in an actual store run by knowledgeable and caring people.

  • Guest

    FACT IS SERVICE IS A ISSUE AND PUSHY SALES PEOPLE. ALL THEY CARE ABOUT IS A SALE NOT THE CUSTOMER’S NEEDS LIKE ALL BIG BOX STORES.. RADIO SHACT

  • Ken Jones

    FACT IS LIKE ALL BIG BOX STORES ,THEY HAVE PUSHY SALES PEOPLE THAT ONLY CARE ABOUT HE SALE, NOT THE CUSTOMER NEEDS AND HAVE VERY KNOWLEDGE.
    4,000 RADIO SHACKS IS CLOSING AND 30,00 PEOPLE JOBS ARE GONE AS BEST BUYS IS CLOSING 200 STORES THIS YEAR FOR THE SAME ISSUES.

  • Greg Lőrincz

    I live in London and have bad experience with music instrument stores. Fortunately most of them died a few years ago or went online. I don’t miss the grumpy, incompetent dickheads who ran these stores. Turnkey, not far from Oxford St used to be the worst. I couldn’t be happier when they went bankrupt. I don’t know why but it seems that staff in these shops are rarely competent experts with actual retail experience. They’re rather grumpy, failed musicians with no skills.

  • Alvaro Sandoval

    I just started working for Guitar Center, hoping that the store I helped open in Palm Desert would help fund my music career as I helped other people fuel their music dreams too. I hope this doesn’t mean the employees get screwed over. Everyone in the company seems so hard working and loyal. Hopefully there’s a way to keep it going.

  • Mathew Silverberg

    I hope they close all these stores. I was a manager at Guitar Center WPB,FL. and quit because of the greedy bastards that run the big show over there. These greedy little pigs are getting what they deserve. Cut pay for employees, no product, no advertising,…. really I’m surprised GC lasted this long in the first place.

  • http://www.santoguitarusa.com cnunez

    We launched our guitar mfg company exclusivley on Facebook and are very successful. We sell direct via good photography, video and client referrals and endorsements. We are high touch and we engage with our clients. The world is changing. GC is history.

  • Shutthehellupalready

    All of you swine and your opinions amuse me. If you don’t like GC, don’t go. Shut your damn mouth about it.

  • AlertInMinneapolis

    Of course Bain and Mitt Romney are going to be the big bad bogey men in this story. As if Bain put Guitar Center in debt. When Bain acquired GC, they were already deeply in debt from rapid expansion without the growth in sales and profit to back it up.

    • midnitejax

      You obviously have a clouded vision of what Bain does to make money. They buy out companies, dissolve their assets, and then sell off any and all real estate for development. The money is in the real estate.

  • Hermosaguitar

    I think what people are missing here is that GC is about too much debt. Bain is essentially declaring GC bankrupt and trying to sell it to Ares, which will then restructure the debt(e.g – eliminate most of it) and GC can go back to being GC with actually LESS pressure and a better environment(asssuming a decent ceo) because they can focus on the business and not making the next debt payment.

  • Rob Fielding

    When I first started seeing all the activity going on with iPad signal processors (and to some degree, instruments); I walked into Guitar Center and saw doom all around me. If selling lots of effects pedals is necessary, then this spells trouble. It could also be that Guitar Center was doing reasonably well when they were being run by people whose point was to sustain the business; then they got bought by a VC firm whose point was to milk it instead. The local guitar shops are posting this article with a grin all over Facebook right now.

  • HappyAtheist

    Actually I won’t ever go into a GC. They are responsible for the closings of hundreds if not thousands of Mom and Pop music stores. Including the two I worked at. Just in Miami all the great music stores are gone .The ones they couldn’t drive out of business they bought out. Eds Guitars on Bird road for instance. I know times change but as a semi retired pro player, if I need something, its either Musicians Friend for small stuff, or Sweetwater on line.

  • stevek

    LOl at all the experts. GC was going down before Bain. SO stop blaming them for GC downfall (and mItt-lol why do people have to play polarizing poltical games?). Yes Bain is in the business of making MAJOR cash- sometimes it works sometimes not. The companies they get their grubs on are near death already. SO they go on Bain life support. Some make it some don’t.

    mom and pops had manufacturer issues 30 years ago. Manufacturer heavy hand squished mom and pop inventory- making it impossible for that little guy to have what he wanted (what his customers wanted) in the house. Not just Fender and Gibson but SLM too.

    Things change. Business changes. Remember the “Service station” when you got your gas pumped for ya? I have a fondness for GC as my first guitar palace around 1990. Cleveland Ohio. Sad to see them go if they do.

  • BassAndGuitar

    I, for one, like Guitar Center. The local chains and mom and pops abused the local marketplace with high prices and crappy service. Guitar Center put them on notice that they needed to be more competitive. I would hate to go back to those days.

  • anarchitect

    i was an employee at guitar center for a long time and they just laid me off, the titanic just hit an iceberg and only the high class passengers are getting life vests

  • GCguy

    Let me leave a comment for all to see. As a past employee of Guitar Center, I have a good concept of why the stores in some of the smaller areas have employees who seem “unqualified”. Much of this has to do with pay which stems from the financial problems (sort of a vicious circle here). Our employees are “paid” (in essence) nothing by Guitar Center. We must pay ourselves by selling and earning commissions. For the good salesmen, this was not a problem years ago. They could walk away easily making 13-15 $/hr in smaller markets and 20-30 $/hr in larger markets. This made the Guitar Center a profitable place to work with highly competitive pay and thus they could be picky with whom they hired. Things have changed since then. Now, because of internet competitors who have little to no overhead and nearly zero customer service practically giving away gear, it is much harder to scrape away with a sustainable wage. All discounts to match are taken out of the salesmen’s profit. In essence, what is happening; guy comes up to you and says “hey I’ve been looking at this piece of gear, can you tell me what you think about it and what the difference between this one and that one is?” You then proceed to spend 20min talking about the differences, testing the gear, researching with the customer, etc. you get to the counter and the guy pulls out his phone and says; “oh, and such and such website has it for 20% less! you guys price match, right?” Now, understand this; Guitar Center has always and probably will continue to have a guaranteed lowest price out there, but when something like this happens with a $800 guitar, it is LITERALLY like the salesman taking out his wallet and handing the guy $35. This becomes particularly difficult when the customer is anything less than the most pleasant individual to ever walk the earth. Let that soak in. It is hard to find (and keep) skilled employees when they are subjected to that daily.
    And this is all to say, that the reason stores like this have declined is because of people like that. Those who have worked as waiters/waitresses understand something similar. The good employees go where the money is.

  • Gi2joe3

    Fender and guitar center both are horrible companies. When people want a Fender they don’t realize that saying, “they don’t make them like they used to”. The quality has gone out the window, especially with their American made instruments. Don’t get me started on GC, a flock of salesmen trampling the first customer they see just to make some sort of commission. It’s companies like these that destroy small businesses, but hey they have a bigger selection. Fender has small shops by the balls and when GC can’t pay back their debt and goes out of business all the local music stores will be long gone.

  • bruce

    i predicted all of this back in 2006. the music industry is a niche market tiny compare to almost every other consumer product group.

    Wal-mart thinking will kill it period.
    just look what happened to Mars Music and what happened to SWR amps when they shut down.

  • MNYAAAH SEE!

    FOXES MUSIC COMPANY! 416 S. WASHINGTON STREET FALLS CHURCH, VA 22046! MNYAAAH SEE! WE’RE SO DAMN LOCAL SEE!