an interesting read about Guitar Center.....

jeffwj

Platinum Member
They are actually opening more stores. There's one that is opening (or has opened recently) on the south side of Richmond. That makes 2 GC's within 20 miles or so. But the south side has no chain music stores (all privately owned), so I guess that made their decision easier.

Jeff
 

Nodiggie

Gold Member
good read

I have friends who work there and I have friends who run their own music stores. It's a tough gig indeed.
 

Aeolian

Platinum Member
I'm not surprised. If you look into the history of Bain, you find that their modus operandi is to kill companies, not make them succeed. They cleverly structure the buyout (why they're called leveraged buyouts) to saddle the company with debt while they skim off any profits, assets or other deals. When the companies go bankrupt, they get the first payout from whatever is left and all the other creditors get the shaft.

The debt comes because Bain puts up a small down payment and takes out a huge loan for the rest of the buyout. The loan is taken out under the auspices of the purchased company so Bain isn't responsible for it. But now they own the company and all it's real assets. Which are typically several multiples of the token down payment they put in. Once in, they continue to acquire debt on the companies behalf while paying themselves management fees and taking stock options (which when converted are taxed at the capital gains rate not at salary rates). When the goose is good and cooked, they call in the rest of their chips and let it fall.

GC was never that much of a fun place to work. I worked for a regional music store chain in the mid '70s and understand the business. I've known several musicians who put in their time there and couldn't take it. I know a former regional manager who quit after the Bain buyout, went to a manufacturer and is now working to help a local independent grow. Everyone grumbled that as bad as it was, under Bain it got way worse. There was no flexibility in deals. Some folks who had managed to hang in there for awhile by building up a big clientele and giving good deals (making up the slim commissions on volume) were suddenly handcuffed. And as said, they screwed everyone they could out of benefits. Ridden hard to upsell kids on pro hardware. And so on.

After Bain makes off with the lion's share, someone may come along a buy out the name and inventory and start it up again. Maybe make it into a musician oriented store again.
 

Bo Eder

Platinum Member
As the article says, it would be very interesting to see what happens come April or May of this new year.
 

Andy

Administrator
Staff member
Obviously, I have no knowledge of this store chain, other than what I read here, but it sounds like the absolute opposite of a place I'd like our drums to be represented in. In the UK, we don't really have a musical instrument chain store in place, so the concept in context is lost on me.
 

dmacc_2

Well-known member
I'm not surprised. If you look into the history of Bain, you find that their modus operandi is to kill companies, not make them succeed. They cleverly structure the buyout (why they're called leveraged buyouts) to saddle the company with debt while they skim off any profits, assets or other deals. When the companies go bankrupt, they get the first payout from whatever is left and all the other creditors get the shaft.

The debt comes because Bain puts up a small down payment and takes out a huge loan for the rest of the buyout. The loan is taken out under the auspices of the purchased company so Bain isn't responsible for it. But now they own the company and all it's real assets. Which are typically several multiples of the token down payment they put in. Once in, they continue to acquire debt on the companies behalf while paying themselves management fees and taking stock options (which when converted are taxed at the capital gains rate not at salary rates). When the goose is good and cooked, they call in the rest of their chips and let it fall.

GC was never that much of a fun place to work. I worked for a regional music store chain in the mid '70s and understand the business. I've known several musicians who put in their time there and couldn't take it. I know a former regional manager who quit after the Bain buyout, went to a manufacturer and is now working to help a local independent grow. Everyone grumbled that as bad as it was, under Bain it got way worse. There was no flexibility in deals. Some folks who had managed to hang in there for awhile by building up a big clientele and giving good deals (making up the slim commissions on volume) were suddenly handcuffed. And as said, they screwed everyone they could out of benefits. Ridden hard to upsell kids on pro hardware. And so on.

After Bain makes off with the lion's share, someone may come along a buy out the name and inventory and start it up again. Maybe make it into a musician oriented store again.
This is consistent with the knowledge I've had on Bain as well.

The unfortunate thing will be the empty retail spaces that sit around empty if / when they shut their doors. Like most companies, I'd have to believe they'd file for restructuring before doing so though. Perhaps not, we'll see.

Obviously, I have no knowledge of this store chain, other than what I read here, but it sounds like the absolute opposite of a place I'd like our drums to be represented in. In the UK, we don't really have a musical instrument chain store in place, so the concept in context is lost on me.
You have an accurate assessment which I completely agree with.
 

Midnite Zephyr

Platinum Member
This is consistent with the knowledge I've had on Bain as well.

The unfortunate thing will be the empty retail spaces that sit around empty if / when they shut their doors.
That's when companies like the one I work for make money.

Thanks for the nice read, G, although I don't have a real comment. It's just glorious capitalism taken to the extreme. If you read Aeolian's comment, you get one POV, and if you read the first comment under the article, you'll get a contrasting POV. It's all so convoluted with all the money juggling these companies get involved in.

Personally, I would like to go to Pro Drum Shop for my drumming needs, but it's the LA traffic that keeps me from going. Their work hours are the same as mine, and I'm not going to spend my Saturday sitting in traffic on a freeway just to get a pair of drum sticks. We used to have a brick and mortor shop here in the OC area, but they shut down a few years ago because of GC and Sam Ash. This pisses me off because I much preferred going to the drum shop. I've never bought drums from GC, but I have bought a couple cymbals, lots of sticks and a few drum heads. (Oh, and my Mitchell Acoustic, Les Paul Jr, and a few accessories... forgot about those.)
 

wildbill

Platinum Member
There was a music store chain around here called Mars Music that was a lot like GC. They went out of business several years ago. If GC goes under, there won't be much left. There's a Best Buy electronics place that carries some music stuff, but it's not their specialty, and they're another big box chain store.

There's a couple mom and pop stores, but they don't have much selection, and I've never seen them offer any good deals.
I hope GC makes it. They're not great, but currently, they're the best of the available alternatives.
 

bermuda

Drummerworld Pro Drummer - Administrator
Staff member
Obviously, I have no knowledge of this store chain, other than what I read here, but it sounds like the absolute opposite of a place I'd like our drums to be represented in. In the UK, we don't really have a musical instrument chain store in place, so the concept in context is lost on me.
You're lucky, you still have independent dealers. In the US, many mom & pops have folded, partly due to GC's supposed selection and pricing, partly in the last few years due to the economy. GC and Sam Ash are almost all that's left in the big cities. If GC goes out, that makes it really tough on musicians who need to get strings or heads or sticks or whetever for their gig tonight or tomorrow; they don't always have the luxury of ordering those consumables.

In L.A. for example, until 2 or 3 years ago, there were drum shops and independent full-line stores with good drum departments. Obviously it was better 10 and 20 and 30 years ago, but still very workable for musicians, and Guitar Center was basically just another dealer, not the giant that they ended up becoming..

But now, a number of those music stores and drum shops have closed. Save for GC and Sam Ash, there are just a few places for drummers to go: Pro Dtrum, Chad Sexton's (mostly consumables and special orders) and possibly Alva's, a music store tucked away on a cute little street hidden within in a neighboirhood in San Pedro. If GC goes, and there's not a Sam Ash nearby, the alternatives are very slim. And that's in Los Angeles, where more than a few people still make music!

One other consideration if GC should fold - there are several manufacturers who depend heavily on them for their business, and would be in real trouble if thoase sales went away (not to mention the probability that they'll take a loss on payments that they're due.) You may think DW is huge, but if GC fails, it will be crippling. I don't imagine DW would go out of business, but the loss of GC is gonna be a big blow to sales. It could completely devastate others, and some brands would be relegated to direct sales, assuming they can make that conversion fast enough.

It will be interesting indeed.

Bermuda
 

bermuda

Drummerworld Pro Drummer - Administrator
Staff member
There's a Best Buy electronics place that carries some music stuff, but it's not their specialty, and they're another big box chain store.
Best Buy has almost nothing in the way of gear, particularly when it comes to drums. And, unless they severely change their business model, they're on the way out. Their selection and pricing is poor, but they're doing nothing to change that.

Bermuda
 

GruntersDad

Administrator - Mayor
Staff member
From Guitar Center:

Because of our incredible buying power and strong relationships with all the top instrument brands, you're sure to find all the best gear at the guaranteed lowest price.

From the article :

Also, manufacturers are getting pissed at GC. Most of that mounting debt is probably due to them for product.

I just emailed GC corporate with the above snippets and asked them, which is it? We'll see if I get an answer.
 

wildbill

Platinum Member
Best Buy has almost nothing in the way of gear, particularly when it comes to drums. And, unless they severely change their business model, they're on the way out. Their selection and pricing is poor, but they're doing nothing to change that.

Bermuda

Yep - a very poor selection of drums. They do currently carry 493 cymbals though:

http://www.bestbuy.com/site/Drums-Percussion/Cymbals/pcmcat152100050012.c?id=pcmcat152100050012

and a fair amount of accessories and so on. Better than nothing, I guess.
 

bermuda

Drummerworld Pro Drummer - Administrator
Staff member
From Guitar Center:

Because of our incredible buying power and strong relationships with all the top instrument brands, you're sure to find all the best gear at the guaranteed lowest price.
And within that statement also lies the problems.

"Top instrument brands" maybe, but the selection and SKUs they stock are poor. For example, drummers who need a set of cymbals would be hard pressed to assemble a good ride, 2 crashes and hats by visiting one store (or two, or three...) They'd be better off buying a pre-pack (ugh!)

As for the "lowest price", they won't simply give it to you, and you can't just ask for it. You have to bring printed proof of the lower price. Not a big deal I suppose, but you have to do your homework. You can't depend on GC to give just anyone off the street a great price.

And, consumers are doing their homework, coupled with the remaining smaller stores stepping up with better pricing and service, which is why certain brick & mortar stores are struggling.

Bermuda
 

bermuda

Drummerworld Pro Drummer - Administrator
Staff member
Yep - a very poor selection of drums. They do currently carry 493 cymbals though:
Online, yes, but not in the stores. And until there's a more reliable system for sound clip quality, buying cymbals online is very iffy.

Bermuda
 

?uesto

Silver Member
Guitar Center is Wal-Mart for musical instruments. I'd love to see them go!

Really insightful article, though. I had no idea about Bain. I just know that GC's are filled with crap gear, incompetent employees, terrible customer service, and that they move in near any other music stores to try and run them out of business.

When Resurrection Drums opened in Miami, a GC opened not too far away. When we moved to Hallandale, guess what store opened up on the other side of I-95. Another one opened recently not five minutes from a Sam Ash that's been here at least ten years.
 

Andy

Administrator
Staff member
You're lucky, you still have independent dealers. In the US, many mom & pops have folded, partly due to GC's supposed selection and pricing, partly in the last few years due to the economy. GC and Sam Ash are almost all that's left in the big cities. If GC goes out, that makes it really tough on musicians who need to get strings or heads or sticks or whetever for their gig tonight or tomorrow; they don't always have the luxury of ordering those consumables.

In L.A. for example, until 2 or 3 years ago, there were drum shops and independent full-line stores with good drum departments. Obviously it was better 10 and 20 and 30 years ago, but still very workable for musicians, and Guitar Center was basically just another dealer, not the giant that they ended up becoming..

But now, a number of those music stores and drum shops have closed. Save for GC and Sam Ash, there are just a few places for drummers to go: Pro Dtrum, Chad Sexton's (mostly consumables and special orders) and possibly Alva's, a music store tucked away on a cute little street hidden within in a neighboirhood in San Pedro. If GC goes, and there's not a Sam Ash nearby, the alternatives are very slim. And that's in Los Angeles, where more than a few people still make music!

One other consideration if GC should fold - there are several manufacturers who depend heavily on them for their business, and would be in real trouble if thoase sales went away (not to mention the probability that they'll take a loss on payments that they're due.) You may think DW is huge, but if GC fails, it will be crippling. I don't imagine DW would go out of business, but the loss of GC is gonna be a big blow to sales. It could completely devastate others, and some brands would be relegated to direct sales, assuming they can make that conversion fast enough.

It will be interesting indeed.

Bermuda
That's a bleak outlook indeed Jon. Several higher profile stores have closed recently in the UK too. Not because of predation by chain stores, but more because of internet buying habits & general economy downturn. It would seem that those stores with a hybrid store & internet presence are fairing best.

TBH, at least in the UK, the choice of drums on offer in stores is generally woeful, & even if you can find a store with close to a reasonable selection, it's usually several hours traveling distance for the average buyer.

From a small scale manufacturer's POV, we're at a loss what to do really. We fully embrace the real benefits of having our drums available for demonstration, but then in what environment, & what expertise of demonstration staff? Lastly, there's the margin aspirations of many stores. The average margin ask exceeds 60%, & 40% is the absolute minimum they'll consider. I realise there's costs to be born, but margins like that are crippling for a manufacturer like us. It's many times more than we can dream of making, so that limits selections in these stores to those who can either make cheap, or charge big. We're neither. TBH, I have no idea how things are going to roll out.

Stores only have value to manufacturers when they have a retail presence, can demonstrate & stock their products, & offer complementary services. The moment "stores" retreat into being merely internet distribution facilities, the manufacturers might as well do that themselves.
 

wildbill

Platinum Member
....As for the "lowest price", they won't simply give it to you, and you can't just ask for it. You have to bring printed proof of the lower price. Not a big deal I suppose, but you have to do your homework. You can't depend on GC to give just anyone off the street a great price....

My experience with the GC store here is that they will just give you the lowest price on certain things.

But there's a huge catch to it - it's only on one specific item, and you never know what it will be, or how long it will last.

I've walked in there a couple times and seen a price on something that's much lower than any on-line price you'll find. It's not advertised anywhere either - you'll only know about it if you go in-store.
Go back in there a day or a week later, and the price is jacked up back high again.

If it's something you've been looking for, you're in luck, and will get a super deal. A very haphazard way of doing things though. And if you were wanting to get your whole setup through those deals, it'd probably take several lifetimes. LOL

As a sales technique it works though - an effective form of 'intermittent re-enforcement'.
 

Derek Roddy

DRUMMERWORLD PRO DRUMMER
Having worked in the retail environment for 19 years....I feel the need.....haha.


Personally, I would like to go to Pro Drum Shop for my drumming needs, but it's the LA traffic that keeps me from going. Their work hours are the same as mine, and I'm not going to spend my Saturday sitting in traffic on a freeway just to get a pair of drum sticks.
Right there......This is what is putting the local stores out of business.


We used to have a brick and mortor shop here in the OC area, but they shut down a few years ago because of GC and Sam Ash. This pisses me off because I much preferred going to the drum shop. I've never bought drums from GC, but I have bought a couple cymbals, lots of sticks and a few drum heads. (Oh, and my Mitchell Acoustic, Les Paul Jr, and a few accessories... forgot about those.)

So, you bought the items that make the independent dealer the most profit.....at GC.
You'd be better off buying a drum kit at GC because they are practically giving them away....where the profit is at, is in all the items you get at GC!!!!

And, we wonder why the store (we can't bare to spend time in traffic driving too) is hurting? Haha.

D
 

mxo721

Senior Member
I can already hear the radio spot " GOING OUT OF BUSINESS SALE....EVERYTHING 90% OFF!" like this sabian cymbal WAS $ 324.00 NOW it's $ 322.00 <----that's 90% off 90% off kids........sigh
 
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