Aeolian
Platinum Member
Just because a certain Bain executive was recently in the political area doesn't make discussions of their business practices political. It's pretty easy to see how they operate. KB Toys is a prime example of what GC is headed for. There used to be a KB Toys in every mall I knew of. Now they are no longer. And Bain isn't the only firm engaged in this practice, just the one that's doing it to Guitar Center.
There are two factors at work here. The race to the bottom for revenue. Meaning that when you walk into a GC you are confronted with piles of Squire starter prepacks while the few nice guitars are in a separate room behind glass. The sales volume is in those mom and dad buy junior his first rig deals. And after that the next rig up. Same with the entry level kits and ZBT prepacks in the drum room. There's little volume in selling to pros. Outside of touring pros with artist consideration direct purchases, most local working musicians don't make enough money to be constantly buying high end stuff. They're making do with the broken down gear they've been hauling in and out of clubs 5 nights a week for the last 10 years. Maybe each of them makes a big ticket purchase every 5 years. Not enough to support a storefront. There is the other end of the spectrum, the doctor/lawyer hobbyists who do buy really expensive stuff. But catering to that is a dangerous game. Trying to keep up with the flavor of the month. I know the owners of a couple of good size local independent shops. They might occasionally take a gamble on 1 or 2 pieces of something. But there's no way they can stock up on a good selection. Too much risk in having high value inventory sitting around getting nicked up and taking a year to turn around. And the boutique makers who build this stuff can't afford to consign it or wait for 6 month payment terms. And so it's back to the cheap Asian made starter sets that you can turn in a month and get on net 60-90 terms from a big conglomerate.
The second thing, which GC has on top of all this is the business practices of leveraged buyout firms like Bain. It's hard enough to run a broad spectrum retail outlet catering to a specialty market. But to have someone come along and saddle you with a ton of loan and interest debt just because they could, makes it orders of magnitude harder. This financial hijacking makes money for the hijackers. But leaves everyone else holding the bag. Employees without a job and musicians without a place to buy stuff. Unfortunately for us, it kind of has to fall in order to get better. The leveraged buyout guys have to leave with their booty before the ship can be righted. As long as they are there, they will keep bleeding it dry. Only when they decide that the corpse is useless and not worth the effort to wring more out of, can someone else come in and start some sort of recovery.
At least there are a few independents around. I don't know where a Sam Ash is in the Bay Area. Not within a hundred miles of me that I'm aware of.
There are two factors at work here. The race to the bottom for revenue. Meaning that when you walk into a GC you are confronted with piles of Squire starter prepacks while the few nice guitars are in a separate room behind glass. The sales volume is in those mom and dad buy junior his first rig deals. And after that the next rig up. Same with the entry level kits and ZBT prepacks in the drum room. There's little volume in selling to pros. Outside of touring pros with artist consideration direct purchases, most local working musicians don't make enough money to be constantly buying high end stuff. They're making do with the broken down gear they've been hauling in and out of clubs 5 nights a week for the last 10 years. Maybe each of them makes a big ticket purchase every 5 years. Not enough to support a storefront. There is the other end of the spectrum, the doctor/lawyer hobbyists who do buy really expensive stuff. But catering to that is a dangerous game. Trying to keep up with the flavor of the month. I know the owners of a couple of good size local independent shops. They might occasionally take a gamble on 1 or 2 pieces of something. But there's no way they can stock up on a good selection. Too much risk in having high value inventory sitting around getting nicked up and taking a year to turn around. And the boutique makers who build this stuff can't afford to consign it or wait for 6 month payment terms. And so it's back to the cheap Asian made starter sets that you can turn in a month and get on net 60-90 terms from a big conglomerate.
The second thing, which GC has on top of all this is the business practices of leveraged buyout firms like Bain. It's hard enough to run a broad spectrum retail outlet catering to a specialty market. But to have someone come along and saddle you with a ton of loan and interest debt just because they could, makes it orders of magnitude harder. This financial hijacking makes money for the hijackers. But leaves everyone else holding the bag. Employees without a job and musicians without a place to buy stuff. Unfortunately for us, it kind of has to fall in order to get better. The leveraged buyout guys have to leave with their booty before the ship can be righted. As long as they are there, they will keep bleeding it dry. Only when they decide that the corpse is useless and not worth the effort to wring more out of, can someone else come in and start some sort of recovery.
At least there are a few independents around. I don't know where a Sam Ash is in the Bay Area. Not within a hundred miles of me that I'm aware of.
