Guitar Center Jumps The Shark!

Guitar Center Jumps The Shark!

Guitar Center, the music industry’s retail giant for decades, has finally Jumped The Shark.  The end draws nigh.  In the final analysis, their recent decision to remove the ability to negotiate prices on high-dollar items will be the coupe-de-grace, an effective suicide disguised as an attempt to become more profitable.

On November 17, 2014, just shy of a year ago, Guitar Center’s Board of Directors appointed Darrell Webb to be the company’s new President and Chief Executive Officer, effective immediately, the same day that Mike Pratt resigned.  They also put Michael Amkreutz in as Executive Vice President in charge of Marketing, Merchandising and E-Commerce on that same day.  Just one large problem, a massive pink elephant in the living room: Both of these guys are big corporate brainiacs, but are they even remotely in touch with musicians?

Yesterday this writer visited them, interested in seeing if they had a 2015 6-series guitar in stock yet.  While there, I demo’d a few guitars for a buyer (who eventually chose a 210e Taylor for his new “beach” guitar.)  While there, I happened across a 214e that I’d have liked to have made my own.  Of course, the guitar was marked priced at MAP (Minimum Advertised Price) of $999, but guitars at that level are never actually sold at that price by anyone in the know.   I brought it to a salesman I’d seen in the acoustic guitars room and told him that I know the standard answer these days is that they don’t reduce prices, but to talk with the manager, (whom I’ve bought through before) and tell her that I’d take it for about $800.  Guitar Center frequently has 15% off coupons, so this wasn’t much of a stretch at all.

About 5 minutes later, he came back saying there was nothing he could do about it, that I’d just have to wait for a sale.  I blinked several times, incredulous, before requiring that he have the manager join me.  He begged off that she was in a conference call (on a Saturday).  I insisted and she appeared, reiterating what the salesman had said.  I reminded her that we’ve done business this way before, but all she did was repeat and add that the policy came down to her a couple of months ago, that Guitar Center no longer negotiates or discounts, except to price-match.  And therein lies the lie.

High end items like Taylor Guitars always have MAP (Minimum Advertised Price) requirements.  While MSRP (Manufacturer’s Suggested Retail Price) may be $4998.00, no dealer is allowed to advertise that guitar for under $3498 or $3199, or whatever it may be.   This is why they ALL have the same price for the same model guitar.  Of course, they’ll only ever be price-matching the MAP, so they’ll all always be at the same number.  How convenient!  I’m sure the manager, a bright gal, realized this as well.  I informed them that I will no longer be doing business with them, and left.

ANALYSIS: In this industry, in a time when the Internet makes it a Buyer’s Market, when every high-end guitar dealer in the country is cutting deals, only an idiot would make such a decision on ALL products in a brick & mortar store.   With this decision, Guitar Center just labeled itself the WalMart of Musical Instruments.  But Walmart survives and thrives primarily by selling essentials like food, clothing and basic entertainment.   Guitar Center’s customers are buying what amounts to most to be a luxury item, and people have many options available for buying such items, nearly all of whom will negotiate.  Perhaps GC meant this policy to turn the tide for their already failing company.  But deals are how they’ve survived as long as they have.  To stick to their stickers on small items and accessories might just work, but to do so on primary items and major purchases is a major mistake.  If they don’t recant, that faut pas is certain to be their swan song.

Brick & mortar Mom & Pop music stores provide a valuable service to their communities and ensure future generations of musicians.  They’re wise enough to be expanding into Internet sales, and to negotiate prices.  Guitar Center seems to think they’re too big to fail.

They’ve always had systems in place to keep staff from helping themselves and their friends to unjustified deals and losing money.  Pack pricing (costs which include the cost of advertising, shipping, etc.) has ensured that no employee would end up losing them hard cash on any item.  Their current bizarre computer software, itself a text-based dinosaur, managed to keep them alive and thriving for decades.  Now in one fell swoop from a corporate pencil-pusher, the giant is about to fall to its knees.

Sorry, GC, but you’re not a bank holding the mortgage on our homes, so we won’t be bailing you out.  You’ll continue to get some business through creative financing and people too green to know better, and via small items that people need immediately for a gig or session, but your days are decidedly numbered.  If only you had trusted your managers a bit more.

Guitar Center had its beginnings in the late 60’s.  I began buying from them a decade later at their Sunset location in Los Angeles.  Over the years, between my own purchases and those made for clients, I’ve spent roughly $250,000 with them.  At 10% profit, that’s not a small sum, and I’m far from one of their biggest customers.  To show such indifference to that much patronage was foolish, even if I hadn’t been personally responsible for selling dozens of upper-end guitars for them in the past year.  I will miss them, but look forward to working with even more of the Mom & Pop stores than we have in the past.  No, they haven’t closed their doors yet.  To me, though, they’re already gone.  Whatever comes after this will not be the same company we’ve spent our entire lives with.

Guitar Center, 1959-2015, RIP.

5 Comments

  1. Sounds like someone is being a big baby over not getting their “usual” treatment. Grow up! Your $800 would have left GC (still a brick and mortar) with virtually no profit. I get so sick of people expecting deep discounts like they got before MAP pricing because they can get it from a large online retailer with virtually no overhead. You, my friend, should go to work for the online guys since you are putting a nail in mom and pop’s casket. I’m no friend of GC mind you as I work for a 100 year old retailer, but they do keep the industry in the store front. Your critique is purely personal.

    ED: Far be it from me to censor, especially when you’re so willing to open your figurative mouth and remove all doubt, but there is decidedly profit at $800-$850. In fact, they often put out coupons for 15% off, which is what I was asking for. Grow up? How about you “my friend try doing so. This is BUSINESS, sir — multi-billions a year IN PROFIT. Get a clue. You’ve been duped, and apparently your employer doesn’t trust you with the costs on Taylor guitars. “Nail in mom & pop’s casket”? No, they do it themselves when they gouge, try to make it all on one person instead of doing a sane volume. There are several retailers, brick & mortar Mom & Pop stores, who have grown with the times and sell both in that store and online. They are extremely competitive and highly profitable — but not by gouging the individual. Ever notice how there are always people trying to sell a guitar used for more than you cn buy it for, Jerry? That’s because they got screwed over by one of those merchants, charged so much for the guitar that most people can buy a NEW one for less than they can stand to sell theirs for used! That is the bad guy, not someone requiring that they do business in a fair and equitable fashion. But if you want to pay more than you should, contact me and I’ll hook you up with that sort of deal instead. Here at AGN, we’re all about the truth, and the best thing for the people making the music, because that’s where it all comes from.

    Stay tuned for the follow up. I must not have been too off-base, because they’ve since recanted, loosened that policy and found ways to give their managers more control.

    • Not in the least, Jerry. I’ve dealt with GC for decades. They still have PLENTY of profit at $800-850. In fact, they offered a coupon last weekend that would have put the guitar at exactly the same price, and I purchased the same level/model just last year for $850. GC has a thing called “pack” which is their actual cost, including overhead, advertising, shipping, etc. That price is still within Pack. You may work for one, but apparently don’t see the actual costs. I work with several Taylor and Martin distributors across the country. They can ALL do that price and still make money. Just not the excessive profits they’d LIKE to get away with. Tell me: Why should a merchant, who simply orders it in and sells it back out, make as much money on such an instrument as the company who designed, built, and wholesaled it in the first place? Seems to me you guys are crying because we’re finally exposing your gouging and your gravy train ride is coming to an end.

  2. Ok. Go into Verizon and haggle a price. No? Best Buy then…no? Surely you could get a third burger for free at McDs. Still no?
    Why do musicians feel it the right to try and take as much money out of the hands of music stores and feel it fair. This mentality is what put mom & pop stores out of business.

    ED: Thanks for your input. Actually, it was the gouging mentality of some Mom & Pop stores that put them out of business. They wanted to make a lot of profit on one person. Look at places like Gracewinds, Mom & Pop and Brick & Mortar as it gets, but still quite profitable. Why are they still alive? Because they’ve been treating their customers fairly and righteously all along.

    • ED: Perhaps because stores feel it is their right to get as much hard-earned money out of the musician’s pockets as is possible and feel THAT is fair. MSRP is a vague and random number. MAP is another similarly random figure. Yet stores will put MAP up as a “fair” price. We have it from solid exxperience that stores can sell for HUNDREDS less — as much as 20% below MAP — and still make a fair profit. That’s mom & pop stores. Stores like Gracewinds in Corvallis, Oregon, who have been doing it for decades and two generations now, making a profit while giving musicians a fair shake. So tell me, Dave, why is it that stores feel they have the right to complain when musicians finally wise up and stop getting their wallets raped by opportunistic vendors who think they deserve as much profit for simply having it there as the manufacturer who designed, built and wholesaled that same instrument?

  3. On a related note, here’s an article on the demise of Guitar Center.

    Apparently they saw the light, Jeff. GC has loosened that policy since, and their managers have some latitude again.

Leave a Reply

Your email address will not be published.


*