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.