Guitar Center Going Bankrupt

Heard some news today that GC is 650 million in debt and going to file for bankruptcy. Doesn't surprise me..

Much of the money is owed to Yamaha-Gibson-Korg - Roland and on & on & on & on...

You may never see a Tyros 4 ....

Chapter 11 or 13?

I am searching for links to confirm this..

Perhaps shouldn't post unless certain.

Another one bites the dust nothing new there ....I actually expected this.
Internet sales killing them.



[This message has been edited by Dnj (edited 02-07-2009).]

It's a shame. These big guys come in and run all the local guys out of business and then go under themselves. Remember Mars Music? Then we're left with nowhere to shop. I'm guilty too though, I buy stuff off the internet all the time. Oh well, it's a different world.

Joe

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Songman55
Joe Ayala

I did google searches under guitar center bankruptcy and guitar center chapter 11. Nothing at all comes up.

Beakybird

True or not, I'm afraid we will see more than one beat the dust
during the year(s) to come.
Too bad and even worse if we see the factories close down as well.
But as they say, ones dead anothers bread...
GJ

I do think many of the traditional brick & mortar stores/chains will bite the dust. Not sure about other areas, but I'm seeing more and more empty stores in the Malls around Dayton, OH than I ever have.

The internet has forever changed how consumers shop for goods. Music stores, like clothing stores, department stores, etc. are all facing a bleak future...

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Bill in Dayton

False alarm fellas. The sky is not falling either as chicken little use to say.

GC has NOT filed for bankruptcy protection, however much Dan might want them to. Guitar Center recently "acquired" The Woodwind & The Brasswind from the Musician Friends company subsidiary. Guitar Center also recently acquired the Music123.com online music retailer as well. They also purchased the Music & Arts Center company back in 2005 and have recently started to expand its presence throughout the country with ambitious building and expansion projects.

Nice try Dan..

All the best,
Mike

PS: Now if Dan heard this within the last 24 hours then he has an extremely good inside connection and the information has not yet reached the threshold of major news outlets or the internet as of 8:00 a.m this morning. There a slight possibility of that happening though, seeing this is Sunday and all.



[This message has been edited by keybplayer (edited 02-08-2009).]

the woodwind & brass & music123 etc.. were acquired all years ago while they were public... the company went from public to private & manufacturers are leaning on best buy to dig them out

worst recession in a century.... could easily call in to question GC's ability to stay afloat

Yes maybe.. but it is nice to talk about something else for a change...

LOL



[This message has been edited by Kingfrog (edited 02-08-2009).]

I love how GC aquires online retailers that then directly competes with its retail chains Sell so much online you end up putting your "physical" stores out of business.... It'll end up costing more to operate the store itself with labor costs, and all other expenses. In this economy it's better to just choose one or the other. Keep buying all the others and you got yourself in the same position as General Motors.....

I wasn't laughing at the thread. I just cut and pasted what I wrote here into another thread after reading some thoughts on discounts at Brick and Motar stores. I did not want to double post.

The GC issue is relevant and gos to prove VOLUME does not make up for MARGIN in a narrowly focused business. Someone else was moaning because his brick and mortar would not give him a "proper discount". He felt he should decide what dollars the business owner should make on the sale. I said I would rather not sell 4 Tyros to make the same dollars as selling one when I can make those same dollars and more selling much faster and far more numerous sales of $300 guitars at a faster rate then wasting hours demoing a Tyros for the same dollars made in 10 minutes. Thats the advantage of being in the MUSIC SALES business and not selling Stereos and TVS like Best Buy. The margins are across the board pretty much the same dollar for dollar. The item sold doesn't matter as much.

Explained the difference in MARGIN vs Dollar profit. We operate on margins. The same margin on a Fender Custom Shop as a Squire.

I know you didn't mean the thread..You and I both know what's been talked about over and over .. audya chord recognition has been beat to death..

I did some more research on the matter and it does indeed look like GC is in financial straits. When Bain Capital bought them in June of 2007 GC was already 200 million dollars in debt. Then in March of 2008 GC was listed as being 650 million in debt. That being the case and with the world economy now being in the proverbial "tank" I could imagine GC now being well over 1 billion in debt currently. Although that is just speculation. There has been talk of a Chapter 11 reorganization but that hasn't been either confirmed or denied from reliable sources yet.

It's hard to imagine that GC would suddenly go belly up but stranger things have happened. With other "major" companies dropping like flies all around the U.S. and worldwide too I would have to believe, then I suppose it 'could' happen to GC as well, although I hope it doesn't of course.

I did notice a strange phenomemon at my local GC recently. Seems all the regular employees in the keyboard section are no longer there, at least none of the faces look familiar to me. And I knew many of "previous" salespeople fairly well too. Maybe they got privy to some information the rest of us haven't gotten yet and they vamoosed because they knew the writing was on the wall. Hard to say though, because GC can sometimes have a dramatic employee turn over rate.

So DanO you could very well be right on in your assumption, or rather your friend's assumption with his information that he passed along to you.

Where's Chicken Little when you need him, eh? lol..

All the best,
Mike

[This message has been edited by keybplayer (edited 02-08-2009).]

GC is closing some stores. Here is a blub about them when they WERE a public company..They were in trouble then.

Privately they are closing stores. http://www.fool.com/news/foth/2002/foth020611.htm

Thanks for looking some facts..

Look at what has happened to Toyota over the last year.They lost billions of dollars.. Who would have predicted that Toyota would lose BILLION !

Imagine Yamaha being owed millions of dollars by a company or companies that can not pay on time. This whole economy could really make life hard for many musical instrument corporations..

I know Yamaha is big, but are they biiger than Toyota ?

Toyota may lose a billion, but they aren't going out of business. Same, I would imagine, for Yamaha (who are diversified in many different businesses). Smaller companies may well have tougher times, though.

Wersi come to mind... I hope Dom can make it through the storm (I still have high hopes for his MS one day), Ketron have gambled on the high end of the market, Let's hope they don't shoot craps (but that doesn't mean they get a pass on the audio loops thing!), Roland is going down-market (probably a smart move)...

It's the perfect storm... a credit crunch after the entire business world changed so they revolve around credit... and so did we

I would hate to see anyone loss their job, But I stopped shopping at the GC because the sales rep don't know any of the products, they never have anything in stock, its always special order and they use to provide discounts for long time customers. which now I have to bring in an competitors ad and they will match it. Thats BS! good luck GC, but you lost me as a customer for good.

http://finance.yahoo.com/news/15-Companies-That-Might-Not-usnews-14279875.html

I still buy Yamaha bikes. Their Drum chrome is made in the Bike factory.....So the handle bars on the 1300 is rally a Hi-Hat Stand




[This message has been edited by Kingfrog (edited 02-09-2009).]

The irony of all this is that Best Buy just might think twice about making a quantum leap into the musical instrument biz.

Cheers,

Gary

They shouldn't. The margins are far better then their core business products. Its a no lose situation for them. They are USED to slim margins where now they will get a minimum of the mid to late 20's in points and up to 3x more on accesories.

I think Best Buy would do well in selling musical instruments. My only concern would be finding someone in that store qualified enough to sell the products Best Buy would be benefiting from large bulk orders and cost per unit would be reasonable.., and their return would be quite good. Again.., problem is finding qualified sales staff in these stores.

Hopefully the same guy that sells you a 46 inch flat screen with the audio system isn't the same guy trying to sell you a Yamaha Motif XS6. Or finding the guy helping you in the music department just sold a washer and dryer combo to the couple he met before you

I talked to one of the managers not too long ago at our local Best Buy. He was very excited about the possibility of selling top end musical instruments. When I asked him how will you go about getting sales reps qualifed enough to sell a state of the art synth/workstation who knew not only how to play, but operate these things his attitude changed a bit. I told him you're going to have a hard time finding someone qualified enough to sell and operate these things.., and then run into real problems if you expect that qualified person to step outside of the music section and sell a washer and dryer....

Hopefully they'll employ real musicians if they expand to this area in their stores.

Squeak,
Don't think you'll see it ever.
They have enough trouble finding someone to sell you a washer/dryer...or anything else.

A little better than RS,,,youv'e got questions...they have blank stares.

Sometimes you do get a good person at BB...but he/she is gone is a few monthes.

I would rather go see King, Frank or George...but there a ways from me.
AND I hate having a keyboard shipped.

Lee

You don't go to a supermarket and expect the guy stocking the shelves to tell you how to cook a souflé...

Why should you expect anyone at Best Buy to understand something as esoteric as a MotifXS..?

If you want supermarket prices, you should EXPECT supermarket service.

You're not going to get supermarket prices at Best Buy though. If you go to the main Best Buy website and look at the gear you'll see the prices are the same as other online retailers. A Korg M3 on their site sells for $1,899 (and that's the current online price). That's hardly what I'd call supermarket prices. It'd be different if you could go into Best Buy and pick up a Motif XS for considerably less than $2,199 but that's not the case. If I could walk into Best Buy and pick up a Motif XS for $1,599 I could care less if the guy selling it to me knows more about washers and dryers.

Online retailers ARE supermarkets! That's the whole point...

The trouble is, people are unrealistically going into brick and mortar stores, and expecting online prices. If you give up ANY expectation of brick and mortar service, knowledgeable sales staff and stock available to demo, sure, a brick and mortar store can compete. But you want him to pay what a knowledgeable salesman costs hourly (they don't JUST make commission! and that adds to the cost, or deducts from the margin, as well - either way the B&M store suffers), you want him to unbox an expensive unit and let you demo it (whereupon, half the time, he has to sell it as a 'demo'ed product - less margin, again).

If the lowest possible price is your main criteria, why on earth do you expect any service? Walk in, pick up the sealed box, and take it to the checkout counter to get scanned. Period.

If you want to talk with a knowledgeable professional, actually hear it played well, play it yourself, don't expect that to cost exactly the same as the online retailer, who provides NONE of that.

I still don't get it... you wouldn't play a gig for free, but you want the B&M store to do that...

Take 5 or 10 music products and show me how much the internet shopping saves vs. walking into a store..

I think, Dan, that one of the problems is that many TOTL arrangers are handled by 'Mom & Pop' music stores that deal real pianos, school brass, 'home' digital pianos (lot's of fancy furniture, little great about the sound) that work on generally higher margins than the stores that handle 'group' music stuff, guitars, amps, synths, WS's, etc..

I know that when Roland introduced the G70, they transfered the dealerships from MI stores over to the CK division, which handles high margin, high price KR-series home pianos and Atelier organs, etc..

Immediately, the MAP jumped nearly a grand... I had to pay quite a LOT more for the G70 than my G1000, even taking the MSRP into account.

It has now been transfered back to MI division, but the damage has been done. Many stores that USED to stock G1000's have now grown distant from that market... But those Mom & Pop stores were MUCH harder to negotiate a deal with, on the whole. They had exclusive rights to their territory, and internet sales weren't allowed for those lines. I was quite vocal at the time that it looked like Roland were shooting themselves in the foot, and I believe this had an awful lot to do with the failure of the G70 to be as popular as the G1000 was.

Now, I don't believe this is necessarily universal, but you DO have to look at the kind of stores that actually STOCK T3's, PA2Xpro's, E80's, SD-1's (and soon, Audya's) and realize that few of them can afford to (or even want to!) go down to the margin that internet retailers can do, because of their lack of overhead.

It is sad (I kind of get your point, I think) that the whole retail MI business is going down the toilet because their customers don't equate paying a bit more (as little as a few hundred dollars on a $3500 product) with getting the kind of service that they moan about when they DON'T get it.

Why anyone expects knowledgeable sales staff and well stocked shelves at a Guitar Center or Best Buy amazes me. They aren't PAYING for those things. Pay less, get less. Pay more, get more...

Diki,
Point well taken..
I happen to know 1st hand what it is like to try and make it on a 20-25-30% profit margin.. After the expense of paying rent, employee's , utilities etc.. it is very difficult to make it owning a MI music store.....

Just the cost of hanging enough instruments on the walls and floor just to make 2500 sq ft look like a music store is expensive.

So I appreciate your point of view..

GC stinks......we went there today they had nothing....no arrangers.....


Sam ash was well stocked with goodies of all kinds...


& even better best Buy surprised us with a very nice array of TOTL gear, assorted guitars, Roland 700gx, juno's, mackie, tapco, fender, etc etc & lots more very impressive for best buy....

GC watch out!!

[This message has been edited by Dnj (edited 02-09-2009).]

Best Buy's musical instrument infusion opportunity may be GC's eventual undoing actually. Best Buy Co., Inc.is a Fortune 500 company and the largest specialty retailer of consumer electronics in the United States (according to statistics) accounting for 21% of the market. It also operates in several other countries including Canada, Mexico, and China.

Currently they operate over 1,150 stores in the U.S. alone. On January 16, 2009, Best Buy became the "only" Nationwide Electronic Retail Store (online and/or brick and mortar) in the United States, after the announcement from smaller rival, Circuit City that failed to find a buyer and/or receive any credit. Circuit City announced it was filing for Chapter 7 (Going out of business) and would liquidate the company.

OTOH, Guitar Center operates a little over 200 stores nationwide and none internationally that I'm aware of. With Best Buy's huge presence and popularity and with them getting this strong foothold into the music instrument segment, it may be the proverbial final nail in the coffin for GC, and maybe sooner than we think. As I said, I'm not wanting that to happen because it is never good for consumers when the competition disappears. It wouldn't affect me much personally though because there are several Best Buy stores in my area that I could utilize for my music instrument needs. And for the rest i.e. accessories, etc. I could simply use the various online music retailers. Hopefully though Guitar Center will be around for many more years to come. Time will tell..

All the best,
Mike

[This message has been edited by keybplayer (edited 02-09-2009).]

http://www.bestbuy.com/site/olspage.jsp?id=abcat0207000&type=category

It's going to be interesting to see if Best Buy, now they have outlasted the competition, start to bump their prices upwards a little...

Who's left to compete?

Best buy sells American Strats for $174 more then we do..We still have them at $999!! Fender just increased prices so maybe the ones on order will be $1099. But $1274 for an American Strat is a lot. Even Sam Ash has them for $999.

Everything we sell is at Internet prices. We HAVE to compete. We don't charge nor get a premium because we know the products and can demo them.

The difference is we have to be careful what we stock and stock what the market will buy. no sense in having Signiture Fenders. 6 American Strats and a few American Teles and 12 Mexicans and 12 Squires. Mass market stuff. Ibanez is a good seller and has better MAP pricing. In that case we can beat the Internet advertised prices. Yamaha is what it is. The same all over. We hold the MAP on Yamaha Arrangers and customers don;t seem to mind. Tyros is another Animal.

Independents can compete with the Internet. We fight the tax on the high dollar stuff though. Like Bose. $210 on $3000 is hard to swallow for many and Bose is hardline about selling AT MAP not below. We have to get creative with freebies sometimes but it can be done. Again we can compete. B & M stores HAVE to compete.

But we also have to floor sale able items. Workstations are not sale able for us. Arrangers are not sale able for GC. Yet we both sell every other kind of MI gear. Go figure.

Nice statement but don;t be afraid of shipping. How do you think we get them? LOL

BTW this is not a solicitation. I will not sell anything to anyone on the boards I participate in over the net. Frank is the better choice for that. I bought my Korg PA2x from him (before we got the line).

We don;t even carry the PA2x or PA800. It is difficult to justify and sell a $2400 PA800 vs the $1600 S900 to our market which are primarily retired and part time players.

We carry the Korg PA50 on display and sell the 900 20-1 over the Korg at $700 MORE!!!

The Latinos prefer and buy the Korg product. Don't ask me why. Maybe its the Cumbia Style.

Dan..you might be on to something....I just came back from Guitar Center (checked out the WK-500)...and I did not see any of the regular floor, sales, managers around..only new personnel...I peaked in the manager's office..thinking a meeting was going on...nope..the Store manager wasn't even there...Very strange....

Maybe they all applied for a job at Best Buy..

BTW:I didn't notice any low priced keyboards at BestBuy...Did you Donny?...They definitely weren't with the Roland and Yamaha workstations..