I worked at the San Fran Guitar Center in the mid 80’s for awhile. Yamaha wanted GC to carry a line of guitars. We didn't want them. Yamaha said "we'll GIVE you the four components of our personal recording studios for free". GC agreed. We sold those things, each listing for $119, for $19. How is anyone gonna compete with that ?
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Frankly, I don’t understand how they’ve remained in business after the entire retail side of things was taken over. On that day, everything was priced the same industry-wide, professional discounts were no longer allowed, and anyone taking issue with these policies were shown the door. Employees no longer needed any musical experience, inventory no longer included professional necessities, high ticket items became open-box, take it or leave it. The ONLY positive result of this was/is profit. I’m 73 and still very active, but I’ll step in front of a bus before Guitar Center gets my business again.
I worked in one in Denver. The building used to be a Musician Friend warehouse. GC bought it and made it a retail store. A few years later they were an inch away from losing their contract with Gibson. Fortunately they renegotiated. They have buying power. They offer lessons so kids come in and learn on a junk guitar and for Christmas they get a $3000 Les Paul. Marketing does the trick. Get them in and up sell to any piece of candy in the store. Brilliant!!
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I remember West LA Music. I’d go to NAMM every year on a vendor pass, check out the new keyboards, hit up Johnnie(??) at West LA and put in my order. Professional musicians discount at the time was 50% off retail (sad that’s gone). I’d get the latest keys (needed back in those days) sell my year old gear for what I paid for it.. (win win). Now I buy mainly B stock…..
Guitar Center has always given me good service and “professional” discounts. When I was on the Board of Musicians Assistance Program, they used to give us a couple of guitars every year – they held the guitars in the back room and when famous musicians came in they got the star to autograph the guitars – plus, we got all the stars who performed at our music festival to autograph them too. We auctioned the guitars at the annual Musicians Picnic Music Festival and made money that was used to help musicians recover from substance abuse. After the President of MAP died, the Grammy Foundation absorbed Musicians Assistance Program into their MusiCares division. I was glad that MAP would continue helping musicians – it still is. The folks at Guitar Center were good to us.
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GC isn't terribly successful, it's been bought and several times, gone through a bankruptcy, and generally not been well-managed. They maintain a presence across in-store, online, band, school, and studio fronts. But what they are really selling is CREDIT! They are hooked-into financing for stuff that usually costs thousands. And they have usually negotiated decent interest rates to keep several million dollars of merchandise on the floor in each store. Small guys can't compete!
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Guitar Center went bankrupt several times and was bailed out by investment firms and companies that took over their debt and are in control of their earnings at this point. In fact they have been sued and lost and had to settle out of court to keep it out of the news numerous times. They were charged with fraud, illegal business practices, cheating their employees as well as their customers.
Yes, Guitar Center stayed alive because they saw the power of the internet and got engaged early on with an online presence. Then went even further by subcontracting with online sellers like Musicians Friend to make them their online store making a win-win situation for both That's how you survive, by adapting and embracing and capitalizing on change.
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I think it was a combination of buying out the competition, opening up mail order and then online shopping. I'm also guessing as they grew and had cash, offering a bunch of money to a small store or chain would be irresistable. And with their big stores there was so much selection. Maybe they were able to create discounted partnerships with manufacturers. I still favor the independent stores.
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