Guitar Center Going Out Of Business?

Discussion in 'General Music Discussion' started by Carl Kolchak, Dec 6, 2017.

  1. Fred the Shred

    Fred the Shred Shrederick

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    I agree with Bostjan here - while there's obviously interest in the musical instrument industry, we have such a tremendous market saturation and lower sales potential than in the whole 80's through 90's heyday that it's not really that certain that whatever group is willing to invest the money in the acquisition and restructuring that it would take to make it a viable business again, and that is only complicated further by the monumental outstanding debt they carry.
     
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  2. Mathemagician

    Mathemagician SS.org Regular

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    Yeah, when large online retailers are willing to work with me to make a sale, and smaller shops like DCGL & Axe Palace have a higher level of touch/options than GC it’s an obvious choice.

    You either go mass-volume or higher end.

    It’s the same thing that happened to the grocery store. You either have Kroger’s/Wal Mart for the volume or Whole Foods/specialty stores.
     
  3. Overtone

    Overtone SS.org Regular

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    I think it's hard to kill off the guitar store completely, but the trend is definitely not good. I remember the Berklee college of music having 3 great shops nearby ~10 years ago and now there's just a GC AFAIK. But you still need somewhere to try guitars out. I've only ever bought custom guitars online because I'd rather select a production model personally because not all are equal. GC has improved a lot, but I agree that their POS is a POS. Their sales people are also hit or miss... a lot of us know a considerable about more than the average GC salesperson about the products they sell. GC has some brand value, and they're a foot in the door to local musicians, which has some value too. The bondholders will get very little in a liquidation, so it's definitely possible that someone will come along and offer them more than that because they think that by retiring the company's debt, they'll be able to use the online presence, brick and mortar presence, and existing sales channels, inventory management, etc. to make a profit and invest in growing sales.
     
  4. Overtone

    Overtone SS.org Regular

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    Also worth mentioning that when Sports Authority went out of business, they flooded the market with marked down inventory and it did drive manufacturers of those products out of business. It's not hard to Gibson buckling under the weight of their existing problems if GC offloads its inventory next year. But I really don't see GC being dismantled, just restructured.

    Does anyone remember that wave of Platinum Room gear clearance sales around 2013/2014? Picked up some good deals then!
     
  5. Overtone

    Overtone SS.org Regular

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    If you read this it makes things a little more clear:
    "Credit ratings agency S&P downgraded Guitar Center last week on what analysts saw as a possible debt restructuring that they "would view as tantamount to a default," according to a press release from S&P emailed to Retail Dive. [...] The analysts downgraded Guitar Center’s corporate credit rating from CCC+ to CCC-, writing that the retailer "could likely execute a debt exchange offer within the next six months for its senior secured and unsecured notes." They noted that Guitar Center is currently negotiating with its debt holders about a possible exchange that could be worth less than the face value of the bonds."
    https://www.retaildive.com/news/guitar-center-downgraded/512290/

    Default doesn't always mean bankruptcy and bankruptcy doesn't always mean going out of business.
     
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  6. cwhitey2

    cwhitey2 BlackendCrust Metal™

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    I like my local GC, but their inventory is crap.

    At one point they had a decent selection of guitars.... Now I'm not even interested in browsing.

    I have a shop within an hour drive that has probably 50+ extremely nice PRS guitars and all the high end amps you could want. I think I'll survive in the guitar buying department, but not in the convenience factor for strings as i drive by GC everyday.


    They really need to worry more about selling products and customer service before profits for share/debt holders, but that's just me dreaming!
     
  7. bostjan

    bostjan MicroMetal Contributor

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    You are correct. This is all speculative; however, a CCC- rating is a very foreboding rating for a company of that size. To use the reference to Sports Authority above, just before they went out of business, they got downgraded from a CCC to a CCC-, as well. I think you might be able to find success stories of a large retailer who got a CCC- and recovered, but, hmm, maybe not. I mean, a BBB- is considered a risky investment, and a BB is a 9% default rate, B is about 1/3 default rate, CCC almost always spells default. So going from CCC to CCC- is significantly bad news, it means that a company failing to pay their debts is falling significantly further behind. A recovery from CCC back to BBB, even over any arbitrary length of time, is rare, and coming back from a CCC- to a good rating (BBB or higher) is virtually a miracle.

    Default doesn't mean bankruptcy, correct. A business might go into default by mistake. But that's not the case here, this is a case where systematic default is imminent. Bankruptcy is court protection of a company that's in default, so, the two terms are different, but in terms of which is worse, they are apples and oranges, one's a financial term and the other primarily a legal term, and the prerequisite for one is the other.

    The whole story adds up here to say that GC is on the verge of going under. If they go under some restructuring, maybe they can pull themselves out of this; however, if the financial trouble is for lack of income in a suffocating market, then there is no restructuring that could do enough good to address the issue at hand. But that's just my interpretation. Other interpretations are more accurate, I'm sure. Time will tell.
     
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  8. Frostbite

    Frostbite Periphery Shill

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    My experience yesterday actually cemented me never going back to GC for anything other then strings. I'm currently looking for a new 7 or 8 string and went to Manchester Music Mill in NH. I went there and they had an amp room away from the main show room where I could crank a 5150 II they had in stock and all the guitars were setup moderately well and were clean, which products being clean is a huge thing for me. It was fucking fantastic and I ended up buying the 5150 II since it was $500 and that's too good of a deal to turn down.

    Before I bought the 5150 (ended up driving back to MMM after leaving a first time after thinking about the 5150), I went to GC in Nashua, NH to check their stock of 7 Strings. Every guitar I tried was gross, dusty, and very poorly taken care of. They also had no amps that could get a decent metal tone at a decent level (they had a blackstart ID:CORE but I REALLY don't like that amp) and I couldn't use any of the tube amps because of how loud they are. So all the guitars are in no way in a playable state IMO and there are no good amps to even play through. So GC can go fuck themselves for all I care. I realize that they're a chain so it's to be expected but I'd rather drive 30-45 minutes out of my way to try something else that's actually indicative of the product I'm buying
     
  9. marcwormjim

    marcwormjim SS.org Regular

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    Fair enough.
     
  10. A-Branger

    A-Branger SS.org Regular

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    like if there was another way to play it :p
     
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  11. wankerness

    wankerness SS.org Regular

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    I desperately want them to go out of business. Every single experience I've had there is horrible thanks to the most apathetic employees I've EVER seen and whatever their business policies must be to hire people like that and teach them they can get away with that without getting fired. Like, really, every GC I've ever been to has the employees sitting around showing off their SICK RIFFS to each other in the corner, maybe talking to one or two non-employees that came in and appear to be their friends, and acting like they're incredibly burdened if any customer comes over and asks them anything or tries to buy something. It's kind of funny just watching them from the other end of the store and seeing how many customers just walk out after talking to them. I've gotten better service at Mcdonalds in the bad parts of town. :D

    We also have some independent local stores that are actually decent and the less they are threatened by big chain garbage the better.
     
  12. NickLAudio

    NickLAudio Audio/Video Engineer

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    Guitar Center is definitely a unique experience in an unpleasant way. Every time I go to buy strings, I then just "browse" the store after for gear and get basically stalked by sales guys asking if I need help every 5 mins. The funny part is when I walk in with a piece of gear in mind and 100% want to buy it, ghost town...(picture wild west whistling and tumble weed). Well, guess i don't get to buy this piece of gear today.

    One time, I actually overheard a girl talking to a sales guy about a guitar she was holding that she absolutely loved and wanted to purchase. He then proceeds to talk her out of buying it by saying "this guitar has a floyd rose/whammy bar trem and those are mainly used for 80s hair metal riffs, you don't need one of those because todays modern music doesnt really use those and it's surprising that guitars still come with floyd rose trems". I literally could not believe my ears and was just shocked that this dude thought he was doing her a favor by telling her this. As absurd as that was, as a sales guy, who actually talks someone out of buying a guitar?
     
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  13. iamaom

    iamaom SS.org Regular

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    Depending on her skill level he might have came up with a bullshit reason so she wouldn't buy a guitar with a FR and end up returning it once a string broke and couldn't figure out how to set it back up.
     
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  14. NickLAudio

    NickLAudio Audio/Video Engineer

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    True, and this did cross my mind. I just thought why not tell her "this guitar has a little more involved maintenance than a guitar with a fixed trem does." But the story he went with was priceless.
     
  15. MFB

    MFB ExBendable

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    This. I remember I got a FR guitar well before I should have because it looked cool (it was a RR-3) and I didn't know how much maintenance they needed when something DOES fuck up, so it's easier to steer them away and let them build towards it then jump right in and become discouraged for something that minor
     
  16. Smoked Porter

    Smoked Porter SS.org Regular

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    This is true, and I had the same early experience as you, but with a Dinky. But the dude could have just as easily given the girl that reason if that's what he meant, I'm sure she she would've been able to comprehend that and make a decision :lol:
     
  17. bostjan

    bostjan MicroMetal Contributor

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    I bought my first floating trem guitar at a mom and pop store, and the salesman there made sure to spend a good thirty minutes if not an hour to show me how to change the strings without messing it up.
     
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  18. Mathemagician

    Mathemagician SS.org Regular

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    Changing strings on a Floyd for the first tone? I winged it. It was fine. Set ups? I’m 29 and still pay for those. I just do not care about certain “life skills”. Lol.
     
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  19. KnightBrolaire

    KnightBrolaire 8 string hoarder

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    one of my first guitars had a floyd on it and pretty much scarred me for life. I became so unbelievably infuriated at trying to set it up (this happened multiple times over 6 months or so) that I sold it and swore off floyds for as long as I lived. Granted, I'd be open to a floyd loaded guitar now but some irrational part of my brain still hates them for the amount of frustration they caused me compared to my other guitars.
     
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  20. BenjaminW

    BenjaminW SS.org Regular

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    As much as Floyd's are cool and what not, I am with you on this. I've never owned one but I've played guitars with Floyd's on them. The whole 9 yards of setting them up, tuning with them, etc is just a pain. If I got a guitar with a Floyd, I'd replace the damn thing with a stock Fender tremolo or something so I don't have to deal with the pain of a Floyd.
     

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