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Should Guitar Center Go Upscale To Survive?
As competitor Sam Ash goes out of business, Guitar Center’s new CEO plans to emphasize “premium” products to return to the chain’s roots of focusing on “serious” musicians.
“Our core customer is the serious musician — the gigging artist or the passionate player where music is a big part of their identity,” Gabe Dalporto, who was appointed CEO last October, told Music Inc. Magazine. “Over the years, we’ve evolved significantly into serving the beginner and entry-level customer — which is great — but if you walk through a GC store, you’re going to see an awful lot of $300 guitars and $300 digital drum kits.”
“We have some premium product, but we don’t have enough,” Dalporto added. He further noted that most of the premium product is locked up high on walls and hard to access.
“I want customers to walk into [a store] and have the same experience I had when I was younger and just be hit in the face with, ‘Wow, this is amazing. This is a playground. This is where I belong,’” he explained. “And that means having a much more premium assortment that’s more easily accessible where I can get in and grab a guitar and plug it in and try all these pedals and effects and just geek out and have a great time.”
Beyond products and merchandising, Dalporto plans to invest in his sales team’s “consultative skills” so they can help customers “really experience the magic of some of these instruments.”
“We need to be consultative and relationship-driven,” Dalporto said. “If I help you find the instrument of your dreams, and I give you a great experience and I check in on you and make sure everything is good, you’re going to come back and you’re not going [to] come back to Guitar Center, you’re going to come back to me, the sales associate at your local Guitar Center.”
Guitar Center, with over 300 stores, emerged from bankruptcy in December 2020 with a filing blamed on COVID-19-related store closures and a looming debt maturity tied to a leveraged buyout led by Bain Capital. However, the chain pre-pandemic was already struggling to compete against online rivals such as Sweetwater and Amazon.
Last week, Sam Ash, the second-largest music instruments retailer after Guitar Center, said it was closing all its remaining 42 locations after 100 years in business due to continued pressures from e-commerce.
“A lot of this has been the move to online shopping,” Derek Ash, the chain’s chief marketing officer, told the New York Times. “There are so many choices, and to maintain a store with that much selection is very difficult.”
Luis Infantas, a manager at the West 34th Street store, noted that “showrooming,” or a customer trying an instrument in-store only to buy it cheaper online, continued to be a problem.
A RetailWire article from 2018 explored other potential symptoms of the long struggles of musical instrument stores, including being unwelcome to women, being located in rundown areas that turn off families, staff lacking knowledge of the latest recording technology, poor integration with online operations, and the declining popularity of the electric guitar.
Discussion Questions
What do you think of Guitar Center’s planned shift to target more seasoned musicians with premium products versus beginners with entry-level items?
What solutions do you see to mitigate online and other pressures facing music instrument stores?
Poll
Loading …BrainTrust
Patricia Vekich Waldron
Contributing Editor, RetailWire; Founder and CEO, Vision First
Ray Riley
Chief Executive Officer, Progress Retail
Guitar Center has always been a specialist. However, it struggled because it lost some of its specialism and became too generalized: before bankruptcy, our local store was stocking all kinds of random electronics and was very disorganized. Too many stores are tired and down-at-heel. They are not nice places to visit, even for lessons and instruction. Moving upscale to target professionals is fine, but that requires a reworking of stores and the creation of an ambience and level of service that supports such a position. It also needs to be supported by a very strong online offer to compete with Amazon and other online players.
The other point, of course, is that the professional market – while sizable and high spending – is somewhat niche. Guitar Center cannot sacrifice its mainstream market (younger kids taking up music for the first time, students wanting instruments, people having lessons for fun) in an attempt to attract a new segment. It needs to retain and expand the audience it already has in addition to attracting a new one.
It can be niche, but now that Sam Ash is out of the biz, maybe you can add more upscale equipment and accessories so they don’t have to go to that upscale music retailer or order something you can feel or touch. I think they can retain their mainstream customers and hopefully add some of the upscale assortment ti attract that customer. I also hope they will let customers know they carry that product too. You do nothing for yourself if you don’t let customers know you are in that biz…
Guitar Center can choose to go more upscale if it chooses but the real answer to survival is to widen its musical offerings and services to appeal to a broader scale of customers. Rock bands all feature guitars, and the industry itself has a glow that Guitar Center fails to exploit or capitalize on. When you walk into a store it seems very generic and lacks the sizzle it needs to be a fundamental part of the most exciting industry in the land.
Even the logo and company markings understate the excitement of playing the guitar. Project more of a rock band image by making the logo with a neon colored guitar, or two, or three.
It will also help to choose better locations, with excellent displays, and tremendous advertising that will even help to create new users!
Another marketing tool that Guitar Center should look at is the use of well-known guitar players, as influencers. Maybe Eric Clapton is chilling from his incredible career and available to do something like this. Ok, maybe not. How about John Frusciante, Dave Grohl, Sophie Lloyd, Jim Root . . . Is Keith Richards still around? Ha! Of course he is! Carlos Santana? Joni Mitchell? Jimmy Page! Well, you get the idea! – This part was fun. Db
This is a challenging situation, but it’s a familiar one for many retailers that have struggled to find their place in the market in the face of e-commerce competitors who only compete on price. Broadening their efforts to include more seasoned musicians is fine, but if they do so at the expense of turning away the larger part of the market, which is comprised of novice and hobbyist players, then Guitar Center’s future will most certainly be much smaller than it is today. Guitar Center needs to focus back on their stores and to the services/experiences that only an in-store experience can deliver. From music lessons, workshops, collaborations with school music programs to guest appearances by leading musicians – Guitar Center needs to focus on all experiences that they can deliver and which you can’t get on Amazon.
I don’t think it will work because I don’t think that’s the problem. A quick Google search suggests that one of the key growth drivers in their market is “beginners” driven by the growing popularity of online lessons and tutorials (Statista). That same search suggests that over 60% of purchases are still made in person. And finally, specializing requires “specialists” and that means musicians not consultative sales people (unless they’re musicians).
GC probably needs a combination of strategies (including its rental business). I was surprised when a great friend, successful entrepreneur and accomplished musician told me he rents exclusively from GC when performing with the Bonobos (think Vets) at various trade shows. Being a talented musician, I thought he’d thumb his nose at GC. I also believe that GC will have to face the “showrooming” elephant head on. Maybe go crazy and post competitive prices in its stores in real time; and offer to match competitors at “equivalent value” (price, service, return policy, etc.).
Unfortunately, the challenge with the solutions to GC’s real problems is that the real solutions require a much longer runway to take off (and pay off). It takes time – definitely a lot more time than it takes to go bankrupt or to have your stock fall through the floor. They’re living on the “pick’s edge” (see what I did there?).
I like the idea, but I question whether there is enough market for the premium segment to support 300 stores.
I’d lean very hard into GC’s existing instructional and lesson services: Perhaps there is an opportunity to partner with select school districts? Most schools do not have the budgets to afford pro audio equipment or set it up and maintain a studio. Nor do they have the experts on staff to facilitate quality instruction. Parents want their kids to have healthy hobbies, and with GC’s physical footprint, they could execute.
When your CMO says, “A lot of this has been the move to online shopping” they threw in the towel a long time ago. Lululemon could have said the same thing. Many others as well. And yet, as Sam Ash goes down in flames they’ll take the easy way out – it wasn’t us. It’s always the retailer. GC has an opportunity with this CEO who will take no prisoners and move the brand forward. I have confidence in Gabe’s vision. They have more creed with musicians and the general public than many give them credit for.
GC has a ticking clock on their survival. This is a business that is in decline, and really belongs to the online community because of their ability to fulfill a customer’s needs, keep prices low, and support the customer’s perspectives on how to shop for their musical needs.
GC will need to refurbish their stores as well as revisit service levels and inventory range to take advantage of the gap the Sam Ash leaves. Focus on the high end can be great for image and attracting excitement, but it’s a niche market. GC will also need to cultivate beginners and hobbyists to drive volume.
First, I’m a musician, and I love Guitar Center. I’ve bought at least six guitars from them. I’ve also bought my higher-end guitars from a local retailer specializing in another level of guitar.
So, here is my commentary from first-hand experience. Guitar Center has to define who it serves. While it does have a few high-end instruments, boutique stores with highly specialized and trained musicians/salespeople attract high-end customers willing to spend exponentially more than the beginner or intermediate musician. I can find a $10,000 guitar at GC, but I can find dozens of $10-20K (and higher priced) guitars at the boutique. It’s smart to have a few offerings in the higher end, but focusing on the 80% of the customers that make up most of your revenue and profit is also smart.
My hope is that the leadership of Guitar Center finds the balance between their in-store and online retail experiences – and creates an experience in both channels that leverages the expertise of their employees, proves their value, and keeps them in business for years to come.
Guitar Center has a number of opportunities that will allow it to “thrive” not just survive.
Guitar Center is experiencing many of the same issues that Radio Shack suffered. At its peak, Radio Shack was a mecca for ham radio hobbyists and tech fans who turned the chain into a household name. But as competition heated up, the sale of low priced parts and accessories plus limited holiday sales wasn’t enough to maintain the business. Guitar Center originally expanded around the 80’s rise of rock guitar gods like Van Halen and Jimmy Page. Today music tastes are different and guitar or piano can be replicated on a computer, negating the need to learn a specific instrument to enjoy creating music. Few people are investing in expensive instruments and, much like Radio Shack, selling cheap instruments and accessories doesn’t generate enough profit. Rather than a premium experience, Guitar Center needs to reconnect with the love of music in all its forms, including the tools to create electronic house music, a marketplace to buy and sell instruments, land gigs or find a DJ for your wedding. Bringing in weekly live music at stores to showcase the local music community – re-engaging all levels of music lovers including me — who’s musical talent is playing the stereo.
Guitar Center is retailer who can pull off a positive ship to more premium and remain on a profitable path.
Music is an emotional thing. People buy instruments and accessories to stoke their passions, hobbies and lifestyle. For most new musicians, it’s not going to be fancy guitars or strings, but an environment full of experts, with sights and sounds will motivate them to the next purchase upward. Customer experience is king in the music business and Guitar Center needs to own it.
Rock and Roll saved my soul. It was and is my church, my poetry, my spiritual release. And for hundreds of millions of people rock music, in all its forms and genres, felt the same way.
Buts alas, while rock is not dead, ROCK and its primordial soup building blocks of life, the electric guitar; the electric bass, drums, and a mic, have become a niche genre.
From the early sixties through the early 2000s Rock Was Culture. It created tribes, fashion trends, and was the lingua franca of young people around the world.
Growing up in NY meant that I could regularly walk down “MUSIC ROW” (48th b/t 6th and 7th) and spend half a day hopping from Manny’s to the original Sam Ash, and a dozen more music and instrument shops.
Then I would hop the 1-2-3-9 line down to the West Village and spend the rest of the day hunting for rare records, imports, and new music in dozens of shops from Washington Square in the West to the East 8th street of squats, Trash and Vaudeville, and The Ramones.
48th Street is no longer Music Row, Sam Ash is gone and so are the record shops, punk boutiques and squats of NYC.
There is still a place for guitar stores, but much like the rock music that sustained these meccas of metal, grunge, prog, punk, and new wave, that place is small and niche just like guitar driven music