Official Luthiers Forum!

Krugman's biological make-up aside.... and a nod to Joe's crediting of fat-arse Al Gore having invented the Internet prior to confusing a "real" massage therapist for, well, you know.... here are some more thoughts.

First Ken - Fred Durdell is a good friend of ours and he is a really good guy. He has sent us countless Toledo folks for repairs, Martin warranty work, etc. Both Fred and his lovely wife have been to my home and it was a great time.

Next regarding brick and mortar business reemerging someday in the wake or likely wake of GC's demise my bet remains on the idea that they will be back. Perhaps a bit different from the experience of previously perishing but I believe they will be back.

Why?

A number of reasons. First one companies demise is an opportunity for others with the vision, coin, and desire to jump on it. This is The United States of Business and even if none of us can fathom opening a stinkin music store I am sure that someone else will want to do so.

Next and this is the really big kahuna in my thinking. Big companies, huge companies spend millions testing markets, researching opportunities, gathering real-time data before investing in earnest in an idea.

IBM still to this very day contracts Stanford University every year for a survey of the ten most powerful words in the English language to North American consumers. Every year some of the words change and are a sign of the times. Some words remain from year to year in so much as they remain powerful to we human bags of mostly water (Star Trek reference).

Words such as love, power, money are on the list every year and rarely change. Other words such as herpes, AIDs, Taliban, etc.... change from year to year depending on what's on the minds of North American folks.

The end game for this top ten list is that IBM will then populate their advertising and promotional materials to the fullest extent with the use of the powerful words as often as possible. It's to get our attention, be powerful in presentation with much meaning to us, and ultimately exploitation but what kind of promotion at the end of the day isn't....

Long story short in one of these studies done by another huge company the question was asked if folks prefer the low price of an Internet reseller or to deal with an actual human in a brick and mortar store. Just what we are wondering about, eh...

Surprisingly and as one who is also "cheap" at times myself... guess who won?

Yep, actual humans. As such this study is taught in Universities with the end game being that we humans actually prefer to have a bit of a positive relationship with a store owner or employee and we also appreciate knowing that we are part of something larger than us when we support local businesses.

That's exactly how I feel as well and although I buy off the Internet too I am usually keen to shop local first and even pay more for the thing locally as well so long as it's not WAY more....

I want Alice at the bakery to have a job and Dan the Master Jeweler to have a successful business. I want DJ to be able to pay for his kids college and why I bought my fridge from him and I want Bill to have a good retirement as appreciation for the years that he pumped my gas even in an era when self-serve is cheaper and full service is nearly nonexistent.

I know and believe that money spent in my community results in my community doing better.

And..... as a small businessman myself I appreciate when folks feel the same way.

I'm also armed with IPhone and socially conscious apps permitting me in real-time to scan this toothpaste or that toothpaste and know what causes the company offering the stuff supports and measure these causes against my own personal values and morals.

One of the things that I taught when I did consulting work was how local businesses can have a positive and parasitic relationship with Internet resellers in which the marketing dollars that GC spends might actually result cash sales for local businesses.

How can this be? Because people really at the end of the day and for the most part want to buy from people and not a web site. We also want immediate gratification so I can order an ax from Sweetwater even with their return policies but I can also drive across town and have it today too from a local reseller and be able to inspect what I am getting as well.

GC in many ways has a business model that regardless of Internet resellers or brick and mortar they might still get the sale. Good thinking except for what this has done to the Mom and Pops but I am sure that was never on the minds of GC executives.

So I believe that for many reasons, some documentable and supportable with real data, Mom and Pops will reemerge. Perhaps not the degree that they once existed but there will always be someone who fancies the romance of selling musical instruments and turns a blind eye to the realities that make this likely not very romantic at all....

Regardless time will tell and what's really, really, really important is at the end of the day are guitars still cool?

The majority of our clients are middle aged or older and this with 50,000 student less than 2 miles from our shop. It's concerning to say the least. Maybe we should start stocking depends, Ensure, and Bingo pieces..... or..... iPads with musical apps....

Never did a fret dress on an IPad.....

Thanks for your thoughts everyone, much appreciated!

Oh yeah, one more thing. Before the store that existed in our space for 52 years perished and the owner and our friend Herb retired he made the most money off lessons, the second most money off repairs, and the least money of sales of musical instruments. He was a Martin dealer as well.

His reality was that low profit margins aside selling musical instruments WAS a stalking horse for getting repair and lesson business. Then there is that old adage about living by the sword and dying by the sword. It could be that GC's business model that positioned musical instrument sales as the likely largest profit and loss center does not work for them as it didn't work for Herb. Why? Because since one place did it now everyone is selling on price and making virtually nothing when considering real and true costs.

It just could be that GC's business model once mature and with competition from others selling on price that the dependency on musical instrument sales for the lions share of revenue ended up hurting them for the very same reasons it hurt Herb. There is no money in it currently....

This should concern small builders as well to some degree.

So this means that other activities have to make up and take up the slack. Other activities that require real, live humans with certain skill sets such as music teachers and repair Luthiers.

We also know that GC reworked how they manage the repair side of the biz a couple of years ago seeking to reap more from it which could also be an acknowledgement that musical instruments sales are simply not all that...

At the end of the day GC participated in a very big way in shifting the emphasis for musical instruments sales from personal attention, quality products, and great human to human service and relationships to an atmosphere where it's now all about price and price only....

Seems to me that this likely means that they reaped what they sewed and likely did this to themselves....

Yup! Rush Limbaugh told me that so I believe it too. Don't understand why actual economist don't understand.

I see there are veiled /obvious political allegiances being bandied about again. Elections are coming oh oh! . I used to run a succesfull music store in L.A, so I will throw in my 2 cents here.Yes martha, m/p stores do have a chance! . A lot depends on the community one lives in , and what potential services the clients are looking for. Yes offering lessons , repairs , sales , etc helps to build goodwill. Personally, if mega corps practice unethical business tactics, then sooner or later they will fall, and open up opportunities for others to create a niche environment for themselves and their community. My feeling is that the glass is half full and it//s never too late to run a small store or luthiery biz, but do some serious research first before spending $$$$

Actual economist - Milton Friedman.
Fake economist - Paul Krugman.

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"Act your age, not your shoe size" - Prince

Mercy! You win! Can't argue with your logic, Chris. Why don't we get back to discussing guitars, guitar making, the business of guitars, and the like?

The truth is it is hard to know what impact the demise of GC will have. I agree with those that suggest that we can't turn back the clock to mom & pop shops on main street. Something other will probably fill the void. Mainstream guitar buyers seem to want a guitar that is a tablet computer with strings. I've seen touchscreen midi controllers, guitar lessons masquerading as computer games, guitars that tune themselves, guitars that sound like sitars and pianos, etc. Almost by definition the high tech guitar is a product of large corporations and outsourcing to China. If a guitar is just a block of painted wood holding some electronics, it does become a commodity that competes only on price. How the mom & pop will cary or service those is a mystery to me.

Of course I hope I'm wrong. I work with small business owners all the time, and it is heart breaking to see a young couple in their early thirties hoping to do something other than be a corporate drone and know that they have virtually no chance of succeeding. Some do succeed, and for their sake I hope the demise of GC brings about what Hesh is thinking.

I've been treated poorly by mom and pop stores and given excellent service by multi-national corporations. The opposite is also true. No business model has a monopoly on good or bad practices.

I sure wish the little right/left jabs would stop already. In addition to being insulting to Lance, they are really quite impotent and pointless.

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George :-)

The most successful music stores locally (and I use the word successful loosely, as they are all hanging on by a thread), are the ones who provide in house instrument repair and service, instrument rentals, and offer in-store teaching staff. Having these 3 things provides enough foot traffic to buy strings, reeds, books, and sticks. This manages to keep the lights on. Then staff salaries and commissions come out of actual sales. Taxes take all the rest. IT'S TOUGH OUT THERE, no matter whether you run a full line store selling school band instruments down to sheet music, a rock'n'roll store with guitars and amps, or simply pianos and organs.

And it won't get ANY better until the gubmint quits taking so much of our money, agreed?


The biggest change we'll all have to deal with - online purchases. eBay and Amazon have made sure there is no going back to the old days.

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"Act your age, not your shoe size" - Prince

NO.
Can't you stop with your right wing agenda?
It's not allowed you know...

Ernie not only talks the talk but he has walked the walk far longer and further than any of us when it comes to how to run a music store and what the possibilities are.

Ernie and I are opposites politically but it does not matter and I hope Ernie does not mind if I post publicly that we are friends and talk from time to time. I value Ernie, his experience, his humor, his humanity, and most of all his intellect - he is a very sharp guy. He also tells me that I am full of &**& from time to time and I suspect that he is correct!

Regardless my bet's on Ernie's view of the opportunity for music stores going forward. I too see an opportunity here although I would never want to enter that business mostly because I love what I do now and can't get enough of it.

To be clear Krugman was brought up because he specifically studied Bain and their practices and published an article about it. Friedman did not or I would have mentioned him as well. This is not about Mitt Romney to me and this is the first time that I have brought up his name. Hopefully it's the last time it appears and I pledge not to mention him again.

Instead it is very much about the largest reseller of musical instruments the world has ever seen on the brink of bankruptcy and as such how they got to this point seems to me to be something that adults should be able to discuss without getting off topic into subjects such as taxes, politics, etc.

So as the OP here this is my thread so please everyone including myself let's keep this discussion about GC, their management, the market, the prospects, the future, predictions, personal experience with any of this, etc?

I'm on my very best behavior going forward in this thread so if someone pees in the collective canteen so-to-speak going forward it will be on them, instant fame if you will.

Lastly unlike the other times that someone wrote about GC and their woes this is the very first time that a publication such as Forbes has examined the situation. That's notable in so much as Forbes is well respected, some times....

Thanks

THE TRUTH is always allowed by thinking people.

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"Act your age, not your shoe size" - Prince

Especially those "thinking people" that resort to ad hominem attacks...

You like LIAR better? How about IDIOT?
Let's stick to the facts - he's a Keynesian, and I think that school of thought is based on fallacies.

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"Act your age, not your shoe size" - Prince

Down boys! Down!

Is anyone even the least bit concerned about the horse?

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A constellation only takes shape when one maps the whole.
- Beth Brower

Been thinking about this on and off all day. If a big box, low cost retailer failed, would M&P fill the void? This assumes that the original demand which led to the Low cost retailer fades as well, no? Seems to me the demand stays. So what happens next is a business which learns from others past mistakes comes in with a new approach. Let's face it. Walmart thinking is pervasive. I used to posit that Walmart makes people stupid. I don't think we are ever going to see M&P fill the void.

I might be a bit wishful here, but I do think that if GC were to restructure and downsize significantly, or implode entirely, that there could be some level of recovery with the mom & pop stores. It's not going to be a magnificent boom and return to what it once was (there's still the internet), but there could be opportunity.

More retail would go to Amazon and Ebay (no brick and mortar can compete with tiny markups that low-rent warehouse high volume distribution hubs can manage). In communities that loose a GC store however, there will be many small voids left in little pockets around the country for lessons and service. If played wisely (not a trait typical to music store owners I know), there would be opportunities to run successful stores focused on lessons and service, as well as local retail. Much of this is going to depend very much on location.

I will also be curious to see how companies like Martin and Taylor adjust their sales policies in the wake of this (assuming it happens). In the past they have been keen to protect their value by enforcing MAP, as well as their reputation of quality by favoring retailers who could be a respectable face of their companies to consumers. Let any entrepreneur willing to place minimum orders sell your stuff through Amazon or Ebay at rock bottom prices, with no environmental care and restrictive return policies, and it can quickly tarnish their perceived value and quality reputation. Set your dealer policies so loose that penny-stock music stores drive the more reputable stores out of business, and it could be tough to recover when reputation sags and representation becomes more scarce.

In the current race to the bottom I know a lot of these dealer terms have been loosened quite a bit. I remember when Taylor heavily restricted any listing of their products in catalogs and websites to protect smaller dealers from being undercut by big box stores. By now I imagine you can buy them through Amazon, but it wouldn't surprise me if we at least see a more stringent enforcement of things like MAP, and more scrutiny of potential dealers as being suitable representatives.

Or it could go the other way, as it seems Fender has already begun, and we could see more manufacturers offering direct to consumer sales. Dunno. Just a lot of guessing and speculation on my part, but it will be interesting to watch (especially how manufacturers weather the coming years).

I will say that if our nearest GC were to close, I would miss all the extra work they feed our shop, in getting to bill extra for all the intensive reworking of jobs botched up by their in-house techs.

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Eschew obfuscation, espouse elucidation.

Wow, you are full of yourself. Quite the ego....
I don't know how you continually get away with this. I'm done with you. Enjoy your Chicago School Economics.

What's brest augmentation have to do with G*itar C*nter?

Back on topic, please.... when the store was still on the lower floors of our building we used to talk about what we observed on the sales floor.... More specifically someone would select a nice Martin, sit down in the John Lennon sat here chair... and put a towel in their lap (more on this in a minute...) try it out, like it, put it back, pull out the IPhone and Google it and then off to GC they went to save $50...

A month later they were in our shop being written up for a proper set-up... Additionally the nearest GC to Ann Arbor is maybe 20 miles away but hard miles often because of our terrible roads these days... By my calculations buying from GC after factoring in the set-up costs that we charge, the drive, gas, someone's time - I betcha that this escapade actually cost the customer $50 or more additional than if they has simply bought local...

Go figure...

I used to have a brother in law who would spend three hours on the Internet to save $10.... Never got that one either. Maybe that's why he is a "used to be" brother in law...

Experiences like this had me convinced that independents can compete with the big box stores and actually have the advantage in terms of the human factor. Sure GC has humans too but my experience has been they are on some level of commission (in the linked article in Forbes it was reduced to .25%...) and as such have pressure to make the sale. The independents have pressure too but my experience has also been that independents have an opportunity to play the long game building solid relationships over time, perhaps years at times. At GC every time I went in there the crew changed seemingly from month to month. It was like migrant garage band folks with a day job.

As such I will always put my bet on the independent because the people factors have the opportunity to be superior. Not always obviously but relationships matter when it comes to developing trust.

Personally my favorite thing to check out on the rare occasion that I make the sojourn to the mecca of our area, Elderly is the used stuff and even the "as is" stuff. Being a Luthier creates lots of possibilities for folks that others can't know or have. We can pick-up instruments that need work, get a beer and do the work and have something pretty cool for below market value.

For the music store experienced folks, Ernie and others I have a question. During the holiday season we see lots of the "strat packs" and equivalents from other manufacturers such as G*bson. I always suspected, but I don't know... that these were loss leaders and more a stalking horse for traffic than something uber profitable for the store.

Is this true or what's the deal?

Regarding the towel in the lap thing - customers were offended, truly especially when you can't know where that towels been... My take on shelf rash and store damage is that it's part of the trip to New Jersey so to speak of being in a retail business and you kind of have to bite the bullet and go with it. Anyone have a better way to protect merchandise, have folks try things out freely and with no dependency on a sales person. The towel thing was basically offensive and understandably so.

Thanks

Hesh, coming from the classical guitar side with the delicate shellac french polish on most of the better instruments, I wouldn't be offended at all by the towel. Belt buckles and even jean rivets/buttons can damage an otherwise flawless finish in a heartbeat. As a matter of fact, I check what I'm wearing before I sit down to play at home, and if it looks like it could scratch I use a towel myself!

Hi Hesh. Thank you for all the kind words.! Just to be fair politicaly I will bash conservatives, as well as Liberals/progressives, and conversely say positive things about both when they merit it.Getting back to biz, it seems from my perspective that even with the GC current debacle an the slow economy,luthiers do have many opportunities to succeed, and please don/t let the naysayers tell you otherwise. Due to current financial pressures and soaring personal costs . I am going back to work. Plus, I would be bored whitless hangin out with others my age who are retired. If I could go back an remedy 2 things in our store it would be 1) hire a lawyer familiar with small biz assets to protect ourselves from potential legal problems, 1 legal problem can put you out of biz????and trust me they will arise , but most importantly too would be an a accountant who has a lot of experience with understanding the complicated tax laws in the usa plus your own individual state tax laws. I found this out the hard way trying to save $$$ and paying a huge $$$ fine to the IRS and state of Kaleefornia, which I luv. One other observation.many of us loofiers would do well to study the habits an attitudes of those who have to sell for a living.If you cannot communicate with your potential clients, you will not make the sale and or be able to pay yourself and the bills!!

Hesh . I do not know how to answer your question about the (strat pack), but I will take a guess .It/s probably a loss leader put out by the gtr mfr. companies to ensure that their name/logo is known to anybody and everyone in perpituity. When a big corp sells their product or biz, or goes out of biz , the goodwill created by name recognition is worth big$$$. cheers

wow...just WOW

methinks a LOT of energy has been put into this thread by ppl. who think any attack on Bain Capitol is an attack on Republicans and Mitt Romney...pffft ...frakking motard...

first...let's lay a foundation...I have a 4 year degree in Economics/Business from the University of California...anybody care to challenge that???

I totally agree with what Hesh has said about Bain...somewhere out there exists a theoretical sweet spot of economics wherin lies the perfect situation...everyone benefits...business and consumers...but it rarely happens because of predators that want to be the king of the hill... ...pillagers and rapists IMHO...and Bain Capitol is one of those animals...only concerned with themselves...get a clue...it's obvious...

Guitar Center? my memory of them is this...I bought a Peavy Classic 50 watt with 4 10" speakers used from them circa '82 (they were still a "mom and pop store" IIRC as they were only in Ca. way back when)...was a loyal customer of Guitar Showcase in general, but hey...things happen...walked in to GC one day in '83 and had the chance to buy a Jackson RR0004...WOW...wish I wasn't broke then (college student, don't ya know)...that would be a real collector's item...had to settle for RR07xx...'84 with damned poplar wings as opposed to alder wings...

anyway...GC has certainly grown...and is most likely going to fail...because of Bain Capitol and its pillaging ways...

and yeah, this is directed at the person who objected to the concept that I would have been pissed if he had setup my guitar AGAINST my specific directives to NOT do so...I play aggressively and have to set my saddle appropriately to compensate for such...if a customer says don't frakk with the saddle, then DON'T...sheesh...

go ahead, call me an IDIOT and be prepared to defend your statement with some REAL economic theory...and that is a joke in of itself as economics as a Social Science that "attempts" to use math to define how society acts....historical note: I attempted to be a physics major...I'm weird but not that weird...point being I'm familiar with math way beyond anything that an economist uses...

and there's the proof of your arrogance..again, spit out some proof of your thoughts...sheeshus...

No need for personal/political ugliness here.

Thanks.

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https://soundcloud.com/jeffreylsuits/he ... -runnin-13