Guitar Center Layoffs

[Rocky]

I worked in retail for years. Back in the ‘80s it was common for prices at every step to double.

Item manufactured for $250
Sold to distribution warehouse for $500
Sold to retail store for $1000
Sold to public for $1500-$2000

It's common for non-commodity goods sold through distribution to have a manufacturing cost 10-15% of retail. That's incremental cost - the cost to make one more of something you already make, not including design, tooling, etc. For disposable goods, like fashion, or things requiring large amount of marketing $$$, it's probably more like 5%

 

[DrumBob]

I disagree there Gary. I've known the Ash family since I was young, and they're very good people. They treat their employees like family, much like D'Addario does. When you go into either of the Long Island stores, you are greeted by generally cheerful and knowledgeable workers, many of whom have been with the company for a very long time. I can't say that about a single GC here, and it's a testament to the bankruptcy laws in this country that they're even still in business. They've been on life support longer than Sears!

EDIT: I actually misread that originally as "much better" rather than "much better off", but I believe sam Ash to be on much better financial footing as well. Even if their retail outlets don't perform exceptionally well, their Samson parent company (which includes brands I love like Hartke) are in fine shape.

Don't know if you are aware, but the Sam Ash on Route 4 in Paramus, NJ is closed, after decades in business. The last time I was in there, it looked like a morgue.

 

[Midnight Toker]

it was that way for a while but fees and shipping have become cataclysmic in some cases, and now they are even reporting to IRS. this is why some of the pricing on reverb and ebay are thru the roof these days...many dealers have become dependent on the big online sites, and now the digitial overhead and shipping costs have multiplied on them. Craigslist still seems funcional, for now at least.

I suspect payment measures to circumvent this will eventually be utilized. Like instead of listing a guitar for $1400, they will list it for "3 individual payments of $466, and then the guitar will be shipped."

 

[mavuser]

Don't know if you are aware, but the Sam Ash on Route 4 in Paramus, NJ is closed, after decades in business. The last time I was in there, it looked like a morgue.

only time i was in that place someone working there was trying to tell me my 1966 Guild Jetstar was from the 70's (I was like "dude I own 4 of these, pretty sure I know the deal") and they were selling a GF-25 with action higher than the moon.

the Sam Ash by me in Huntington Long Island has always been great, however. That place has been looking pretty bare these days though. and there's a rumour their lease is now month-to-month. the main guy doesn't work there anymore.

 

[Stagefright]

I'm old enough to remember paying by the word to put ads in the want ads section of the local newspaper

I place an ad in a local newspaper for a Guild F50R back in the mid 1980's. I got one call from a guy wanting to start a jam session. The Internet rocks...for now. The corporate MBA types and tax authorities have a way of screwing everything up eventually.

 

[cupric]

What is SamAsh direct? Some prices appear to be the lowest on the net.....wholesale almost!

 

[Roland]

I think that what is going on is that most stores, and especially stores like GC, are in the business of selling new guitars. So Joe comes in with his nice guitar that looks fabulous, hardly been played and that he paid $3000 bucks for three years ago. He figures it is worth at least $2500 and that he's giving it away for that. From his point of veiew they can price it to make a few hundred dollars easy money by tuning it over. But one has to realize that the store can buy that particular guitar new for $1500. So from their perspective $1500 is new price for a used guitar. It isn't an insult, it is just that they can't afford to pay more for a used guitar than they can get a new one for.

 

[twocorgis]

Don't know if you are aware, but the Sam Ash on Route 4 in Paramus, NJ is closed, after decades in business. The last time I was in there, it looked like a morgue.

I have driven by that store a number of times, but I don't think I've ever been in there. I know it has been there for a long time though, at least 35 years or more.

the Sam Ash by me in Huntington Long Island has always been great, however. That place has been looking pretty bare these days though. and there's a rumour their lease is now month-to-month. the main guy doesn't work there anymore.

That would be sad news indeed. I haven't been there for a while, but the staff at that store was experienced and knowledgeable. And that place has been there since I was a kid.

 

[jp]

True statement and Rickenbacker is owned and managed by the founding family. But Gretsch has outsourced some operations to FMIC so the family remains ownership but FMIC has exclusive rights to develop, produce, market and distribute Gretsch guitars.

The relationship between ownership and the goods and services the customer receives is interesting and has a lot of associated mythology.

I was aware of the Gretsch relationship with FMIC, and I remember clearly when it happened. Still, the family does retain ownership, and it is a more creative solution than selling out altogether.

I understand how this works. Read my response to GAD. It does not mean I have to find it in my heart to think well of you after the fact!
And I think we are often all too forgiving in the aftermath. Think of the price of necessities after the pandemic. Some retailers chose to triple the costs to consumers. Legal yes, and certainly good for the stockholders. But it doesn't mean that consumers have to smile and like it.
I'm my career in healthcare the concern for the patient was abandoned for the stockholders. The bottom line trumped patient health in many cases. Lawyers made it legal. The cost of quality healthcare was often removed, out of reach, for many who cannot afford it. I understand, but I do not have to like it or the institution s that were/are involved. That is my point.
With GC I simply made it my business plan to go somewhere else.

It's often misunderstood when selling used to a dealer, that the value of used inventory gets written down very quickly from an accounting perspective. In order to survive, dealers of used goods have to account for the fact that something they purchase may sit on the shelf for a long time, slowly decreasing in value quarter by quarter. Of course, this is dependent on the used good and the characteristics of its market. Therefore, it's often more profitable for them to quickly decrease the price and sell it off quickly than letting it sit on display at a magnificent price forever. Sure we see the high markup, but taking into account used inventory, some things sell quickly and others don't.

It's the nature of that business. Dealers do their best to buy, price, and predict accurately, and good ones are often right. But they make mistakes, too, and the bottom line washes out in the end. Those better at it survive, but often just barely. They end up losing to big box stores who can buy in bulk more cheaply, and sell for lower prices. They also usually make their money in specific segments.

I understand where you're coming from, esp. with GC, but there are different rules at play that apply to dealers of used gear. It's a tough and racket.

 

[wileypickett]

Don't know if you are aware, but the Sam Ash on Route 4 in Paramus, NJ is closed, after decades in business. The last time I was in there, it looked like a morgue.

I used to shop in that one, back in the the day. The family house we grew up in was just a few miles up the road.

 

[DrumBob]

I used to shop in that one, back in the the day. The family house we grew up in was just a few miles up the road.

I shopped at Sam Ash Paramus for decades, buy haven't bought anything there in ages. I could see the store gradually going down from recent visits.

 

[Midnight Toker]

When it comes to “trade ins” or selling to stores, you have to figure you’re gonna get no better than a pawn shop deal. 40-50% of actual value. And you’ll get the same reasoning you get watching Pawn Stars. “Well, I have to put up my own money, then store/display the item in a crucially space restrictive store which alone costs money to maintain, then sit on it for however long it takes with the hope that some day the right person will walk in willing to pay retail on your used guitar.”

years ago I knew of a few new/used mom and pop shops that had a room for used guitars on consignment. If I remember correctly, they set the selling price which the seller would have to agree to…and the store got around 30%….and that was the best deal going besides selling it yourself. I bought my tele from Garrett Park Guitars in Annapolis that way.