There’s no denying that the buying strategy of Showrooming is real. It evolved from a technology that will continue to grow and continue to change the way we shop. I understand that some consider it a questionable consumer behavior that can have a negative effect on retail structures and competitive relationships. But, if Showrooming is a known and present consumer behavior, isn’t it incumbent upon the business to respond with a competitive strategy?
Could I be a Retail Wretch?
I started a discussion here this morning to get some feedback on whether an external DAC would make an appreciable improvement over an internal processor’s DAC. During the discussion, I said that I typically visit a local audio dealer, to experience the equipment and then, comparison shop to find the best deal. The particular dealer I was referring to, emails me weekly, sends postcards monthly and catalogs quarterly. It’s always with an invitation to “see and hear the difference”. So I visit, and occasionally buy some small ticket items. But, when it comes to spending thousands on nationally available equipment, I don’t feel any obligation to limit my shopping to that one location.
When I shared my buying habits with the forum, I received responses that said using any brick and mortar stores to demo and then buying elsewhere “cuzz” it’s cheaper is just plain wrong…
I was surprised at that statement. I’m a value oriented person. I enjoy quality items. But I search for them at the best price - is that wrong? If there’s no competitive pricing or added value, why should I feel obligated?
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"In the case of the guitar center, it is them stabbing everyone else. Because they can." Maybe they cannot... "Sales have fallen off sharply in recent years, which, while a problem on its own, is compounded by the fact that brand finds itself sitting under $1 billion in outstanding debt." "Moody’s warned investors that the brand was facing an imminent default with its bondholders. That immediate disaster was held off with an emergency loan renegotiation of $615 million in debt — a relief, perhaps, of the most pressing concern of default." To be continued... |
Guitar Center was a public company in 1997 with 28 stores that started to expand quickly across the country. In 2007 Bain Capital, a private equity firm took GC private with a grossly over-estimated value and highly leveraged buyout of just over 2 billion dollars. The debt service would have been a strain in a normal growth environment. Unfortunately, the timing was on the cusp of the greatest recession since 1929 and the music industry just stalled. In 2014 Ares took over GC in a 500 million dollar debt for equity swap and there’s been some noise about taking GC public again. The problems GC endured weren’t the result of a poor marketing strategy but, simply a matter of someone dramatically over-paying for the company with borrowed money. Their “come sample and enjoy” environment never wavered. And, till this day there are trays of guitar picks throughout the guitar area, choices of drumsticks in the drum rooms and keyboards with headphones for anyone to enjoy. All available at the guaranteed lowest price! |
FYI - June 6, 2018 "Despite the financial challenges, the retailer plans to open six more Guitar Centers and complete two store remodels, including a significant overhaul of its flagship and largest-volume store on Sunset Boulevard to be completed by the fall. It also plans to add up to 30 Music & Arts stores, smaller outlets that sell and rent band and orchestra equipment. They also provide lessons on strings, horns and other instruments played in schools — some 1.5 million last year alone. The division, with more than 175 locations, has seen a recent return to profit growth, company executives say." |
Let’s see if that profit growth will be enough and sustained. They are running on borrowed time and money at this point. Obviously, restructuring plan is betting on expansion. It will be interesting to revisit this topic a year or two from now. All available at the guaranteed lowest price!For whatever it is worth, it seems the problem was not the price but interest in general. https://www.digitalmusicnews.com/2018/05/10/electric-guitar-sales/ |
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