Sticker shock

griehund

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Just had a few minutes to kill and took a walk through what used to be a large local privately owned music store in Spfld MA. Maybe 60 new acoustics hanging on the wall. Most expensive was a $1400 Martin. Everything else was on sale in the $200 to $500 range mostly Ybanez. Maybe 30 electrics, mostly Ybanez and Squires again in the $200 to $500 range. This store used to have two floors but has been reduced to one. Used to carry several pianos and organs now mostly keyboards. Also used to have lots of drum sets, amps, and PAs. Not much anymore. There was not one quality instrument in the entire store. Food for thought.
 

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I was in the local store today and they seemed only to be interested in the low-rent stuff too. :(
 

griehund

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Default said:
I was in the local store today and they seemed only to be interested in the low-rent stuff too. :(

If a retailer loads up his/her store with merchandise that doesn't sell he/she goes under. Been there done that. The situation speaks more about the condition of the economy and the resulting health of all retailers. In a perfect world the high end stuff would be flying off the racks and the low end stuff wouldn't exist in the quantities that it does today. Bottom line, a guy's gotta eat and feed his family.

On the bright side, "the son will come up tomorrow, bet your bottom dollar that tomorrow, there'll be son". :)
 

walrus

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My local store (not counting Guitar Center) has a nice selection of Martins, Taylors, and Guilds. But they also have some low end guitars, particularly their electric selection. The strategy seems to have worked for many years - they also, of course, have a very loyal local customer base that has supported them throughout.

walrus
 

dapmdave

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griehund said:
Just had a few minutes to kill and took a walk through what used to be a large local privately owned music store in Spfld MA. Maybe 60 new acoustics hanging on the wall. Most expensive was a $1400 Martin. Everything else was on sale in the $200 to $500 range mostly Ybanez. Maybe 30 electrics, mostly Ybanez and Squires again in the $200 to $500 range. This store used to have two floors but has been reduced to one. Used to carry several pianos and organs now mostly keyboards. Also used to have lots of drum sets, amps, and PAs. Not much anymore. There was not one quality instrument in the entire store. Food for thought.

We have a local shop that was becoming a Fender dealer, and for a while I had hopes of seeing a Guild or two. But they just loaded the place with Squiers, and at the high end we have a few MIM strats or teles. What a shame. :(

Dave
 

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dapmdave said:
We have a local shop that was becoming a Fender dealer, and for a while I had hopes of seeing a Guild or two.

Slight veer. I was talking to a local dealer (and he had about 12 Guilds in his showroom from the US, from China and from Mexico). He said that from his position, FMIC is a bunch of individual companies. If he wants Fender branded equipment he contacts someone in the Fender group of FMIC. If he wants something else he has to deal with the Specialty Brands arm of FMIC and depending on what he wants he has to talk to the Guild product line or the Gretsch product line or the SWR product line or...

On the outside we tend to think of FMIC as one big company and if a dealer is selling one of the FMIC brands then they are authorized to sell them all. But that is not the case. The better analogy would be to the old General Motors. No one expected to buy a Chevrolet at a Cadillac dealer just because they were both General Motors products.

Slightly back on topic, this dealer is known as a guitar shop and he has been able to stay in business selling vintage guitars, amps and effects and new instruments that are mid-to high end. I remember being in the shop and he had three Fender Road Worn Strats. It freaked me out because if you compared them they were worn in exactly the same way and three guitars with identical wear patterns was disconcerting, to say the least. Regardless, those were the new fenders he thought he could sell, not Squires.
 

walrus

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Don't get us going on those "road worn" Fenders!!!

walrus
 

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fronobulax said:
It freaked me out because if you compared them they were worn in exactly the same way and three guitars with identical wear patterns was disconcerting, to say the least.
Impeccable production consistency, eh?
:lol:
 

walrus

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"Production consistency"? I thought they were played to get like that, I thought I would be paying for the "mojo"!

Salesperson to gullible "road worn" customer: "These three guitars were played equally, in a sweaty club, for the same exact amount of time, by a set of identical triplets!"


walrus
 

griehund

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Haven't seen those road worn strats in stores for 3 or 4 years, maybe longer.
 

adorshki

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walrus said:
"Production consistency"? I thought they were played to get like that, I thought I would be paying for the "mojo"!

Salesperson to gullible "road worn" customer: "These three guitars were played equally, in a sweaty club, for the same exact amount of time, by a set of identical triplets!"


walrus
Be a pity to break up a set like that then, wouldn't it?
'Scuse me, I gotta get my tongue back out of where it's firmly planted in my cheek... :D :wink:
 

samriggle

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In Michigan, the only store I have ever seen a Guild is Elderlys in Lansing. Plenty of Gibson, Martin and Taylors in any store you visit. I have tried them all and cannot see myself spending alot on any of them. :D

I love my Guilds 8)

Sam
 

geoguy

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Store owners need to stock what their customers are willing & able to buy.

The store griehund visited is in a city that has had severe economic hardship for some time (Springfield, MA). They probably have few customers with free cash to buy good-quality instruments.
 

fronobulax

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geoguy said:
Store owners need to stock what their customers are willing & able to buy.

The store griehund visited is in a city that has had severe economic hardship for some time (Springfield, MA). They probably have few customers with free cash to buy good-quality instruments.

In contrast to the store I visited which is inside the Capital Beltway in an area that has not suffered serious unemployment and usually comes in the top ten of any survey dealing with median income. So the ability to pay the premium for new road worn guitars is different.

Tangentially the owner postulated that in today's economy the high volume Guild dealers were most likely to be in big cities, on the coasts, in areas that have been relatively unscathed by the recession. It makes sense although I suspect there are exceptions, including a store in Montana :wink:
 

griehund

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fronobulax said:
geoguy said:
Store owners need to stock what their customers are willing & able to buy.

The store griehund visited is in a city that has had severe economic hardship for some time (Springfield, MA). They probably have few customers with free cash to buy good-quality instruments.

In contrast to the store I visited which is inside the Capital Beltway in an area that has not suffered serious unemployment and usually comes in the top ten of any survey dealing with median income. So the ability to pay the premium for new road worn guitars is different.

Tangentially the owner postulated that in today's economy the high volume Guild dealers were most likely to be in big cities, on the coasts, in areas that have been relatively unscathed by the recession. It makes sense although I suspect there are exceptions, including a store in Montana :wink:

There is an economic theory that postulates that the sale of high end/luxury products is not affected by recessions because folks with lots of money will buy or not buy regardless of economic conditions. Using this reasoning, NH would be wise to keep the quality/price point at the high end. Scarcity also works to keep demand up which in turn works to keep margin up. Guild and GC may be good examples of the extremes. On the one end you have a smallish company with the potential to be highly profitable and on the other end a huge corporation trying to be all things to all people that is feeling the economic downturn.

Also, from a retailer's point of view, it is sometimes wise to carry some inventory that has a large margin to subsidize the sale of short margin goods. If I walk into a shop and see an array road worn strats I'm thinking they have been hanging around for quite a while or the owner was able to pick up a few at closeout prices and has a long mark up on them. Of course the inventory is only worth what you ring in the register.
 

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These three Strats were flagged as New product when I saw them and they are not there any more so presumably someone bought them.

There is an economic theory that postulates that the sale of high end/luxury products is not affected by recessions because folks with lots of money will buy or not buy regardless of economic conditions.

I think that is a factor that contributes to the continued existence of this store. I also think the relatively high concentration of people with "enough" money in the geographical area helps a lot.
 

Taylor Martin Guild

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I understand that for a dealer to carry Guilds, they have to fill a minimum order. That may be too many guitars for smaller shops to be able to handle.
Does anyone know if this is true?

If this is true, I can see why there are no Guilds in the Shops that I visit.
They cant afford to order more than one or two at a time.
 

adorshki

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Taylor Martin Guild said:
I understand that for a dealer to carry Guilds, they have to fill a minimum order. That may be too many guitars for smaller shops to be able to handle.
Does anyone know if this is true?
I recall seeing a reference to Fender requiring large minimums a few years back, but I doubrt very much if that's actually the case now with Guild specifically, since one reason cited for the lack of their presence in Guitar Centers is that they can't make enough to meet GC's requirements.
I'm pretty sure the real situation is that they're sticking with supplying only authorized dealers, and even then may only be barely keeping up with demand.
Taylor Martin Guild said:
If this is true, I can see why there are no Guilds in the Shops that I visit.
They cant afford to order more than one or two at a time.
Bing at Guitars of Montana'd be the guy to ask, he's authorized and he's a member here. :wink:
Bing, gotchyer ears on, big buddy? :D
 

fronobulax

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Taylor Martin Guild said:
I understand that for a dealer to carry Guilds, they have to fill a minimum order. That may be too many guitars for smaller shops to be able to handle.
Does anyone know if this is true?

If this is true, I can see why there are no Guilds in the Shops that I visit.
They cant afford to order more than one or two at a time.


I don't think Guild dealers are required to place minimum orders.

The dealer network was discussed at LMG III and a few points seem relavent. First Guild admitted that they had lost a lot of dealers and the associated confidence by "starting and stopping" the brand several times. Those days seem to be over but the "wait and see" attitude definitely effects dealer enthusiasm for stocking Guilds. Second there are only 120 US dealers, IIRC. One of the reasons given for that is that Guild has a vision for its dealer network and not all shops fit into that vision. I believe the network is being built by word of mouth rather than someone from Guild visiting shops and saying "please sell our guitars". Given the limited production it is a good thing that the dealer network is not growing significantly faster than production. Finally, if you use a rule of thumb that the dealer has to buy the guitars and thus invest something close to 50% of the MSRP in inventory, stocking 5 American Guilds ties up something like $10,000 in inventory. There are shops that cannot afford that and there are shops that could get a bigger or faster return by stocking different inventory items.

Since we don't have retailers who are owned by Guild, it is safe to say that stores are in business to make money and not in business just to sell Guilds.
 

griehund

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fronobulax said:
Taylor Martin Guild said:
I understand that for a dealer to carry Guilds, they have to fill a minimum order. That may be too many guitars for smaller shops to be able to handle.
Does anyone know if this is true?

If this is true, I can see why there are no Guilds in the Shops that I visit.
They cant afford to order more than one or two at a time.


I don't think Guild dealers are required to place minimum orders.

The dealer network was discussed at LMG III and a few points seem relavent. First Guild admitted that they had lost a lot of dealers and the associated confidence by "starting and stopping" the brand several times. Those days seem to be over but the "wait and see" attitude definitely effects dealer enthusiasm for stocking Guilds. Second there are only 120 US dealers, IIRC. One of the reasons given for that is that Guild has a vision for its dealer network and not all shops fit into that vision. I believe the network is being built by word of mouth rather than someone from Guild visiting shops and saying "please sell our guitars". Given the limited production it is a good thing that the dealer network is not growing significantly faster than production. Finally, if you use a rule of thumb that the dealer has to buy the guitars and thus invest something close to 50% of the MSRP in inventory, stocking 5 American Guilds ties up something like $10,000 in inventory. There are shops that cannot afford that and there are shops that could get a bigger or faster return by stocking different inventory items.

Since we don't have retailers who are owned by Guild, it is safe to say that stores are in business to make money and not in business just to sell Guilds.

I think there's probably a few reasonable assumptions that can be made:

Guild doesn't want to sit on a large inventory in NH.

While it's probably not an actual hand to mouth situation, I'm sure they want to turn inventory into capital ASAP.

They cannot produce large enough quantities to supply any big box stores.

They probably don't want to take on a big box account at this point in time because of the economy and the danger of falling into the Sears Roebuck syndrome.

It would be in their best interest to cultivate smallish dealers by offering payment terms that fit their ability to pay.

It is unlikely that any dealer would openly discuss his/her business relationship with anyone so while speculation is appropriate inquiry is probably not.

All this thinking has me plumb tuckered out. :?
 
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