You look out your window and see the new Guitar Center that just moved in next door. You look down at the beginner packs in the new Wal-Mart ad that appeared on your doorstep. And then you look at your finances and see the margins just aren’t where you need them to be. What do you do? Do you throw in the towel now before you go the way of Brook Mays and The Woodwind and Brasswind? Or do you take a hard look at your product and service mix to create a recipe for keeping your guitar shop in business? Here’s how to be one of the strong who survive.
High-End Times
It’s common knowledge that the guitar market is not operating at the same strength it was a few years ago. According to MI SalesTrak’s Jim Hirschberg, “Guitar unit sales in MI retailers fell 5.6 percent versus 2005,” particularly in the acoustic and pack segments. “I think the overall category is soft, at best,” added Don Rhodes, vice president of merchandising at Musicorp. “Many dealers came out of the 2005 holiday season with more inventory carry-over than anticipated due to soft sales. We’re hearing that December 2006 was not much different.”
But while economic swings could discourage the first-time buyer or a family man choosing between gas for his car or a guitar for his son, the high-end is a nice place for retailers to situate themselves and not get hit directly by the economic storm. “If six months ago you had $3,000 to blow on a guitar, chances are six months later you still have the $3,000 to blow on a guitar,” said Brian Meader of Washington Music.
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It also can be helpful to work with the manufacturers to create exclusives for your store, which Joe Gallenberger said work better than house brands because they allow you to build on existing brand equity rather than start out with an unknown entity.
“Many years ago, I saw a lot of my competitors doing house brands, and they would have to do the job of explaining to the consumer why the Mark’s Music guitar was worth owning,” said Gallenberger, who is both general manager of Brookfield, Wisc., retailer Cream City Music and president of its parent company, Warpdrive Music.
“We can take the Washburn name, for example, and design a model with them, run the certificate in house. Now we’re using the brand equity that’s established by a brand that’s been around for 100 years, but using our own creativity to create a model and we’re the only ones in the world that have it. It really takes the competition out of the game very handily and allows us to make a fair margin.”
Out Strat Pack ‘Em
Another benefit to carrying the upper ranges of product is that it takes away some of the direct competition from big boxes and chains.
“For all the things GC does well, they’re really more focused on the under-$1,000 market,” said Meader. “So rather than try and out Strat Pack them, one of the things you can do as a store to separate yourself and be different is to have a lot more of the higher-end stuff they’re not even interested in trying to do.
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