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The longest Deathwatch


p90jr

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Every year someone is pointing out that Guitar Center will soon go under, with sound reasoning... and it doesn't happen. I've asked friends of mine who work in finance about it, and they looked into all of the news and say "how they're staying afloat is a miracle... a lot of people are just delaying taking a loss on the investment in the company. When they can't or won't anymore, that will be it."

 

I don't expect it to go down this year... I think the next financial crisis will do it in (yes, I do believe there will be another financial crisis. Nobody learned any lessons from the last one).

 

Guitar Center downgraded by Standard & Poors, who expect an upcoming default

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Nor from the three or four before it.

 

They SEEM to be doing a lot of business, but I suspect most the dudes filling their stores are just in there to "browse" and take advantage of playing some nice guitars. and have no intention, or enough money to BUY anything. ;)

Whitefang

I started out with NOTHING...and I still have most of it left!
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I hope they stay in business as there are fewer and fewer guitar stores out there these days. Hopefully their used guitar and equipment business will help them keep going. A lot of brick and mortar stores are having problems staying in business... :cool:
Take care, Larryz
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Seems unrelated (but isn't actually), but the businesses that seem to be "booming" in this day and age of iNet buying, are UPS and FEDEX. In both delivering items sold online and returning them when some are found to be defective. I don't get it. It's LESS trouble for me to go to the store, try something on, try it out, see if it's something I really want, than unpacking, repacking and driving to the UPS store or wherever you take items to deliver by FedEx. And all because I bought something online, and just because I CAN. I go through enough anxiety whenever I (rarely) buy anything from a CATALOG. But THAT'S only if I can't find the item in any local store.

 

Anyway, GC might find a way to survive ala the REVERB method. Strictly online sales. It's their EMPLOYEES that'll likely do most of the suffering. Oh, and OTHER businesses that are picking up are those that offer various security camera systems because there's been a sharp increase of UPS, AMAZON and FedEx packages being stolen off of porches whenever they deliver items when nobody's home. I don't know WHEN they stopped going to the next door neighbor and asking if THEY would take the package and hold it until the person who it's for gets home. I've babysat many a box for my neighbors over the years. No bother at all. ;)

Whitefang

I started out with NOTHING...and I still have most of it left!
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Well they just caught a guy up here in my neck of the woods stealing packages off of porches...the Sheriff Dept. put a tracking device in a dummy package and followed him home right to his front porch LOL!

 

Tons of people are shopping on-line these days and I admit to being one of them. +1 on USPS, Fedx and UPS doing more deliveries than they can handle and employing private delivery people. The privates sometimes get reported to the Sheriff as they drive around in unmarked cars shining lights on houses (looking for addresses)....anyway it's always fun this time of year.

 

Many people go to the big box and try on the products and then order them on-line. Guitar Center is aware of this and they catch both kinds of fishes in their net. That may be why they are still in business. +1 they will probably go strictly on-line like MF and SW when all else fails and close a few stores... :cool:

Take care, Larryz
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They opened a new store blocks from where I live, and they're planning to open one in downtown Washington, D.C., within the year. FWIW, there are NO full-service Music stores in D.C., period, so that might be a strong market move for them. Right now, if you live in D.C., and you're a Musician, you have to go out into one of the suburbs to go Guitar (or Bass, Drum, Keyboard) shopping, unless you haunt the surviving pawn shops.

 

OTOH, I don't see a lot of business at my nearest GC, even with the holiday buying frenzy everywhere else? They seem to discount their Used Gear pretty quickly, in an effort to move it, a good thing for me, maybe not so much for their bottom line.

 

All in all, it seems out of balance: They keep opening more stores, even though the ones they have don't seem to be thriving, except maybe in a few prime markets? Somehow, they're still in a position to make exclusive deals with manufacturers, like those super-cheap T.C.Electronics pedals that I don't see anywhere else. Can't say I'd miss them much if they closed, but I'd feel bad for all the folks out of work.

"Monsters are real, and Ghosts are real too. They live inside us, and sometimes, they win." Stephen King

 

http://www.novparolo.com

 

https://thewinstonpsmithproject.bandcamp.com

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I don't think I've ever actually been into a GC but they serve a purpose...one forgotten factor (& it may not really apply here, I don't know) is some where in the org there are some ppl actually motivated by promoting musical instrument ownership, not just profit maximization.

 

As per "learning from previous financial crises" or other socio-political aspects of economics & , at risk of bumping up against the political reality of these days, I'd suggest that a great many learned from the last recession but unfortunately it wasn't the general mass of voters who continue to believe that international corporations will actually invest in lower tier workers or that job growth in a non-tech world's gonna ever be the way it it used to.

"Trickle down" or any similar idea's got 1/2 a century record of unlikelihood.

d=halfnote
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As per "learning from previous financial crises" or other socio-political aspects of economics & , at risk of bumping up against the political reality of these days, I'd suggest that a great many learned from the last recession but unfortunately it wasn't the general mass of voters who continue to believe that international corporations will actually invest in lower tier workers or that job growth in a non-tech world's gonna ever be the way it it used to.

"Trickle down" or any similar idea's got 1/2 a century record of unlikelihood.

 

Can't honestly dispute that d. I can only add that while some people did learn from those past financial woes, it wasn't the ones who SHOULD have learned. And it's MORE than the "general mass of voters". It's also the JERKS they VOTE for! :mad:

 

And it seems that what's also not been learned is that with a "trickle down" theory of economics it's usually someone HIGHER UP that's controlling the flow. And when it fails( which it always does) they'll just blame their political opponents or the Chinese or something. :/

Whitefang

I started out with NOTHING...and I still have most of it left!
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I have a friend who owns a music store. Before GC came to town, he was one of the 2 main music stores in town. He was already feeling the heat from online retailers, and when GC came to town, that pretty much put the final nail in the coffins of several local stores.

 

He managed to stay in business by changing his business model. Basically, he said there is no margin on the big ticket items like guitars and keyboards. The online retailers have the margins so slim that they don't make much and if they try to charge more, people will just buy online.

 

He made sure they had a healthy business of music lessons because when kids are coming in all the time for their lessons, they'll buy strings, reeds, cork grease, cables, straps, etc. which are the high profit margin items. He also switched focus to fixed-install business at churches, schools, etc where they needed a bit more consulting and service.

 

So the funny thing is that what kept him in business is almost the opposite business model of GC. They carry huge inventory of low margin high dollar items that mostly just sit there on display and usually don't mess with school band instruments or lessons, and don't do any kind of consulting or service type work.

Dan

 

Acoustic/Electric stringed instruments ranging from 4 to 230 strings, hammered, picked, fingered, slapped, and plucked. Analog and Digital Electronic instruments, reeds, and throat/mouth.

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Seems unrelated (but isn't actually), but the businesses that seem to be "booming" in this day and age of iNet buying, are UPS and FEDEX. In both delivering items sold online and returning them when some are found to be defective. I don't get it. It's LESS trouble for me to go to the store, try something on, try it out, see if it's something I really want, than unpacking, repacking and driving to the UPS store or wherever you take items to deliver by FedEx. And all because I bought something online, and just because I CAN. I go through enough anxiety whenever I (rarely) buy anything from a CATALOG. But THAT'S only if I can't find the item in any local store.

 

Anyway, GC might find a way to survive ala the REVERB method. Strictly online sales. It's their EMPLOYEES that'll likely do most of the suffering. Oh, and OTHER businesses that are picking up are those that offer various security camera systems because there's been a sharp increase of UPS, AMAZON and FedEx packages being stolen off of porches whenever they deliver items when nobody's home. I don't know WHEN they stopped going to the next door neighbor and asking if THEY would take the package and hold it until the person who it's for gets home. I've babysat many a box for my neighbors over the years. No bother at all. ;)

Whitefang

 

Guitar Center owns Musician's Friend... which is their online company, but GC also does online sales.

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I have a friend who owns a music store. Before GC came to town, he was one of the 2 main music stores in town. He was already feeling the heat from online retailers, and when GC came to town, that pretty much put the final nail in the coffins of several local stores.

 

He managed to stay in business by changing his business model. Basically, he said there is no margin on the big ticket items like guitars and keyboards. The online retailers have the margins so slim that they don't make much and if they try to charge more, people will just buy online.

 

He made sure they had a healthy business of music lessons because when kids are coming in all the time for their lessons, they'll buy strings, reeds, cork grease, cables, straps, etc. which are the high profit margin items. He also switched focus to fixed-install business at churches, schools, etc where they needed a bit more consulting and service.

 

So the funny thing is that what kept him in business is almost the opposite business model of GC. They carry huge inventory of low margin high dollar items that mostly just sit there on display and usually don't mess with school band instruments or lessons, and don't do any kind of consulting or service type work.

 

This economic lesson was taught to me by Mrs. Cunningham on an episode of Happy Days where Mr. C was hospitalized and she had to run the hardware store... and she put the paint on sale for cost! I think it was $1 a can, usually sold for $2, and he lost his mind when he heard, then she brought him the books and she'd made a huge profit and had one of the best weeks in the store's history and he didn't understand how... and she explained to him she doubled the price of the paint brushes and other inexpensive things anybody doing any painting would need and nobody thinks about how much that stuff costs and it's all profit!

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It's sad when a GC comes to town and puts the mom and pops out of business. The little guy has trouble up against the big boxes who can run loss leader items at cost just to draw people in and make money on the condiment stuff like straps, strings, picks, etc. and perhaps talk the customer up to a little better model. All sorts of tricks in the books. I think the little guys could still compete in the used market up until GC started getting into it. Now with Ebay and Reverb and other on-line places to market used equipment, some of those little guys are back in business...especially those with fix-it know how...

 

Not sure how the used market is going with GC as they turned in this direction too? The big box brick and mortar rent is a major factor on their bottom line these days... :cool:

Take care, Larryz
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I think the little guys could still compete in the used market up until GC started getting into it. Now with Ebay and Reverb and other on-line places to market used equipment, some of those little guys are back in business...especially those with fix-it know how...

 

Not sure how the used market is going with GC as they turned in this direction too? The big box brick and mortar rent is a major factor on their bottom line these days... :cool:

 

Not sure if Music Go Round is considered a little guy, but see my recent threads on purchases I made there. On those, I did not mention that I had also stopped in GC a few times. Much larger and better selection for better prices at Music Go Round and the staff was very attentive and friendly and encouraging in terms of hooking stuff up and trying it out. GC has a closet with some overpriced used stuff in it.

Dan

 

Acoustic/Electric stringed instruments ranging from 4 to 230 strings, hammered, picked, fingered, slapped, and plucked. Analog and Digital Electronic instruments, reeds, and throat/mouth.

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I hope they hold on. I hardly ever buy anything new there but if I'm looking for something specific I search GC's used inventories. I've bought a bunch of used pedal doo-dads and my Cordoba Gypsy Kings flamenco guitar came used from GC. On of my Pedal Steel amps was used from GC. So far I have never gotten burned. All the purchases have worked out.

"It doesn't have to be difficult to be cool" - Mitch Towne

 

"A great musician can bring tears to your eyes!!!

So can a auto Mechanic." - Stokes Hunt

 

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Not sure if Music Go Round is considered a little guy, but see my recent threads on purchases I made there. On those, I did not mention that I had also stopped in GC a few times. Much larger and better selection for better prices at Music Go Round and the staff was very attentive and friendly and encouraging in terms of hooking stuff up and trying it out. GC has a closet with some overpriced used stuff in it.

 

Yeah, I remember your posts on this business. I looked up the nearest one to me and it's located in Stockton, CA. It's a couple of hours away, but if I get down there for any reason, I'll make it a point to drop in and pack a few of my guitars with me! :thu:

Take care, Larryz
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  • 4 months later...

I had NO idea they were in business that long. I'd never heard of them until about 19-20 years ago. And the nearest one to ME jut opened up about FIVE years ago. The only other one I know of is about 20 miles away. And opened up in Canton, MI about the time a nearby MARS music closed it's short-lived doors.

Whitefang

I started out with NOTHING...and I still have most of it left!
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I've mentioned this elsewhere, but it bears repeating in this context -

 

Within the past year, GC opened a new branch in a shopping center blocks from my house. This gives them a store right on the main Metro (subway) line that connects downtown D.C. to the suburbs; it's as close to the city as they can get, without being IN D.C. itself. FWIW, there are NO major Music retailers within D.C. proper. You wanna buy a new Guitar/Bass/Drum Kit/P.A. System in D.C., you gotta drive out to the suburbs, so having this particular GC sitting right where it is (mere blocks from the city line, and right on top of a major public transportation hub) seems like a brilliant move.

 

At any rate, I go in the nearby GC on a fairly regular basis, and it's never busy, never. The phone rings constantly, but I can tell you from working Music retail, while those phone calls take up time, they don't usually bring in sales. About half the time I go in there, I see someone coming to return something, but I hardly ever see anyone coming out with something they've bought; I've never seen anyone else walking out with an Instrument? I've bought exactly one Guitar there, a used Epiphone I picked up when they dropped the price by $100.

 

You've probably heard the old line, "A boat is a hole in the water that you throw money into." Let me tell you, opening a new store, any store, is like digging a hole in the ground, and throwing money in. There's the initial lease agreement, outfitting the space, hiring staff, stocking, or moving, inventory. If I were going broke in business, I wouldn't go around opening new stores, thinking one of them was going to turn into a gold mine?

"Monsters are real, and Ghosts are real too. They live inside us, and sometimes, they win." Stephen King

 

http://www.novparolo.com

 

https://thewinstonpsmithproject.bandcamp.com

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Another view -

 

I also don't understand how GC can have so many 'exclusive' product partnerships? Over time, I've seen Guitar models from Gibson and Ibanez that were only available through GC, a handful of Dunlop/MXR pedals that were also GC exclusives, and most recently, a limited-edition version of Walrus Audio's Julia Chorus/Vibrato pedal, called the Enchantress. I'm sure that there are other product lines I don't pay as much attention to, with similar examples.

 

Just as I don't see how anyone can be opening new stores without the money to pay for rent, staff & inventory, I don't see how you can convince a manufacturer to make you an exclusive product, if your potential partner thinks you're going to file for bankruptcy? "Hey, how about you make us a few hundred custom items, we'll see if we can sell a few before our creditors shut us down."

"Monsters are real, and Ghosts are real too. They live inside us, and sometimes, they win." Stephen King

 

http://www.novparolo.com

 

https://thewinstonpsmithproject.bandcamp.com

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This could be a case of retail folie a deux, with most of the manufacturers they partner with for these exclusives being delusional about (or ignorant of) GCs current financial status.

Sturgeon's 2nd Law, a.k.a. Sturgeon's Revelation: âNinety percent of everything is crapâ

 

My FLMS- Murphy's Music in Irving, Tx

 

http://murphysmusictx.com/

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You've probably heard the old line, "A boat is a hole in the water that you throw money into." Let me tell you, opening a new store, any store, is like digging a hole in the ground, and throwing money in. There's the initial lease agreement, outfitting the space, hiring staff, stocking, or moving, inventory. If I were going broke in business, I wouldn't go around opening new stores, thinking one of them was going to turn into a gold mine?

 

+1 Brother Winston on both of your posts but I'll throw in an idea just for kicks, regarding opening a store. I'm getting too old to do it but it's an idea I have kept in mind for many years. I bought a boat for $25,000 about 10 years ago. I just sold it for $25,000 as the prices on my boat have climbed to about $50,000 new. I got 10 good fun years of use and beat the odds by getting all of my money back in the used market (this is not the norm in the boat market LOL!)...I see the same thing happening with guitars, I mean who can afford $4,000 these days for an LP or Strat or 335, etc. ? I think this is the reason for the Bankruptcies going on in the guitar world today...

 

Anyway, back to the idea...I almost bought a store on Main Street many years ago with the idea of opening a consignment or other business. We have lots of novelty and antique stores in town that do make it. The new owners move up from the big city and retire. They open up a business just to have something to do. They don't have the worry on paying a lease as they pay cash for the property. They don't worry about making it. When they are too old to keep it going, they just sell the Real Estate to the next guy and make a ton of money after holding it for 10 years (more so, than whatever goods they were trying to sell). If you love antiques or whatever, it gives you a job and a business with no employees (unless you want them).

 

OK, that's basically the idea. I would think with all the guitar stores going out of business, someone should open up a guitar shop and market some classics along with some amps...I would have fun doing it. (I'm still thinking about it) so don't shoot too many holes in the concept LOL! :cool:

 

 

Take care, Larryz
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If you've been reading all of these stories for years you know that GC's problems lie in two legacies of 90s/00s Corporate busines:

 

1) Venture Capitalists Bain Capital took over the company, saddled it with all the debt they could find, extracted what they could and unloaded it - knowing it would eventually collapse under that debt - to suckers. See also: Toys R Us. It was set up to fail.

 

2) Growth and Expansion fever... what mattered to those (suckers) investors was not the balance sheet, but the promise of continued growth, believing eventually THEY could unload it on other suckers.

 

The only reason GC hasn't already gone out of business is that those investors and the banks that lent the money seem to be too embarrassed to cash in the chips and start the dominoes falling... they keep agreeing to hold off. But, as Moody's is advising, any turbulence in the economy (which we're due for and Washington is beautifully setting us up for, at the moment) downturn in the marketplace and in the instrument retail business and the company would not be in a position to survive.

 

They can't sell their way out of this... they can't expand their way out of this (that's just to prolong the illusion of growth)... imagine you being broke and the bank and credit card companies just ignoring that you can't make the mortgage or payments and not evicting you or cutting you off...

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You've probably heard the old line, "A boat is a hole in the water that you throw money into." Let me tell you, opening a new store, any store, is like digging a hole in the ground, and throwing money in. There's the initial lease agreement, outfitting the space, hiring staff, stocking, or moving, inventory. If I were going broke in business, I wouldn't go around opening new stores, thinking one of them was going to turn into a gold mine?

 

 

+1 Brother Winston on both of your posts but I'll throw in an idea just for kicks, regarding opening a store. I'm getting too old to do it but it's an idea I have kept in mind for many years. I bought a boat for $25,000 about 10 years ago. I just sold it for $25,000 as the prices on my boat have climbed to about $50,000 new. I got 10 good fun years of use and beat the odds by getting all of my money back in the used market (this is not the norm in the boat market LOL!)...I see the same thing happening with guitars, I mean who can afford $4,000 these days for an LP or Strat or 335, etc. ? I think this is the reason for the Bankruptcies going on in the guitar world today...

 

Anyway, back to the idea...I almost bought a store on Main Street many years ago with the idea of opening a consignment or other business. We have lots of novelty and antique stores in town that do make it. The new owners move up from the big city and retire. They open up a business just to have something to do. They don't have the worry on paying a lease as they pay cash for the property. They don't worry about making it. When they are too old to keep it going, they just sell the Real Estate to the next guy and make a ton of money after holding it for 10 years (more so, than whatever goods they were trying to sell). If you love antiques or whatever, it gives you a job and a business with no employees (unless you want them).

 

OK, that's basically the idea. I would think with all the guitar stores going out of business, someone should open up a guitar shop and market some classics along with some amps...I would have fun doing it. (I'm still thinking about it) so don't shoot too many holes in the concept LOL! :cool:

 

 

A friend of mine has a consignment store, here... he was a flipper on Craigslist and eBay in his spare time and he just opened a store front. My unsolicited bit of consulting to him (which he ignores) is that he needs to cram the entrance/exit of the store with cheap impulse buys. That's the secret of retail, right? He's now complaining that he only sells stuff on the internet and the store is just a place where people sit around all day and play stuff but don't buy anything... and that's true. What accessories they do have are in a back room. I instantly questioned that logic, and his employees told me "we don't like clutter." The front counter is a glass display case with nothing in it and an iPad register sitting on it. I told them "look, if I'm bored and on that side of town, I go into GC and play guitars and waste time, then to not feel like a scumbag on my way out I buy strings, patch cables, string cleaners, fretboard cleaner, fret polish, pick holders... whatever is there that strikes me when I see it. And there's a mark up on that stuff, so I've paid somebody's hourly wage. People don't buy high ticket items every day... they buy tons of little items that they don't think twice about. Hell, sell sodas and chips and candy bars to the people taking up sofa space all day... whatever to pay the employees, rent and electricity. He still isn't listening... wants to shut the storefront down.

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Venture Capitalists Bain Capital took over the company, saddled it with all the debt they could find, extracted what they could and unloaded it - knowing it would eventually collapse under that debt - to suckers. See also: Toys R Us. It was set up to fail.

 

For the record, that's what they did to KayBee toys, too.

 

(Who, BTW, may be coming back to supplant Toy R Us.)

Sturgeon's 2nd Law, a.k.a. Sturgeon's Revelation: âNinety percent of everything is crapâ

 

My FLMS- Murphy's Music in Irving, Tx

 

http://murphysmusictx.com/

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@Larryz & p90jr - I often make reference to my FLU(sed)MS, where a couple of local Musicians did something very similar to what Larryz describes. They started out in a little house - hell, it was more of a shack with a lower floor - that had been a Used Record store, brought in a bunch of their own old gear, filled it out with stuff from friends, and had an instant Music Store, without having to sign their lives away to any of the big distributors.

 

More than 20 years later, they've moved at least three times, into larger warehouse spaces each time. Their front counter cases are packed with pedals, small Mixers, Modules and what-have-you. The walls are lined with Guitars and Basses, everything from no-name beaters, up through customs and one-off's, like the Reverse Flying V that's been hanging around for a while. The floors are lined with Amps, there's an Acoustic room, a Keyboard room, and an on-site Repair shop, complete with slightly grouchy, opinionated Repair guy, the kind of guy who'll tell you, straight-up, "I don't even install X anymore, because they never work right."

 

They're always busy, and while they take in a lot of gear, they also move a lot of gear. I've seen stuff go up on their Ebay site and disappear within 24 hours. Much of my used gear, and some of my mainstays, came from them.

 

On top of doing a good business, they are truly good people, which is much of their success; you want to go back and do business with them, and you're likely to find almost anything there. If Guitar Center does fold, these guys will be just fine. I'm not naming the store or providing a link, only because I don't want to be accused of spamming. If anyone is curious enough, PM me.

"Monsters are real, and Ghosts are real too. They live inside us, and sometimes, they win." Stephen King

 

http://www.novparolo.com

 

https://thewinstonpsmithproject.bandcamp.com

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I had NO idea they were in business that long. I'd never heard of them until about 19-20 years ago. And the nearest one to ME jut opened up about FIVE years ago. The only other one I know of is about 20 miles away. And opened up in Canton, MI about the time a nearby MARS music closed it's short-lived doors.

Whitefang

 

When I was in high school in the late 60s my band would go down to Hollywood to hang out in the Guitar Center, which I believe was the first store in the chain. Their sign also said Organ Center, so it must have been around the time they were making the name change. We did a lot of drooling over gear we couldn't afford. They've been around a long time.

Scott Fraser
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To add to the absurdity . . .

 

Just got a new Spring catalog from GC, 55 pages, full color catalog, which can't be cheap to begin with, especially if you're sending out a few thousand. This issue features a bunch of gear favored by Jared Scharff, who plays Guitar in the current Saturday Night Live band. First up is a D'Angelico for $1799.99; that turns out to be one of the less expensive Guitars featured.

 

Next page features a Gibson "True Historic 1957 Les Paul Reissue" for $6899.99, or you can get the limited-run 1959 RI for $10,648.99. A few pages later, there is a throughly beat-to-hell "1957 Heavy Relic Stratocaster", where a vestige of the old Paisley pattern clings desperately to a $4899.99 travesty.

 

You get the idea; most of the Guitars featured are well over $1000. The centerfold features a number of affordable Guitars, like an Epi LP for $599.99 and a Jackson Dinky for a humble $269.99, but most of the Guitars featured run somewhere between $1100 and $3000; not exactly impulse buys, even for a pro player.

 

I don't know who they think is going to come running with $$$ in hand, to buy these (IMHO) over-priced Guitars, or why they spent the money to print and mail this catalog? I also don't understand why Gibson is sending them $10,000+ Guitars, when it seems like they can't move enough $1,000 Guitars to stay solvent? Maybe we're all nuts, and this is really how business works . . .

"Monsters are real, and Ghosts are real too. They live inside us, and sometimes, they win." Stephen King

 

http://www.novparolo.com

 

https://thewinstonpsmithproject.bandcamp.com

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