Guitar Center Debt Default Emminent

Discussion in 'The Backstage' started by flashbak, Dec 6, 2017.

  1. defcrew

    defcrew Senior Member

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    There's actually a great music store in town here now and they are cognizant that they have to be competitive with on line. But I do remember when the market and society were less fluid and these stores seemed to charge whatever they wanted. There was a place in ATL called Rhythm City that was the big boy of the era and we'd ride up there to get decent deals. I bought something there and the local guy complained that I didn't keep the money at home. His best offer was almost double.
     
  2. cherrysunburst00

    cherrysunburst00 Senior Member

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    And you know, if the service is great and people nice, I don't mind paying a little extra. But with my Orange dealer I get terrific service and excellent pricing
     
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  3. cherrysunburst00

    cherrysunburst00 Senior Member

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    Sadly the nearby GC (45 miles away) has really gone down. It is in a large, but very poor city (El Paso, TX). They have, for example, an R0 from 2014 with no COA/candy and no original case. They have it listed at $4200ish.
     
  4. defcrew

    defcrew Senior Member

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    Absolutely...to a point. If they want to jack the price of a $100 stomp box to $115 that is no a problem but when you start looking at the same rate at $1000 or $2000 items it begins seeming like real money. It's a problem. Back in the day I played a lot of city league softball. You had to provide a new ball each game. A friend of mine ran a sporting goods store and he said Wal Mart was selling them for cheaper than he could buy them. One ball--no problem. A season's worth (20)--you start scratching your head.
     
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  5. cherrysunburst00

    cherrysunburst00 Senior Member

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    ABSOLUTELY. You can tell if they're jerking your chain with pricing or just trying to make it.

    One of the stores i alluded to has been on/off Gibson and Marshall dealers (mostly off because they're jerks). So, back in the late 90s I was demoing a JCM 600 on a Saturday afternoon. The sales guy says, "so are you going buy? I need to go tp lunch?"

    I didn't buy from them
     
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  6. Bill Hicklin

    Bill Hicklin Senior Member

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    What GC can't figure out is that in the Internet age, the only way for brick-and-mortar retail to stay relevant is with customer service and expertise. You can't ever match the Web on price.
     
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  7. defcrew

    defcrew Senior Member

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    This local store here just began a relationship w Gibson and I'm really wondering how it will work out. I hope it does because they are really great folks but, in the end, it's going to come down to economics. There aren't enough people in any market who vote via altruism relative to their pocketbook to make a shaky model hold up. We are all happier to stay at home and order a pack of strings than spend our "precious time" driving across town to pay $1 more because we think the store owners are nice people. Or maybe I'm just Satan?
     
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  8. defcrew

    defcrew Senior Member

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    Aren't GC and MF, 123 Music, etc. one and the same?
     
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  9. rcole_sooner

    rcole_sooner Senior Member

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    I think this.

    But the brick and mortar stores may be under different "accounting books".
     
  10. LDS714

    LDS714 Member

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    Caveat Emptor!

    I know the folks on here are smart enough to avoid it, but does anyone remember the Mars Music liquidation? Liquidators came in with their fancy x% off price tags and sold off a lot of the inventory at 10-15% off of retail to unsuspecting, unknowledgeable buyers, when in fact the prices were substantially above what Mars had sold the items for.
     
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  11. cherrysunburst00

    cherrysunburst00 Senior Member

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    Nah, not satan at all. I hope your local store gets to remain Gibson dealers. My Orange dealer had to drop a long-standing relationship with Gibson after henry took over because Gibson demanded they move too much product (we're a pretty poor economic base)
     
  12. Tone deaf

    Tone deaf Senior Member

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    If this were to happen, I don't know that it will, Gibson will be at the top of the UCC heap as "trade payables." I would expect any default to be accompanied by a bankruptcy petition. I would guess they go CH11 (reorg) as opposed to CH7 (liquidation). They will kill all the contracts they don't want and keep the ones they do. They will cram down creditors and the equity will be wiped out. The reorg will call for closing underperforming stores and focusing on best stores and websales. It'll take them a year to get it all done. It won't be good for Gibson, but it won't be the end of the world.
     
  13. Bill Hicklin

    Bill Hicklin Senior Member

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    Yes they are, so to an extent GC is competing with itself. But by the same token they should know better than anyone that physical retail is a more costly business model, and if they're going to stay in it they have to figure out a way to justify the necessary price premium.
     
  14. Bill Hicklin

    Bill Hicklin Senior Member

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    Agreed. I didn't say it would kill Gibson, just that they'd take a hit.

    And depending on how aggressive the creditors' committee is, they could demand that the trustee wind up GC's money-hemorrhaging brick-and-mortar arm and move everything to internet sales.
     
  15. defcrew

    defcrew Senior Member

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    Right. I live in Auburn, AL. I think the population w us and sister city Opelika is maybe 60K + 27K students. The town is exploding w the expectation of pop being 100k in 10 years but how many LPs will they expect him to sell? The last time I went in it was almost all acoustics which is actually the hotter market. Seems like I've heard Gibson requires stores to move 100K a year?
     
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  16. LDS714

    LDS714 Member

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    Just a crazy thought, but what if Gibson is able to finagle some sort of deal that allows them to directly write off any GC losses against their debt? I could see them shipping literally warehouses full of product to be liquidated...
     
  17. Bill Hicklin

    Bill Hicklin Senior Member

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    Yes, crazy. Gibson's creditors want their money, they don't care about written-off receivables.
     
  18. TheX

    TheX Voice of Reason

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    We have three GC's here, and I like them. Will I miss them when they close? Probably not, but they have been convenient.
     
  19. cherrysunburst00

    cherrysunburst00 Senior Member

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    I think it largely depends on your economic base. We are just a little over 100,000 in my city (a university town) and El Paso, TX (45 miles away) is close to 700,000 and Juarez, Mexico (which borders El Paso) is well over 1 million. Only 1 Gibson dealer around here: gc. There are 2 Gibson dealers 220 miles to the north (Albuquerque, NM) which has a much higher economic base. One is gc. One of these days I'd like to check out Albuquerque's gc.
     
  20. defcrew

    defcrew Senior Member

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    Yeah, we have a GC in Montgomery (45 miles) and, of course, ATL (125 miles). The one in Mont is really kind of sparsely stocked to my eyes and is rivaled by a small regional chain called Bailey Bros in terms of quality and quantity of stock on hand and BB has a good service dept for repairs. I've tried to do biz w BB re new stuff but they really just aren't competitive enough given having to pay state tax.
     
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