What Happens To The Guitars If Guitar Center Goes Under?

Discussion in 'Guitars in General' started by Cody123, Feb 26, 2020.

  1. Cody123

    Cody123 Member

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    What Happens To The Guitars If Guitar Center Goes Under? Will all the gear go to a liquidation auction? Will they have a large sale before they shut the doors to pay on the borrowed notes they owe to lenders etc...?
     

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  2. supergenius365

    supergenius365 Supporting Member

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    Assuming the whole operation doesn’t go under, I’m sure stuff would go to other branches like Musicians Friend and whatever else they own.
     
  3. sleewell

    sleewell Member

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    i am sure they either burn them or run over them with a tank.
     
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  4. bigtone23

    bigtone23 Member

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    First, that assumes GC goes under. If you have read the news in the last 3 years, they secured a note guaranteeing that they stay in the game for several years.
    Secondly, I'm sure there would be some liquidation. The average store has to have a couple hundred guitars on the wall. That is too much to rebox and truck around to a warehouse.
    Thirdly, it would be a sad day for the guitar. Without GC, there would be quite a few noobs that will never get in on the instrument. Not everyone is comfortable buying something online or over the phone. Going into a store and having a tactile experience to sway the decision is pretty big.
     
  5. Kiwi

    Kiwi Silver Supporting Member

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    When Mars Music - Remember "Mars, The Musicians' Planet"? - went under in 2002, it went to liquidation and not reorganization. The bankruptcy trustee sold off all the gear in all the stores.

    There were some deals, but no screamin' deals, as I recall. The goal is to recover as much money as possible for the creditors.

    I recall the manager of my local GC was snickering when Mars went bust. He had a picture in his office of the local Mars store a mile away with its "Going Out Of Business" banner out front.

    =K
     
  6. Goldie Glocks

    Goldie Glocks Member

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    I would imagine a huge liquidation would take place. Or, as has been mentioned, GC owns Musicians Friend and a few others so they could just move some things around.

    On a side note, my local Craigslist had an add in the musical instruments section that said that our local GC was closing right after Christmas. No reasoning, no context and no contact for further discussion. Needless to say, it never happened. The 'GC going out of business' thing is a discussion as old as time.
     
  7. wox

    wox Supporting Member

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    From 2 days ago, another downgrade for GC:

    https://www.retaildive.com/news/guitar-center-downgraded-as-gains-fail-to-reduce-debt-load/572822/

    Basically anything can happen, but it's not looking great for GC. Despite some improved numbers, their debt is still a huge problem. GC was one of a number of retailers who were targets of leveraged buyouts by PE firms in the early-mid 2000s and it hasn't ended well for a lot of them (thanks to e-commerce and changing tastes).

    LBOs result in a heavily leveraged company, leaving very little room for error. Where an org with less debt could go out and borrow against assets or issue more debt in the form of bonds, a heavily leveraged company can't do that. Therefore, if a big issue hits the company (the shift to e-commerce, or the decrease in popularity of the guitar), it has a very small margin in which to course correct.

    It's why most PE firms focus on ruthless cost-cutting and optimization. I don't know that we've seen that with GC.

    When a business like this goes belly-up, the move will be to raise as much money from the assets as possible, and that can take many forms and doesn't mean USA Fenders for $200.

    First and foremost would be selling the whole company or brands to someone else who wants to take it in a different direction. They could sell off parts of the business - maybe musiciansfriend or Woodwind looks like a viable route for someone like Amazon or Etsy and that could come with a lot of inventory. Maybe manufacturers buy back some inventory. Inventory can go en masse to other retailers. Dunno if GC owns real estate, but that would get sold.
     
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  8. customguitars87

    customguitars87 Member

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    From what I've seen most of those people just end up buying the guitar elsewhere anyway to save money...and with GC gone it's not like all guitar storefronts will go away. There are other chains still around and some smaller shops too (though of course those are rapidly decreasing in number, largely due to companies like GC). Maybe with GC gone, those smaller shops would be able to flourish again...but with the internet being what it is, I doubt it.

    If GC ever does go under though I will be very devastated because they have been the source of ALL my craziest steals over the past couple of years. I sincerely hope they stay in business forever so I can continue to take advantage of the lack of knowledge and subsequent deals that result from it :).
     
  9. ieso

    ieso Member

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    They will all be shipped to Gibson to be crushed under the treads heavy construction equipment
     
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  10. FusionRock

    FusionRock Member

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    In the 30 years I've had access to a Guitar Center, I've bought a whopping 1 guitar (used) and hardly anything else...some strings and picks. And even then, they don't carry the type of strings and picks I use.

    Online buying FTW.
     
    Last edited: Feb 27, 2020
  11. smallbutmighty

    smallbutmighty Supporting Member

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  12. bigtone23

    bigtone23 Member

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    GC doesn't fully cater to the TGP member in his tan shorts, but more to the shy, pink haired kid in middle school. Here in the Denver area, there are maybe a dozen guitar shops outside of the three GCs. Most of these are rather specialized (can't really go in and bother Wildwood for a Squier Strat Pack purchase) and small. I have been in a lot of them, and most are decent for service, but limited in product offerings and price. GC price matches and offers lots of first time buyer incentives on all the cheap stuff that's not so TGP. I would bet dollars to donuts that more than half of those purchases made elsewhere to save money were based on going into GC first, hunting and landing on exactly the item they wanted.
     
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  13. T Dizz

    T Dizz Member

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    They are all sent to a farm upstate with plenty of room to run
     
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  14. FLYING V 83

    FLYING V 83 Gibson Geezer Silver Supporting Member

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    Mars needs Marshalls.

    Hell, it's half the name already.
     
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  15. customguitars87

    customguitars87 Member

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    I'm sure you probably know about this but GC has a HUGE online used gear marketplace with tons of deals to be found, so if you're not looking there for stuff you're missing out big time. The stock in any given store is pretty pathetic at best and the great stuff goes very fast (again usually selling online before anyone really gets a chance to buy it in-store). GC's used gear site is an absolute goldmine :).
     
  16. Bassopotamus

    Bassopotamus Member

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    I bought my Fender Concert reverb at the liquidation. I saved maybe 25% but it was also kind of shopworn. It was an OK deal. As I recall the prices didn't get good until most of the good stuff was gone
     
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  17. Bassopotamus

    Bassopotamus Member

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    One of the concerns I've heard if GC were to go out is that it would really hurt fender and Gibson because they both essentially are sending them guitars on credit, and they'd lose a bunch of what they are owed. I'm not sure if that is still true. GC has been having issues for ages, and I'm not sure I'd be inclined to send them inventory unless they paid for it first.
     
  18. Steadfastly

    Steadfastly Member

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    If GC went out of business? L & M from Canada would open stores in the most profitable locations which would leave the other locations available for a few enterprising Mom & Pop stores to gobble up those small markets.
     
  19. Grun

    Grun Member

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    I wouldn't write GC off just yet. With taxes being applied more uniformly on the internet, and the high cost of shipping, GC is beginning to look much more attractive. Add easy returns and the opportunity to try the gear before buying and you have a winner.
     
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  20. wirsteve

    wirsteve Member

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    My wife worked at BonTon (Boston Store, Carson's, Bergner's, Elder Beerman's) when it went to 0.

    Assuming GC went under, a liquidation company would buy them and they'd have the typical liquidation sale. The liquidator would bring in leftover inventory from other liquidations. Garbage, stuff like tents, clothes, whatever. Any guitars that don't sell would go into that leftover inventory for next time they buy someone.

    It is really a great business model.

    EDIT: This assumes GC is going under...unlikely that is happening in the near future.
     

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