First Published In The Music & Sound Retailer’s April 2007 Issue

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.

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.

“You can’t abandon the product levels that they sell,” Meader added, “but you sure can exploit the stuff they don’t do.”
“I think retailers should shop just like a consumer shops,” Turchetta suggested. “You can buy $200 to $500 guitars that you’re not embarrassed to sell and actually will last and play. Instead of just taking $2,000 to buy 30 guitars, I’d say buy 10 that you’re not embarrassed to sell.”

The mid-range is an important area to focus on when trying to bring in the step-up customer who may have bought his first guitar at a big box or chain so that when they walk into your store, “they don’t feel overwhelmed by seeing price points that are crazy compared to what they saw at Target or wherever they bought their guitar,” said John Thomas, director of sales at Tornavoz.

Are You Being Served?

“What I’ve told my dealers over and over again is whatever these chain stores are doing, do something else. But to them that means sell a different product line,” said Peavey. “That may be part of the answer, but that’s certainly not all of the answer.”
In truth, product selection alone will not distinguish you enough from other market segments. What every successful independent dealer needs is a strong add-on service and personalized touch that creates a store identity.”

“If you want to stand out from a superstore, the best way to do that is to realize that the first impression you make comes down to the first person who your new customer runs in to,” said Gallenberger. “It’s not just how well they are trained. What do they know about guitars? Do they present themselves well? Are they polite? Your employee has to be happy and has to want to be there,” he continued. “All the marketing money you spend is lost if your customer doesn’t feel like they’re welcomed and like this is a good place to come back to.”

“I still believe that knowledge and real care for the customer on a retailer level is the goal, and is the one thing that can set you apart from your competitors,” said Peter Wolf, PRS Guitars’ director of sales and marketing. “Essentially, [you’re] not really ultimately selling a product to [your customer]. You’re actually selling yourself or your services to him first.”

Technical Terms

The role of the salesperson has not dissipated in the wake of the Internet, where unlimited information is at any potential customer’s fingertips. “Customers approach retailers more informed than ever before,” said John Grabowski, Sweetwater’s director of purchasing, “but there is no substitute for the knowledge and guidance of a skilled salesperson. In this day of Wal-Mart and a self-service mentality, it’s easy to lose sight of this, but when exposed to it, customers appreciate true service and a relationship with an expert more than ever before.”

The need for knowledgeable salespeople becomes especially important in the face of new technology in guitars—even though guitar players are known to be some of the least adventurous of the bunch.

“What kills me about musicians is they go out of their way to be different. They have different hair. They have piercings and tattoos. And then when they open a guitar case, lo and behold it’s their grandfather’s guitar. A dichotomy in the extreme,” mused Peavey.

“Guitar players tend to be kind of stodgy,” added Meader. “The rule we apply a lot of times if we’re looking at a new line is it either needs to do something completely different from anything else that’s out there…or it needs to do something someone else has already done but do it better and/or for less money.”
But there’s still an influx of new products that test the limits of these “stodgy” guitarists and also give your staff a new way to sell to the customer and create a need to buy.

“I think the retailer plays a crucial role in informing and mentoring musicians. This is a strength of retail that I remember valuing a lot when I was starting out,” said Marcus Ryle, co-founder and senior vice president of research and development for Line 6. “Besides providing a great service for the customer, there’s a great economic benefit as well. If a musician doesn’t know that there are new music tools, if no one explains how these tools can expand their creativity, then a sales opportunity is lost. A customer can’t ask for what they don’t know exists.”

The availability of new technology can also create a new customer base for your store, as noted by Yamaha Guitars Marketing Manager Bryan Savage. “The RGXA2 guitar we recently released is looking at [the guitar industry] with a technological approach…adding USB to guitars where they can plug and play into a recording unit or computer,” he said. “What it’s doing is capitalizing on the high-tech guys. With home recording now, it’s so easy to get into different styles now and different instruments. It’s an easy thing for a keyboard player to get into [guitar] and check it out.”

Ryle adds that helping entry-level players embrace technology will help them stick with the instrument long term. “When I was starting out as a musician, the first instruments you could afford were typically of pretty inferior quality. Now, a beginner can have a huge range of sounds at their disposal, and actually use the same modeling technology that’s been recorded on countless platinum albums,” said Ryle. “It’s not going to instantly teach them how to play guitar, but the personal satisfaction that can come from learning your first power chord and having it sound like you’re playing in a stadium is incredible. It really creates the opportunity for so many more beginners to keep on playing and become a customer for life.”

Look at Me

OK, so you’ve set up a profitable product mix, ramped up your service efforts, and trained your staff. One element is still missing—how to get people into your store. Some stores, like Mike Lenthe’s Summerville Music in Summerville, S.C., work with the big stores in the area. “Guitar Center actually sends people our way [for lessons],” said Lenthe. “I send people to the Guitar Center just because I know they’re looking for a certain thing and that’s going to be the best price for them.”

But for other stores, the best thing to do is get your name out there in any marketing platform possible. For example, look to the local music papers in your area, said Gallenberger.

“For the cost of an eighth page or quarter-page ad, you can run a full 8 ½ x 11 color, two-sided…insert,” said Gallenberger. “We control the printing costs and define which zip codes they’re dropping it in. Plus, when a potential customer picks up the publication, an insert falls right out of it and onto their lap. They’re much more likely to see it than they are a simple print ad on page 16 that they might never even have the chance to look at.”

Bob Yale, general manager of Dave Phillips Music, decided to try radio advertising, “because if we use our postcard system we’re dealing with the people who already know we exist,” he said. By using this platform to advertise their string special, “we found 40 new customers in a day.”

Another alternative to the postcard system is an Internet evite. “It’s like you’re inviting someone to a party. And it’s free. Using an evite is powerful because it’s very personal,” said Gallenberger.

All in all, the most important way to approach your customer is with the confidence that you can compete not only with other guitar stores, but with retailers of all consumer items.

“If the musical instruments industry products, packaging, and customer support programs are not as sophisticated and complete as other industries,” warned Rhodes, “we all stand a chance of losing the first-time guitar buyer to an iPod or other popular consumer item.”