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Author Topic: GC Severs Relationship With Behringer  (Read 2841 times)

Joseph D. Macry

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Re: GC Severs Relationship With Behringer
« Reply #10 on: May 22, 2014, 11:40:34 am »

Business hold means "before we ship any more product you have to pay your back bill and new shipments are COD or pre-paid."  GC strung Music Group for too long.

This sounds strangely similar to Mars Music right before it went under. Vendors were owed a lot, and Roland finally said "enough" and put them on business hold. Mars did not have large cash reserves, as they were rolling profits and new investments into constant expansion (and some other silliness like buying naming rights to a sports stadium). The owner could not find the new investment cash needed, so the whole chain went into Florida bankruptcy court, then liquidation.
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Bob Leonard

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Re: GC Severs Relationship With Behringer
« Reply #11 on: May 22, 2014, 12:09:16 pm »

Proven?

In my experience the "value" business model is to make generic products that perhaps contrary to actual reality, the value customers already think they know how to operate. The reason why designing value products is actually harder than designing high end gear, is because you have to engineer in "user tolerant" functionality. The heavy lifting is making a product that still works as the customer expects it to work, despite misuse and abuse by the inexperienced customers.

Classic examples of this approach are clip limiting, short circuit , and thermal over-load protection in power amps. These features came first to the value segment because it is so much more successful to engineer out bad experiences than educate the inexperienced customers to avoid making those common mistakes, or worse make them pay for blown up gear even when the failure was clearly their fault. The customer is always right, and doesn't appreciate being reminded with a repair charge when they are not.   

There is no margin or budget in value products for hand holding. The shift to big box stores and direct sales, from mom and pop dealers just squeezes even more end user support from the distribution channel.

These days it's all about price, and customer support costs money. 

JR

Yes proven.
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Ned Ward

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Re: GC Severs Relationship With Behringer
« Reply #12 on: May 22, 2014, 02:48:41 pm »

Bain bought GC in a leveraged buyout, and had hoped to go public or sell the company before the debt came due. That didn't happen, and now cash flow is suffering. We've seen similar things with US retailers (or UK for that matter) where manufacturers make the tough calls to stop shipping product because their accounts receivables are so far outside the average that it becomes lost.

I don't see things improving at GC anytime soon, given the financial burden they have from being over-leveraged. If the GC in Lawndale, CA is an example, the store is a lot more empty, not just from foot traffic but also new inventory. If I were Fender or Gibson, I'd be hedging my bets and being sure that I had a solid relationship with mom& pop stores, as they may turn out to be more reliable and less risk in the long run...
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Bob Leonard

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Re: GC Severs Relationship With Behringer
« Reply #13 on: May 22, 2014, 03:52:21 pm »

Gibson, Fender, and a few others severed those relationships a long time ago by demanding the M&P buy more and more until finally most were priced out.
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Ned Ward

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Re: GC Severs Relationship With Behringer
« Reply #14 on: May 22, 2014, 04:07:17 pm »

Bob - seeing the results of this first hand as our local shop no longer can be a Fender guitar dealer. However, with GC having credit issues, Fender, JBL, and others will have to look to diversify back to smaller dealers or distributors. Otherwise, they'll have a disastrous few quarters if all their receivables are tied up in a company heading to bankruptcy.

Like the Titanic, there are only so many lifeboats, and unfortunately manufacturers won't be at the front of the line, even the bigger ones given the debt load.
http://www.thedeal.com/content/restructuring/ares-capital-strikes-a-chord-with-guitar-center.php

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Scott Olewiler

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Re: GC Severs Relationship With Behringer
« Reply #15 on: May 23, 2014, 07:41:19 am »

GC has no way to forcibly improve sales so the only option to get the financials straight is to leverage their online sales by eliminating the biggest overhead burden, which is the brick and mortar store.  My guess would be the online portion is very profitable and the retail stores are for the most part operating at a loss. I have not personally set foot in a local music store for quite a few years. The sales staff usually knows a lot less about the products than I do and without sales tax it's much cheaper to buy everything on line.  Like it or not online sales is the only business model that works for MI gear.

IMHO GC's biggest mistake was keeping the stores open this long. The writing was on the wall years ago.  Imagine the millions they have wrapped up in display inventory,  a lot of which will end up in a clearance sale being sold at cost or less. In today's world you do not want to be sitting on more than 15-20 days worth of inventory. I bet most of the stores have  a  years worth of sales hanging on the wall.

Ray Aberle

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Re: GC Severs Relationship With Behringer
« Reply #16 on: May 23, 2014, 12:00:49 pm »

My guess would be the online portion is very profitable and the retail stores are for the most part operating at a loss. I have not personally set foot in a local music store for quite a few years. The sales staff usually knows a lot less about the products than I do and without sales tax it's much cheaper to buy everything on line.  Like it or not online sales is the only business model that works for MI gear.

Yeah, except that their website sucks. When I go to search for something on there, their search function is not intuitive enough, so a search for CDJ does NOT bring up Pioneer CDJs unless I get way more specific. Then, to start a new search, you have to go back to the main site page; you can't just search from where you're at. This has been going on for a couple of years-- I suspect that they've started using some flashy gizmo plug in to make it work right, but if you don't tell people what that is... leads to frustration, and I end up shopping elsewhere.

Ray
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Andrew Broughton

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Re: GC Severs Relationship With Behringer
« Reply #17 on: May 23, 2014, 02:57:18 pm »

Yeah, except that their website sucks. When I go to search for something on there, their search function is not intuitive enough, so a search for CDJ does NOT bring up Pioneer CDJs unless I get way more specific.
I just typed in CDJ in the big textbox labelled "Keywords..." on the top left of the home page and got lots of results.
http://www.guitarcenter.com/Search/Default.aspx?internal=1&browser=&fsrc=cdj&src=cdj
So maybe it's better now?
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Ray Aberle

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Re: GC Severs Relationship With Behringer
« Reply #18 on: May 23, 2014, 05:32:12 pm »

I just typed in CDJ in the big textbox labelled "Keywords..." on the top left of the home page and got lots of results.
http://www.guitarcenter.com/Search/Default.aspx?internal=1&browser=&fsrc=cdj&src=cdj
So maybe it's better now?
Yeah, so they fixed that, but now you cannot click on items to get to them, you have to control-click to launch the item into a new window. Either way, if they want people to buy things on their website, they should probably take some time to make it, you know, actually functional.... lol.

Ray
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Kelcema Audio
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Andrew Broughton

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Re: GC Severs Relationship With Behringer
« Reply #19 on: May 23, 2014, 05:48:30 pm »

Yeah, so they fixed that, but now you cannot click on items to get to them, you have to control-click to launch the item into a new window. Either way, if they want people to buy things on their website, they should probably take some time to make it, you know, actually functional.... lol.

Ray
What are you talking about? Clicking on an item or a description opens a detail window where you click a button to buy them. What browser are you using, 'cause it works fine on FF and IE and Safari.
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-Andy

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Saving lives through Digital Audio, Programming and Electronics.
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