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Author: pkpdjh Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 570  
Subject: A view from a musician Date: 2/17/2006 1:48 AM
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I just stumbled on the idea of GTRC as an investment because I am a former professional musician and a fan of the Peter Lynch buy what you know thing. I have always hated GC because it hurt the local guy and so on. But as those of you who hang out in music stores can say, music stores aren't always the most friendly places in the world. They sometimes resemble the record shop in "High Fidelity" where the sales people aren't so much working as hanging out near a bunch of merchandise they like to play with.

I live in the Phoenix area and for a long time, I used to go to the GC near me because they had the inventory, but I always walked out feeling sick because the place was such a wreck and the staff was always a new bunch of new teen-agers. However, recently, the store's staff was completely overhauled with responsible knowledgeable people and I honestly chose to buy my keyboard there because of the service.

In addition to serving musicians, Guitar Center does a killing on techie types who don't get enough of a thrill by going to Best Buy. They end up at Guitar Center just to look at all the trinkets and end up buying tons of stuff they will hardly use to its potential, but GC ends up with a huge sale. (Trust me, I am an engineer now so I can tell you that there are a lot of these people. Real musicians can't afford this stuff.) This group is huge in the Tempe area where the GC store is. This part of Phoenix is one of the fastest growing areas in the country. It seems to me, GC HQ recognized the importance of the store and decided to bring in some quality guys from another store.

Guitar Center takes advantage of their economy of scale and the Musician's Friend is such a dominant player. It seems like management is going to have to work hard to screw this one up. Based on what they did in the Tempe store, I think they are on the right track to providing a good product.

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Author: 1946dodge Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 543 of 570
Subject: Re: A view from a musician Date: 2/17/2006 10:53 PM
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You said it, buy what you know.
And as you see, in the old days people with disposable income bought expensive stereo equipment to listen to music someone else played.
Now people want to play music themselves so they spend the same money on guitars, amps, keyboards, recording software - the whole sheebang.
People, I think are more active now - they want to learn to play an instrument, because music is so important to them.

This is good. Whenever you have people learning to do something for themselves, acquiring a new skill they never had, it is always a good thing.

And GC provides them with a host of instruments at different price ranges all with excellent quality to do this.

And the small guy, the small music store of yesterday could never have done this. They sold either expensive guitars, which scared the novice off or cheap crap that no one could play and discouraged them to learn well.

What GC has done, and guitar makers have found is that in order to get more business you have to get new people into this "hobby", which is what it is for non professional musicians. And since a person shell out money for something that he or she may or may not like or be able to play, lessons or not, if you provide a product that is easy to learn on, inexpensive, and high quality, then you get customers to take a shot at it. When they find out that with a little effort they can play and amuse themselves, their interest grows, they may take lessons, get even better and then come back to GC and buy a high end American made Strat, Les Paul or whatever.

It is a very good business model and has given the musical instument industry a big shot in the arm over the last 20 years.



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Author: whirlybill Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 545 of 570
Subject: Re: A view from a musician Date: 2/19/2006 11:59 PM
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Buy what you know indeed!

Like PC computers, technology improvement and resulting price drops allow us to achieve the 'tone' we seek regardless of musicianship. What I learned on in the late '60's (home spinet piano) and what I play on now are night and day. As a keyboard player, the weight difference alone is worthy of the upgrades (moving aircraft carrier sized Hammond organs before vs negligible weight for 35 pound digital keygboard controllers and rack mounted units now).

Keeping the upgrade cycle alive are the constant improvements - new technology, new sounds, inexpensive home studio set ups, etc, keep the hobbyists and gigging musicians eager to embrace the latest and greatest.

With it's massive market presence, Guitar Center is poised to help new, aspiring and experienced musicians progress as both their skill and income improves.

When I price shopped my Motif ES Rack a year ago on twenty different on-line sites, GTRC matched and beat the lowest on-line low price item once I actually got a price quote. With the info in hand, the haggling was easy. Without it, the person off the street will pay the posted price.

While the posted price is great for GTRC margins, the experienced musician knows otherwise.

I'm long GTRC since the late October 2005 correction.

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Author: ramblinone Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 546 of 570
Subject: Re: A view from a musician Date: 2/21/2006 4:03 PM
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I, too, elected to go long with GTRC after spending a good deal of time shopping, pricing , learning and then buying equipment for my budding sax musician son at Christmas time. (I previously purchased a bass for my other son at GC.) I was impressed with the quality of info provided by the staff. They also steered me to some better priced equipment based on our needs... rather than trying to sell me items and features that we did not need.

The last thing that the salesman told me was that GC was planning to open 40+ stores in 2006, "...in case I ever wanted a pretty decent stock to look into." Sometimes ya gotta love the enthusiasm on the front line.

Fool on!

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Author: feedmeNOWhuman Big funky green star, 20000 posts Top Recommended Fools Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 547 of 570
Subject: Re: A view from a musician Date: 2/21/2006 4:12 PM
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The day I take investing advice from a guy who sells guitars will be the day....

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Author: wutangfinancial Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 549 of 570
Subject: Re: A view from a musician Date: 4/25/2006 1:19 AM
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^lol

I used to work for Guitar Center. I can tell you that they are very agressive in giving staff incentives to sell (through commission and threat of termination), but staff turnover rate is very, very high. This means greater training expense. However, because of the huge supply of willing laborers, Guitar Center can actually afford to pick and choose fairly competent sales people (most everybody had some college, most had B.D) and still pay staff a base rate similar to someone at Wal Mart. When I worked there, there were rumors that Guitar Center was going to go international at some point in the next few years, most likely with a store in tokyo and a store in london. Even lower to mid level managment were loading up on shares. Part of this came from the fact we saw how effective our inventory turnover was. I can tell you Guitar Center is really focused on margins from the bottom (sales people paid a % of Gross Profit) on up.



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Author: feedmeNOWhuman Big funky green star, 20000 posts Top Recommended Fools Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 552 of 570
Subject: Re: A view from a musician Date: 8/30/2006 1:47 AM
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The last thing that the salesman told me was that GC was planning to open 40+ stores in 2006, "...in case I ever wanted a pretty decent stock to look into." Sometimes ya gotta love the enthusiasm on the front line.


Except when it's wrong and the stock drops like a sinking stone.

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