Better? A Little Bit? Guitar Retail in 2010 – Nothing to Fret About…
In prepping for this survey – sent out to over 400 dealers – about the state of the guitar market, we asked ourselves, “What’s new, in fall 2010, compared to last year’s bi-annual checkup of all things six-stringed?”*
The economy? Hmmm… Well, though by most measurements things are better than 12 months ago, smart money (Ha – money! Irony!) wasn’t on folks gushing about the country’s financial turnaround. Turns out the vast majority of respondents (almost 60 percent claim that guitar sales are “about the same,” so – indeed, not much new to report there. Based on some interactions we had at Summer NAMM, we wondered: “Are lessons playing a greater role in the overall business models of guitar retailers? Is the notion of having teachers upsell to students and their parents an approach that’s getting increased attention?” Based on the results of our survey, the answer seems to be… sort of? It appears that lessons, themselves, are maybe slightly down, but the concept of teachers upselling is a big deal for most who have lesson programs (just over 45 percent).
So, what – is there nothing “new” to discuss? Are there results of this poll just a carbon copy of previously reported trends? Hardly: A greater-than-perhaps-expected criticism of the current administration and expectations for changes in the upcoming mid-term elections were widely expressed sentiments amongst our survey participants; those in the areas most recently affected by this summer’s BP oil disaster (and previously by Hurricanes Katrina and Hugo) report how sharply those events are affecting their local retail economy; distress over perceived ill treatment of smaller independent stores at the hands of larger suppliers was also widely voiced… However, it’s worth noting that even from those reporting down numbers and troubled times, there was generally a pervasive note of determined optimism. For more detailed numbers and from-the-trenches insight, read on…
How are your guitar sales, overall, compared to this time last year?
Much better! – 15%
Worse – 28%
About the same – 57%
“We sell second-hand acoustics in the $100-$250 range all day long as well as used electrics in the $200-$425 range, they do well.”
Clay Chalem, Rogue Music Store, NYC, N.Y.
“We’re not quite up to 2008 levels, but 2010 has been much better than 2009.”
Dave Rogers, Dave’s Guitar, Lacrosse, Wis.
“Sales of new instruments remain problematic because profit margins have been severely eroded on most brands, however, vintage collectible and utility used instruments continue to sell quite well if they are priced in accord with the realities of the current economy. Our sales volume so far this year is better than last year, but not enough better to be viewed as a spectacular improvement.”
George Gruhn, Gruhn Guitars, Nashville, Tenn.
“Gave up selling guitars because they are unprofitable to sell. The manufacturers seem to forget that it is my store and not theirs. Nobody tells me I have to take this or that (quotas). I do quite well without having the burden of carrying guitars that are overpriced that I would have to give away to get my money back out of.”
R.M. Zinkan, Mike’s Music Shop, Harrisburg, Pa.
“The lower priced entry-level are still our strongest movers. Oddly enough, the mid-priced units are kind of dead, but higher priced ($1,000.00 and up) are still moving well, just behind the sub $400.00 group.”
Robert Josjor, Lou Kraus Music Inc., Ogallala, Neb.
What trends have you been noticing in the guitar market?
Increase in accessory sales – 27%
Acoustic sales are up – 21%
Marked drop in high-end vintage sales – 6%
Increase in used guitar sales – 11%
Low-end sales are strong, mid-priced guitar sales down – 26%
Other – 9%
“My mid-priced guitars were the strongest [sellers, in past years] and now that market is almost non-existent.”
Danny Brevard, Acoustic Pro Musician, Lufkin, Texas
“More acoustic sales. Anything used and decent is gobbled up quickly at a good margin”
Steve Miller, Tri State Music, Bryan, Ohio
“A race to the bottom on price. The well-built inexpensive guitars under $299 do very well. Everything else, regardless of brand, sits idle.”
Spidey Mulrooney, The Music Shop, Southington, Conn.
In guitar sales, what price-point is doing best for you?
Professional/High-end – 10%
Semi-pro/Advanced – 28%
Entry-level – 62%
Do you have a teaching program?
Yes – 80%
No – 20%
If yes, is this representing more or less of your overall business, compared to last year?
More – 15%
Less than last year – 22%
Roughly the same – 63%
“Both the number of students enrolled and retail is down, but the student part of the business is the larger percentage of our overall gross still. We would never survive without it.”
Joe Chiappone, Northfield Music Studios, Pittsford, N.Y.
Do you encourage your instructors to upsell students to better, more expensive gear?
Yes – it’s a big part of our overall strategy – 45%
Not really – 35%
No, but that’s a good idea! – 7%
No, and it would be inappropriate to do so – 14%
What are the most pressing concerns for your business?
“Rising Internet business that contains the unfair sales tax advantage. Also, cheap guitars sold by big box stores.”
Robert Guthart, Bob’s Guitars, Cedar Falls, Iowa
“Manufacturers setting low profit margins… and freight expenses since we’re on the east coast.”
Bill Melanson, Northstar Music Center, Plaistow, N.H.
“Guitar vendors that have stocking requirements loading us up with product or product that does not move.”
Rich Pires, Herreid Music, Chico, Calif.
“The overall economy. Add to that disasters, and you have quite a bleak market.”
Philip Leitz, Leitz Music Co., Panama City, Fla.
“Level playing field with Internet taxation, too many sources for the same gear, pending tax and health care legislation…”
Donovan Bankhead, Springfield Music, Springfield, Mo.
“I am preparing for the possibility of even worse economic conditions and paying down debt as possible. I will work more hours myself and do what it takes.”
Chuck Vetter, Sounds Great, McPherson, Kan.
How do you expect the guitar market to fare in the coming months?
“I expect it to remain relatively flat with a modest bump in December over last year”
Mark Torstenson, The Fret Shop, Huntsville, Ala.
“I think it will start to improve, but not until after the elections.”
David St. John, Gard’s Music, Glendora, Calif.
“I think we have seen the worst of the decline and have reached stability. It will, however, be a while before business starts to boom again. The graph of this economy would be akin to a square root sign. Those who have survived up till now have probably wrung out all the inefficiencies from the bottom line and will have to re-configure and re-think their strategies for expanding their top line. This industry – as with many others – is in transition, but what form it will take is the question.”
Dave Caldwell, Caldwell Connection, Whitestone, N.Y.
“While the Internet will continue to affect the sale of musical commodities and bring about many changes, we still feel very optimistic about the future of specialty guitar stores such as ours which serve as a regional destination for guitar players. We don’t think the appeal of face-to-face relationships with helpful, knowledgeable music sales people will go away, nor the need to have direct experience with a fine instrument.”
Claire Petsch, Maple Street Guitars, Atlanta, Ga.
“Manufacturers should support and respect brick & mortar stores who continually teach and create buyers for their products. They should even the playing field and stop making such ridiculous deals with Internet sellers that push local retailers out of the game. Manufacturers are systematically killing off the businesses (teaching stores) that help perpetuate their sales. Just doesn’t make sense – what sort of brains are ‘minding the store’?”
Kaye Colangelo, Rosehill Music Center, Thornwood, N.Y.
*Yes, yes – there are guitars with more (and less!) than six strings. Well done…