It's been a rough spring for guitar news. Guitar Center and now Gibson...
I know! That's crazy. But I'm not too worried, they'll bounce back!
Billy
Originally Posted by: john of MTIt's been a rough spring for guitar news. Guitar Center and now Gibson...
That's been coming for a while. I'm surprised it hasn't happened sooner.
A while back I read that Gibson was buying up large & small companies in home audio, computer software & other things that were marginally related to their bread & butter (guitars!).
That article was from last year when they were still excited about turning Gibson into a "music lifestyle company". Maybe they just bit off more than they could chew?
Anyway, I wish them the best. Probably chapter 11 will let them reorganize, pay down their debt & get back to making guitars. :)
Originally Posted by: ChristopherSchlegelOriginally Posted by: john of MTIt's been a rough spring for guitar news. Guitar Center and now Gibson...
That's been coming for a while. I'm surprised it hasn't happened sooner.
A while back I read that Gibson was buying up large & small companies in home audio, computer software & other things that were marginally related to their bread & butter (guitars!).
That article was from last year when they were still excited about turning Gibson into a "music lifestyle company". Maybe they just bit off more than they could chew?
Anyway, I wish them the best. Probably chapter 11 will let them reorganize, pay down their debt & get back to making guitars. :)
Sadly though, kids don't dream of being a guitar hero nowadays. At least not like they (me) used to. Less guitars being sold and way more makers selling them.
When I was buying my first real guitar (Les Paul), there was essentially Gibson, Fender and some other guys. Yes, there were others and quite a few. Gibson and Fender were kind of the monsters in the industry with others only hoping to get there. Now you have PRS full in that space. Japanese makes like ESP making higher and mid-line level guitars too..and more.
Gibson was also not trying to be a bazillion dollar company with hundreds of millions of dollars of debt. Lower demand, lots of debt and more makers diluting the market...recipe for disaster.
Ford just announced that they are focusing on their truck line and eliminating all but 2 of their auto line-up (sedans like the Taurus). They're making too many cars that aren't selling. Gibson is doing much the same. What is my new Les Paul? Is it a Classic? Custom? Standard? Traditional? Traditional Pro? Studio? Studio Pro? Artist Series? Custom aged? I know what mine is but you get the point.
Too many versions and too much to make and stock. I remember a bankruptcy lawyer back in Minneapolis who only did bankruptcy..his commercial ended with: "Bankruptcy. It's all I do and I do it well."
I had a mail order business and I can say to a certainty, stocking product is expensive even when you can turn it over. There's a retail concept that says 'how often can you turn stock'.
Think of a store shelf that's 5 feet long. You have 1 item per foot. 3 of those items are sellers and 2 of tem are not. First thing to know; inverntory that sits on a shelf costs you money. Not just in storage but >> you pay taxes on whatever inventory you are sitting on. So, the more frequently you sell stuff from your 5 foot shelf the more value from that shelf space you get. If the shelf remains fully stocked, you got a lot of value from the 3 that sell and little value on the 2 that you didn't.[br][br]Gibson makes a lot of products, because they are expensive, that just sit. Now you have a million different versions of the Les Paul, who's going to order all those different versions and sit on them.
My new Les Paul (see my avatar) was at a Guitar Center, was brand new and $500 off. Why? It sat there. When they pulled it down so I could play it, it probably had never been played or tuned since it was first hung up there. That's why they sold it for $500 off. It was costing them money to sit there.
Gibson needsto recosider their product line...and there's you lesson for the day ;)
The whole music industry is shrinking. Part of it was the iTunes business model dropped the average purchase price from $12-15 down to $1.30-$3.90. Bands now release songs to support their tour instead of touring to support their album sales.
Plus you have an aging customer base that is not being replaced by younger customers. Younger customers are going straight to EDM because the time to creativity is so much shorter.
Finally, you have a customer base that is very rigid and un-innovative. Everyone wants a 65 classic reissue with 57 vintage whosies-whatsits and patent-applied-for dohickies.
Guitar Center has an outdated business model (lots of inventory within a retail storefront) compounded by the shrinking market so no surprise there.
Gibson tried to diversify they just really really sucked at it.
My hope is that Gibson absorbs Epiphone's current product line into a "traditionalist cork sniffer's brand" and then lets Epiphone go hog-wild. I would love to see mass produced young-and-fun guitars like what is coming out of Fano, Novo, and Airline/Eastwood. No more Fender/PRS/Nash/G&L/Suhr/Grosh strat/tele clones in 3-color starburst. So tired of that.
The article I posted above suggests that Gibson's problems were primarily business decisions that didn't pan out, i.e., expansion/diversification away from guitars. Those businesses and the credit issues created by leverageing caused some major problems for the company. Still, the guitar business remained healthy with annual sales approaching 200,000.
But there's no question 'music' has changed and with it the guitar business:
"The industry faces threats from changing musical tastes, online commerce, and the instrument’s own durability. But new talent offers hope."
Played out? Gibson's bankruptcy fuels fears for the guitar's future https://www.thttps://www.theguardian.com/music/2018/may/04/gibson-guitar-bankruptcy-ed-sheeran-martin
I so agree with post #5, I hope Epiphone (and others) can start thinking about guitars in a new and creative way. How cool would it be to run down to guitar center every three months and see NEW guitars on the wall, try them, discover new features.
