Guitar Center and how not to respond to a viral blog post

Eric Garland Greatest Hits, Guitar Center 12 Comments

The way Guitar Center has responded to a simple blog post going viral is going to go down in business textbooks – but not the way they are hoping.

Two weeks ago I was a good, regular customer of theirs, albeit one who wrote a brief piece about how big box, mass-market retail was in trouble.

This week, my article went viral, gaining 100,000 visitors in a couple of days. I caught their marketing department in the comments section pretending to be a third party while their official corporate HQ simultaneously reached out for a “friendly” chat. Their employees are sending abusive messages. Yesterday, their CEO actually came to the comments section of my Facebook page and this blog to claim that none that bad stuff (which caused Standard & Poors to call their bond rating “junk”) is true and big boxes are awesome and that I didn’t do a sufficient job researching his company’s position before writing on my personal blog.

Executives from Guitar Center’s vendors and competitors alike are flooding my inbox with stories how this company treats the marketplace. None of these stories are glowingly positive. The best any has said is “I am afraid they might take out some decent companies if they went belly up.”

Last night, at the “request” of the CEO himself to do a proper job of analysis, I teamed up with financial analysts to have a look at the 10-Q statements from the last couple of quarters. I am *astonished* that any company in their financial position would spend time screwing around in the comments section of a website, claiming that everything was fine. Guitar Center had to declare a $360,000,000 loss last quarter, a revision of its goodwill, because in their own words they aren’t convinced that they will achieve their historical performance going forward. And they absolutely have to grow their income since they have over $1 billion in long-term debt, all of it financed for massive payments in two or three years. They had just $26 million in the bank at the end of September. It’s a financial wreck – and that’s what they admit to the SEC. Imagine what people actually know.

And all the while, Bain Capital is making fees for their “management.”

On November 26, I made a quick blogpost about retail as everyone was cooking turkey. I used a single news piece as the feedstock for a riff on the big picture. But seeing how Guitar Center reacted to this, it is a much bigger story than I imagined.

In ten years, this may be a business case students have to study.

Comments 12

  1. I would love to think that the failure of a big box retailer like Guitar Center would have a positive effect on the mom-and-pop music stores which have managed to survive during GC’s reign. A good local music store, with salespeople with a passion for the gear and a crackerjack repair department, is one of the most magical places on earth. Don’t let it die!

    1. Will future e-commerce trends effect big – box and local/independent businesses differently? In my view, amazon and other online types will take over big box shopping whereas, to your point, main street and local retailers will adapt and grow byway of in-store and online sales. I think we are in the early innings of both a “shop local” movement as well as a “goodbye big box” way of shopping where online growth will only help the former and kill the latter.

  2. all you idiots that are complaining about guitar center and saying mom and pop shops are awesome, have no clue what you are talking about. This guy is obviously a left wing activist and hater of our system so why read his anti capitalist “oh my god bain is so bad” trash.

    But anyway, I was around working in stores BEFORE GC got big. You want to talk about getting ripped off.. Those, “Mom and Pop” shops raped the shit out of people. They refused to let you return anything, no warranty and they only ever had 1 or 2 items in stock so you could NEVER play the instruments with out a salesman sitting on your back. Most of those stores had a horrible selection because flooring costs from the big manufactures were too expensive. This is why GC got big to begin with.

    This idiot blogger is pissed off, so he is making shit up. I find my local GC is full of helpful people and when i ask for a good deal, they give me one. So if you want to follow this lefty, good luck with the mom and pop shops.. they were crooks. The guitars that are 400 bucks today were 1100 to 1500 back in the late 80s. If you want that again. knock yourselves the fuck out.. and don’t even start on, “The quality was better back then” thats BS. those guitars back then were crap compared to the ones today.

  3. Typical Bain scenario played out company after company. Mitt Romney’s vehicle for getting his vice-presidency at Bain early in his career. This is his business model. I remember Guitar Center when it was 1 store in the middle of Sunset strip in Hollywood, where rock stars and beginners alike could shop for the gear they wanted. Good people then, mom-n-pop type operation just like the ones they’ve nearly squeezed to death under Bain’s “management” services.

  4. you delete my comment, how many other comments that aren’t sided with your ignorant opinion have you deleted? can’t track down my ip and expose me mr executive educator in the field of competitor intelligence… I mean this isn’t the minor leagues right?

  5. This has been fun to watch!. I certainly won’t fret over the potential demise of GC. While I do visit my local GC store regularly, I rarely buy anything. They seem geared more towards the entry-level. About the only thing I will miss is their used gear search on the webpage. hmmm… might be a real business opportunity there.

    BTW; Eric, I met you a few yrs ago. You sat in with my band at a conference in Orlando and played my Red Bongo Bass “Ms. Scarlett”.

    1. Yup – and Bain is at year seven, not their typical plan of being out in 3-5 years. They might actually hold this and run it so that it becomes an asset to somebody, and that seems to be quite challenging for them.

      1. Interesting, looks like the business acumen doesn’t extend to actually running the enterprise, vs. running it into the ground….

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