jonesbrass wrote: How the WWBW is going to fit with Music & Arts will be curious.
Friendly competition would most likely net more profit than partnership. Think of the "market share" that they will have now!
Pete
Hey, Pete. That's an interesting thought, but isn't competition supposed to make profits smaller (unless you're going for volume)? Depends on how "friendly" the competition is, eh?
You're probably right, though, as M&A generally focuses on storefront sales, and WWBW could be their "big" internet retailer. Might be a good way to specialize market focus.
In theory, IMHO it's about market capture and share/control, following the Starbucks model.
Starbucks operates their franchises on the idea that however it works out for individual locations, it all works out well for Corporate. This is the reason why "there's a Starbucks on every corner."
As an example, let's say there's a store operating at the southwest corner of Main and State. Good traffic, always a line, decent service. Corporate decides to open aother store on Main, half a block from Main and State. One of two things can happen:
1) the neighborhood demand for Starbucks can sustain two stores;
2) the nieghborhood business won't sustain two stores.
If #1, Starbucks wins all the way around.
If #2, in theory, the store providing better service with an equal or superior presentation of product will win out; Corporate wins. They still have a store in the neighborhood, better/stronger than before, theoretically further anchoring brand loyalty.
I think a possible scenario for WWBW is that the GC folks put their people in charge, let 'em have at it and see where it shakes out. They'll either increase corporate market share or cut the dead weight, which might not even be WWBW by that point (if it comes to that).
Guitar Center is also working at establishing stores overseas (the only one I remember is near Frankfurt) and may be looking to this to boost market share at home to have a better footing for global expansion.
I believe Guitar Center started as a San Jose retail operation and Musician's Friend started as an internet mail order business just south of here in Medford. As I understand the picture from a couple of strings dealers, there's still not a lot of overlap between the B&M storefront operation and the web merchandising.
I'm also told that the GC side is run in a very corporate style--hard-nosed MBAs adjusting stock and cutting deals.
I wouldn't be at all surprised for the WWBW side to drop all of the more low-volume instruments, such as tubas, out of their inventory. Certainly, that's the way MF operated for years--they had everything in their catalog, but would need to special-order the less common items.
It might also be the case that the WWBW operation will target school programs and carry primarily student-line instruemtns. After all, how many Heckel contrabassoons do you think WWBW sells in a year?
Greg wrote:My bet is that WWBW will continue in a similar fashion but with new ownership. Musiciansfriend is also a discount music wharehouse but is mosttly focused on guitars, amps, recording etc. It appears they are now going to broaden their scope.
If I am not mistaken, Musiciansfriend also owns Giardinelli band instrument company as well.
Greg
Yeah...I'm pretty sure they do own Giardinelli. We ordered one mouthpiece from Giardinelli, and now we get Musician's Friend junk all the time now...
I think I might end up as a grumpy old man when I get old...
Mitch wrote:In theory, IMHO it's about market capture and share/control, following the Starbucks model.
Starbucks operates their franchises on the idea that however it works out for individual locations, it all works out well for Corporate. This is the reason why "there's a Starbucks on every corner."
As an example, let's say there's a store operating at the southwest corner of Main and State. Good traffic, always a line, decent service. Corporate decides to open aother store on Main, half a block from Main and State. One of two things can happen:
1) the neighborhood demand for Starbucks can sustain two stores;
2) the nieghborhood business won't sustain two stores.
If #1, Starbucks wins all the way around.
If #2, in theory, the store providing better service with an equal or superior presentation of product will win out; Corporate wins. They still have a store in the neighborhood, better/stronger than before, theoretically further anchoring brand loyalty.
I think a possible scenario for WWBW is that the GC folks put their people in charge, let 'em have at it and see where it shakes out. They'll either increase corporate market share or cut the dead weight, which might not even be WWBW by that point (if it comes to that).
Guitar Center is also working at establishing stores overseas (the only one I remember is near Frankfurt) and may be looking to this to boost market share at home to have a better footing for global expansion.
The interesting difference in the two strategies (ie Starbucks vs. Guitar Center) is in storefront brand name. Starbucks only has (as far as I can tell) the "Starbucks" storefront name (although they did acquire the Seattle Coffee Company in 1998, and I don't know if they operate at all under that store name). Guitar Center, on the other hand, operates more storefront names than you can shake a stick at. This, as I see it, is a benefit to Guitar Center, as poor service or quality at one storefront name will not necessarily effect the long-term performance and profitability of the others. Starbucks, by opening so many stores, may be diluting the value of the brand name, and brand perception problems may have a greater effect on overall profits for the company. Just a thought.
As long as SOMEONE will still sell a variety of quality tubas at great prices, I'll be happy anyway . . .
