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@strat 54 replied Of course the Fender EU warehouse has no stock.....there's now close to 1000 unsold guitars sat on dealers floors and walls here in the UK alone! Add to that the stock in the rest of the EU and we're into serious £numbers!guitars4you said:But Fender have almost no stock in the EU warehouse - New policy coming in will be no stock at all in any warehouse be it the UK/EU or USA - Only forward orders from the dealers and approx 6 month delivery schedules - As such any 'discounting or dumping' will be dealer led and I can't see many dealers selling £10 notes for £9 unless they run into cash flow issues - Regarding C/Shop then Fender have no excess stock to dumpStrat54 said:Get saving guys, I reckon that day may soon come. Fender aren't far off Gibsons financial predicament and lets face it there is already a huge surplus of Custom Shop stock in the UK, a quick count up of 'In stock' guitars revealed that 5 dealers had 447 guitars!Bridgehouse said:If you sell your custom shop Strats off for £1500 Mark the internet would actually explode...guitars4you said:Don't tell everyone - do we need another thread with around 60K viewing figures ?????
Can't see the recent price increases helping either. £3k plus for an NOS standard spec guitar.
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The Fender Custom Shop business model is a similar size, or was, to that of USA produced PRS Guitars regarding factory units produced
In our trade, return on capital + stock turn, has always been poor - Certainly compared to the corporate high street - That is one reason why none of the major players have ever really tried to get into our trade - Richer Sounds dabbled with it around 20/25 years ago, with a small store in the Bristol area - Richard Branson looked at it around 20 years ago with a view to opening 10 stores immediately - Some may recall that around 15/18 years ago Sound Control opened a showroom within the Virgin Store on Oxford Street (sure it was that location ?) - But in reality the corporate high street does not like our business model - No Dragons Den style venture capitalist would touch it and many such investors hate high stock levels anyway
Many accountants would question any business model that carries such a high stock level, based on the level of turnover and profits delivered - Granted John at Peach, Doug at Coda etc etc will have different stock levels, different profit levels, expectations etc but a common theme will be a low return on capital, based on many other high street retail operations - For whatever reason that maybe
My way of looking at it is quite simple - I need to earn a living and this is all I know - I currently run the business on around a £200K stock level with very little owed to the trade - This 200K investment provides me with enough turnover, hence profit, to run the business and pay a 'healthy wage' - I've enjoyed the journey for over 40 years now and grateful I'm in a business I enjoy - There is no way that I could invest £200K in the stock market, or other investment options, and make the same level of wage and retain the same level of investment - Better investors might be able to achieve it, but I can't - So a guitar store is my way of earning a required 'healthy wage' and if it requires a sock level of 200K, with a poor stock turn on Custom Shop models then so be it
The good news is we are not selling fruit and veg or soft ware with a 'use by date' - As such I don't have an issue with such a poor stock turn - However I know I could run a small coffee store, a children's shoe shop or indeed other options, with far less stock, but would I enjoy it ??????????????????????
I can only imagine that it has got much harder today with the internet and people coming in to check out things and then going away to find the cheapest price. Our biggest profits came at Christmas time with the full kit specials that we could turnover in the dozens. I have a friend in the States with a shop and he has the same thing. He keeps it going with a big lessons operation, with many rooms and teachers for all instruments.
@guitars4you, I'm glad you can make a living at it. I like to support my local stores and still by my strings through my friend's shop, even though there are many discount outlets. He gives me a deal and makes money himself, so we are both happy. Also, I can get my custom gauge sets this way.
Question for you @guitars4you ...which you are better placed to answer than most.
Do the big guitar makers now act more like the giant corporations of other sectors?
Supermarkets seem to be the only retailers that get to largely set their own terms, and often dick on the producers (ie dairy farmers) where most other sectors seem to be manufacturer lead. With RRPs rarely deviated from. My guess is they make a bigger chunk of profit than, say, farmers, steel fabricators or furniture makers relying on outlets.
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It is tougher now for many smaller retailers as they can't meet the requirements of many companies, but less of an issue for say Andertons
Granted I don't know what profit Fender make on a guitar, or indeed Gibson, Ibanez etc
There is still a mutual relationship with many companies, and the fact that you are successful with them helps - My relationship with Gavin/Headline/PRS was excellent and no way could I have built up my level of turnover with them, without their support
Not sure what Marshall are like now but they use to have a stocking policy and a rep walked in to check you carried in stock what they told you to - For example we had to buy the 60 watt bass combo and we thought they were crap - So when you sold it, they made you replace it - Then we got clever - Keep the box, which is now empty in the store room - Sell the amp - And when the rep came round he would see the box, not check it and include it within his 'in stock' listing - So we did not need to replace it - Worked for a while, but then one day he noticed we had one in the store room and not on display so he came to un-pack it - Low and behold it was empty - Bugger - He then use to check the boxes in the store room after that
Gibson do have the worse reputation with many retailers regarding their stocking policies and requirements/targets - Both here in the UK, EU, USA and worldwide
The last time I went there was in 1980 to buy a brand new Hohner Pianet. That was a really heavy load to carry back to Leeds on the bus.
Sorry for digressing, the memory was so vivid. Then it changed name to Spectre Sound.
In various conversations over the recent R8 blowout, it was intimated that the dealers had been specifically chosen to help rebuild relations between them and Gibson. It would undoubtedly have been easier to shift them on to Amazon and sell them in a day, so I can see something in that, but Henry's comments about dealers earlier this year don't match up if that's the case.
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