Thinking of opening a guitar store. Am I insane?

spacecadet

I've been thinking of opening my own store for a while. I travel around a lot with work and always make time to visit as many shops as I can wherever I'm going. You never know what bargains you'll find! Very few stores I go to actually impress me. Guitar Guitars and PMT's are always great of course. Rich Tone, Andertons, Hot Rox, Peach and World Guitars are my favourite independents. 

I see so many, in fact the vast majority, that are just local shops for local people. They all seem to be a little bitter about someone being better than them but do nothing to up their game. There's no ambition. If I ask about something tasty the typical answer is we don't have the customer for that so we don't do it. Why not get it then find the customer then? I see what the good guys are doing right and the bad guys are doing wrong so could potentially make a success of it. Having worked in shops in the past I have a good idea about stocking plans etc and places like this fine forum would give me a good platform to see what people are talking about which of course would lead to what I actually kept in stock. 

Am I being a bit stupid/ naive? I'm not in a position to do it yet but may start planning for the next couple of years. Everyone here would get a FB discount code of course. ;-)

underdog

I think you're mental yes

You'd need huge buying power to compete on price with PMT, Andertons etc and due to the internet you will be competing with every box shifter in the UK, actually with everyone in Europe.

To stock new fender or Gibson models you will be required to commit tens of thousands of pounds to their stock and often they will dictate how many from each price range you take. If you don't stock the F or the G then people will go to someone who does.

If you want to sell mainly used guitars then you could never compete with the range and price of eBay and gumtree

TTony

"Insane" isn't quite the right word.

capo4th

Yes lock this one down mods

spacecadet

@underdog I have no problem in doing Fender. The margins are low but it's high turnover and ultimately it would be a marketing product to let people know I'm there. I would do Gibson but it would be used only. There are bargains to be had. Pricing isn't a worry either. Looking at online prices everyone seems to be stable. I think these days buying power just gets you more margin, not the ability to trash the price unless you have an end of line product. Lot's more research to be done yet but I think it could work. I have an investor ready.

underdog

I think Keith (axetec) got it right, he's selling decent quality hardware and pickups at good prices and doing it all online

VimFuego

IMO, we're seeing the end of the boom in "luxury" consumables, like guitars. For about 20 years we've had a boom of low interest rates, easy credit and a far east manufacturing boom, I don't think the next 20 years will be like the last (just my opinion, from what I read), higher living costs and stagnating wages will take a toll on disposable income. Add to that, as local councils feel the pinch of reduced funding from central government, they'll be wanting to put business rates up and increase parking charges in town centre locations if they're allowed to (nothing so short sighted as a council wanting to tax something). So I can't see us having a mass market for instruments like we've had for a while now. That said, there will be people out there with disposable income, some of them will want to buy guitars, so there will be a market, it's how you cater to that market that will be key, I don't think the traditional high street store will be it though. Just my opinion though, prove me wrong.

underdog

spacecadet;440013" said:

@underdog I have no problem in doing Fender. The margins are low but it's high turnover and ultimately it would be a marketing product to let people know I'm there. I would do Gibson but it would be used only. There are bargains to be had. Pricing isn't a worry either. Looking at online prices everyone seems to be stable. I think these days buying power just gets you more margin, not the ability to trash the price unless you have an end of line product. Lot's more research to be done yet but I think it could work. I have an investor ready.

I've just watched my friend close his guitar shop for a second time, this time he run it along side running lessons on site and also having a recording studio, the only bit that didn't make money was the shop.

Selling used is tough as being a physical shop it means you have to charge more than eBay to cover your costs, yet most people will still haggle to get the eBay price.

Don't get me wrong this world needs more good guitar shops, but I'd not wish it on anyone

fretmeister

I read somewhere that Andertons buy a million quid worth of Gibsons every year. No doubt the Fender's are similar.

Unless you can buy enough to get similar discounts you can't compete.

There are loads of great guitar shops (like Hartnolls owned by Jamie of this forum) but if I'm in the market for a Les Paul then I'm going to Andertons where I can try out 20 different ones of the model I want and pick the best.

Other shops have 1 or 2 in stock and don't offer that service.

The other option is to be the exclusive place - like World Guitars. But you have no reputation to trade on yet. Jeff at WG was well known from Machinehead.

Them you've got the monsters like Thomann to deal with.

You'd lose less money starting a Grand Prix team.

speshul91

One thing I love about my local shop is that if you don't have the money out right they will reserve it for a small deposit and let you pay as and when you can until you've paid then take it home with you. Not many places doing that anymore

underdog

speshul91;440034" said:

One thing I love about my local shop is that if you don't have the money out right they will reserve it for a small deposit and let you pay as and when you can until you've paid then take it home with you. Not many places doing that anymore

Lots of big places will arrange interest free credit, so a small deposit and you can take it home. It's a tough business, much the same as if you fancied opening a record shop right now.

spacecadet

I see places closing all the time and it is sad but those stores are not keeping up with the way retail is changing. Look at all the extra work a business has to do now to simply let people know they exist. Something as simple as the band I'm in (which is essentially a business) has to do so much to get the gigs. Social media, web, hustling for business etc. It's a constant battle. 

I do think that high street music shops are going to be the ones to go first. Look at the successful stores. None of them are in town. The margins in music products are tiny in comparison to clothes, food etc. It would have to be somewhere visible but out of town to keep rent down and increase the size of the place. I have ideas of little add on services as well to help. Like I say, it's a bit of a pipe dream at the mo but I think ultimately I'd like to do something. 

richardhomer

There is a thread on here which I contributed to about the sad demise of Tone World. This business was started by someone of impeccable industry experience, which an excellent personal reputation.

He employed exceptional staff, had the best looking shop I have ever seen, had Johnny Marr at the opening ceremony, followed by a personal appearance only a couple of weeks later by Paul Reed Smith.

Joe Bonamassa bought from them.

This kind of enterprise going wrong would ruin most people - I wouldn't wish it on my worst enemy.

chillidoggy

I'd go with Vim's concise appraisal of the situation, but add a different twist: I wonder if a parallel might be drawn between online Hi-Fi retailers  and Hi-Fi shops: There will always be a market for people who wish to patronise the shops, but they'll use a shop for a demo, and then buy gear online. I think it'll be very tough to make a decent living from sales.

Whatever you decide, I hope it works out for you, though.

crunchman

Think your best bet is to find a town without a decent music shop and set up a more general music shop that does violins, clarinets etc.  There's one near us that rents out the violins.  A lot of parents don't want to commit to buying because they are worried that their child will give up after 6 months.  There is a steady income stream to be made from that.

Repairs are the other way to keep a steady stream of income coming in, although they won't make you rich.

Whatever type of shop you go for, you want to find a town that doesn't have much good competition nearby.  I used to teach in a school in Slough (120,000 ish people) and there was not a single good music shop in town.  Parents would ask the music teacher where to buy instruments and he was sending them out of town.  That was over 15 years ago.  The problem these days is that the music teacher is likely to give the parents a website instead.  You need to find the music teacher at the local school and buy him a drink and get him to recommend you to his kids parents.

Deijavoo

Hat firmly donned at you if you manage it mate. I had a backer with £50k which I thought would be enough. After much thought, and deliberation I decided that I couldn't risk it, plus I realised how much you need to get in with Fender, Gibson, Westside etc...

Vigier were actually very accommodating and open to all ideas.

There was a very small shop local to me that sold up recently with pretty much entry level gear and ot just didn't excite me enough to again pump money in.

ICBM

How to make a small fortune from musical instrument retail...

Start with a large one.

Old but true, unfortunately.

It's a dying business. Unless you have some kind of major sideline - like repairs, hire, tuition etc - then there's probably no chance of making it work. In fact, it's probably the other way round - sales will be the sideline.

Even the big shops are really struggling now, and it wouldn't surprise me if some of them are only just profitable, or even trading on ever-increasing bank finance because the alternative is pulling the plug and the whole lot going down the pan.

crunchman

I was thinking a bit since the last post.

The guitar market has been sustained in recent years by people building up big collections of guitars.  20 years ago most people would have had a handful of guitars.  Maybe one main electric, one main acoustic, and they kept their old ones that they learnt on as a spare.  What has sustained the shops (and manufacturers) is the fact that a lot of guitarists have built up large collections.

I think that has peaked.  I've sold 3 guitars this year and only bought one new one.  From comments I've seen on this forum, I think other people are in a similar situation.

There is also a glut of second hand stuff out there.  There was a thread a couple of weeks ago from someone who had to deal with 200 guitars that belonged to a friend/relative who had died.

I really don't think there is money to be made in guitars at the moment.  From what I've read, even Fender are in financial trouble.

Danny1969

I would image making enough money from selling guitars to pay the lease, the business rates, the services and alarm monitoring etc would be quite hard. You would need to turn over a lot. I always wanted a studio but unfortunately there isn't enough studio work for a place as big as 2020 to pay for it's self, so we subsidize it by doing a lot of repairs. Our own wages have to come from gigging. Between recording, repairs and gigging we get by but I often work 70 hours a week and I'm not exactly rich, far from it. 

I've been running my own  business since 1996 and one thing I've learnt is even if you business plan is rock solid you never know whats around the corner. Things fall in value, you can lose money and if you can't pay the lease you can lose your house. 

Flink_Poyd

Certifiable. If you've got £150k to back you up I'd still look at something else, probably something running in the grand national, better odds of making it.

EricTheWeary

crunchman;440051" said:

Think your best bet is to find a town without a decent music shop and set up a more general music shop that does violins, clarinets etc.  There's one near us that rents out the violins.  A lot of parents don't want to commit to buying because they are worried that their child will give up after 6 months.  There is a steady income stream to be made from that.



Repairs are the other way to keep a steady stream of income coming in, although they won't make you rich.



Whatever type of shop you go for, you want to find a town that doesn't have much good competition nearby.  I used to teach in a school in Slough (120,000 ish people) and there was not a single good music shop in town.  Parents would ask the music teacher where to buy instruments and he was sending them out of town.  That was over 15 years ago.  The problem these days is that the music teacher is likely to give the parents a website instead.  You need to find the music teacher at the local school and buy him a drink and get him to recommend you to his kids parents.

There was a well established shop near me that did rentals and repairs for brass, string instruments,etc. A reputation that gave them a huge customer base.
Gone tits up.
Schools have massively cut music education ( I know music teachers being made redundant) and the rental market was simply undercut by cheap trumpets, etc, from internet sellers. The skilled repair people are now self employed from what I can work out.

We also had Music King which was a successful internet business run out of the owners garage. Turned it into bricks and mortar. Large, well stocked.
Went tits up.

Good luck.