Though much of retail has been buoyed by a rising tide of strengthened sales and renewed consumer confidence, some sellers out there continue to struggle to grab a foothold during changing times.
Guitar Center, founded in 1959, is one such business. Sales have fallen off sharply in recent years, which, while a problem on its own, is compounded by the fact that brand finds itself sitting under $1 billion in outstanding debt. As of April of this year, Moody’s warned investors that the brand was facing an imminent default with its bondholders.
That immediate disaster was held off with an emergency loan renegotiation of $615 million in debt — a relief, perhaps, of the most pressing concern of default. In more recent reports S&P stated
“We don’t envision a specific default scenario over the next 12 months.”
The report also states
“The company began seeing benefits from some of its strategic initiatives.”
Moody’s had noted the refinancing alleviates its concerns about the business; significant and relatively near-term debt maturities and found it would provide the company with “some increased financial flexibility.”
How is Guitar Center answering that challenge, and how will it set the ship right?
A more holistic approach.
That idea comes care of Guitar Center’s chief human resources officer, Anne Buchanan, who says, going forward, the brand is looking beyond the sale of musical instruments as its corporate center, and instead branching out to make a trip to Guitar Center a more harmonious (pun fully intended) experience for consumers — and hopefully one that is more likely to draw consumers in repeatedly.
“Whether you’re a new musician, an emerging talent or someone who’s played for a long time, you’re going to find people [at Guitar Center] who are educated on all these amazing products,” Buchanan said. “You can go in and play instruments, loud and proud, and people are smiling and happy to see it.”
Guitar Center has a unique cultural identity among consumers, and the struggling retailer believes that building out that identity will be crucial to its success.
Buchanan is new to the brand, having joined Guitar Center from Global Brands Group, where she led the human resources strategies for BCBG, BCBGeneration, BEBE, Herve Leger, Joe’s Jeans and Juicy Couture. She is not the only new leader coming into Guitar Center as it works to reverse its struggles. In May, the brand appointed Erica Moran, a veteran of Stride Rite, PetSmart and ACIRE Consulting Group, as vice president of marketing, and Bob Buckborough as the brand’s newly created vice president of eCommerce.
In some ways, Buchanan will have to do the heavier lifting among new leadership staff. Guitar Center’s push to reclaim the mantle as one of the leaders in experiential retail will fall heavily on the staff at the shops themselves. Employees will need new and more extensive product training, which means coming up with new strategies to educate workers into being the best possible guides for their customers. As of now, the group is working with micro-training modules from vendors so that workers can get a quick education on the goods in a five- to 10-minute burst.
“I think we do a great job at investing the right resources to ensure that our employees are prepared to answer questions from our customers and really sell the product, and also understand whether the product is right for the customer,” Buchanan noted.
The hope, she told HR Dive in an interview, is to help customers feel connected not just to the Guitar Center Brand, but to the culture the company has built over its 60 years in existence — and is working to continue to build today.
“For Guitar Center, there’s a rich, deep history, and I think a rich, deep culture. We have musicians; music is a theme. People love music. People play music. People talk about music. That brings a bit of fun to the atmosphere — it’s not so sterile in that regard,” she said. “You hear music in the hallways, you can see pictures of musicians and bands that have a deep relationship with Guitar Center.”
Will it work? That’s the $618 million dollar question that Guitar Center faces as it tries to bolster sales while sitting under what remains a pretty impressive pile of debt. It’s betting big that improving in-store experience, and a more aggressive marketing and eCommerce plan, will be able to start the tide moving in a new direction. Guitar Center opened five news stores in 2017 – and has affirmed plans for more growth in 2018.
We’ll see if their comeback efforts continue to show their early promise.