Is there any validity to the rumor of Guitar Center closing there doors forever and something about them being in financial debt to DW?
I don't know about the rumor itself however stores becoming heavily indebted to manufacturers and distributors is nothing new. Inventory is generally done on speculation of sales projections and previous sales records. Over the past year sales have been way down particularly on high ticket items that often require financing for the customer. As well major manufacturers require a certain amount of kits be purchased by a retailer as well as a certain amount of finances be in sort escrow account to even become a retail vendor of their products. DW is one of the most expensive in this requirement.
GC has a store credit card which makes them a creditor whom use a creditor in order to offer the card. Now with people loosing their jobs and falling behind or defaulting on payment accounts their ability to juggle the funds are gone. Banks have cut back on credit lines which doesn't allow them to cover orders that have not sold nor cover projected orders nor keep inventory on the sales floor and in-store warehouse. People don't buy when they cannot test drive and people don't like to buy big names that have been demoed at new product prices. Two issues that have caught up to them and other retailers.
Add on the new competition from Best Buy whom have the former CEO of GC (from what I was told my a Best Buy music store employee)and you have a big problem. Best Buy has 85 stores that are now carrying the same music gear as GC. Difference is that these brick and mortar stores overhead is covered already by the sale of electronics in which Best Buy dominates. And customers can use their Best Buy card which many already have. Best Buy determined through demographics that 85% of their customers were musicians so why not get their big ticket instrument sales dollars.
