There have been numerous news stories about the impending death of U.S. guitar business. Not without some reason. The instrument long ago lost its central role in pop music. Iconic brand Gibson is in trouble. So is big-box retailer Guitar Center. Ditto many of the mom-and-pop stores that used to be the heart of the business.
According to The Music Trades magazine, though, the $7.4 billion market for all new instruments and music gear has actually been growing since the recession years of 2008 and 2009. Last year retailers sold $1.9 billion of new fretted instruments (mainly guitars) and related gear, up 8.9% from 2016.
Andy Mooney, CEO of Scottsdale, Arizona-based Fender, says his company has been growing faster than the industry. Private equity owned Fender, which had about $500 million in revenues in 2017, is building a strategy on developing a younger audience through new instruments and on reaching customers online. Last July Fender introduced Fender Play, an online subscription guitar lesson service. This March it rolled out a line of lower priced guitars aimed at beginning players, particularly young women. The California Series guitars are acoustics with built in electronics, which can be played plugged or unplugged. While high priced acoustic guitars tend to look like fine antiques, the look and feel of the California Series (the company was famously launched in 1945 out of Leo Fender's Fullerton radio repair shop) echoes Fender’s iconic and flashy electrics.
In this interview which has been edited and condensed Mooney, a retail veteran formerly with Nike and later chief of Disney's consumer product division, talked about why the future of the guitar business is female and why he's not worried about the brick and mortar apocalypse.
The guitar is the baby boomer's instrument. What's the reason for optimism about it now?
It comes back to the environmental positives: consumption of live and recorded music is at an all-time high and continuing to grow. There are 125 million people paying for digital streaming services and that’s growing. We had LiveNation last month reporting 82 million people went to concerts last year up 21%. There is not a signal that the uptake of Spotify or Apple music subscriptions is going to decrease for the foreseeable future, not a signal that LiveNation which is the largest provider of live concerts and has been growing for 11 years, is going to slow down. In Fender's case we think we are just doing a really good job of being a contemporary provider of product and a contemporary marketer of product through predominantly social media and digital channels. We’ve really stepped up our game in terms of more marketing money and spending all the incremental money on appealing to audiences online. (...)
How much of your dealers’ sales are online?
It depends on the region. We estimate that half our sales in the North America are getting done online in some form or other. It's moved from 35 % to 50 % over the last three years.
How does that compare with your competitors?
I can't speak for those brands but I’d think that would be about par for the course for anybody that’s got a significant brand in North America. (...)
What’s the business case for going after beginners?
About two years ago we did a lot of research about new guitar buyers. We were hungry for data and there wasn’t much available. We found that 45% of all the guitars we sell every year go to first-time players. That was much higher than we imagined. Ninety percent of those first-time players abandoned the instrument in the first 12 months — if not the first 90 days — but the 10% that didn’t tended to commit to the instrument for life and own multiple guitars and multiple amps.
We also found that 50% of new guitar buyers were women and that their tendency was to buy online rather than in a brick and mortar store because the intimidation factor in a brick and mortar store was rather high.
The last thing we found was that new buyers spend four times as much on lessons as they do on equipment. So that shaped a number of things. It shaped the commitment we made to Fender Play because we felt there was an independent business opportunity available to us that we’d never considered before because the trend in learning was moving online. We also found we needed to communicate more to the female audience in terms of the artists we connect with, in terms of using women in our imagery and thinking generally about the web.
Has the additional marketing spend helped?
What we found that was a shocker to us was that Fender Play and our other marketing activity encouraged people who had never thought about buying a guitar to buy a guitar. We have good sell-through data for electric guitars in North America. In the November, December, and January we had sell- through increases of 13.5%, 15% and 15%. We’ve haven’t seen growth in the industry at that level for many years and the industry has inherently growing.
We've been growing at faster pace than the industry and enjoying that growth. Gibson’s travails are all of their own making; it’s nothing to do with the state of the industry.
by Peter Carbonara, Forbes | Read more:
Image: Fender
According to The Music Trades magazine, though, the $7.4 billion market for all new instruments and music gear has actually been growing since the recession years of 2008 and 2009. Last year retailers sold $1.9 billion of new fretted instruments (mainly guitars) and related gear, up 8.9% from 2016.
Andy Mooney, CEO of Scottsdale, Arizona-based Fender, says his company has been growing faster than the industry. Private equity owned Fender, which had about $500 million in revenues in 2017, is building a strategy on developing a younger audience through new instruments and on reaching customers online. Last July Fender introduced Fender Play, an online subscription guitar lesson service. This March it rolled out a line of lower priced guitars aimed at beginning players, particularly young women. The California Series guitars are acoustics with built in electronics, which can be played plugged or unplugged. While high priced acoustic guitars tend to look like fine antiques, the look and feel of the California Series (the company was famously launched in 1945 out of Leo Fender's Fullerton radio repair shop) echoes Fender’s iconic and flashy electrics.In this interview which has been edited and condensed Mooney, a retail veteran formerly with Nike and later chief of Disney's consumer product division, talked about why the future of the guitar business is female and why he's not worried about the brick and mortar apocalypse.
The guitar is the baby boomer's instrument. What's the reason for optimism about it now?
It comes back to the environmental positives: consumption of live and recorded music is at an all-time high and continuing to grow. There are 125 million people paying for digital streaming services and that’s growing. We had LiveNation last month reporting 82 million people went to concerts last year up 21%. There is not a signal that the uptake of Spotify or Apple music subscriptions is going to decrease for the foreseeable future, not a signal that LiveNation which is the largest provider of live concerts and has been growing for 11 years, is going to slow down. In Fender's case we think we are just doing a really good job of being a contemporary provider of product and a contemporary marketer of product through predominantly social media and digital channels. We’ve really stepped up our game in terms of more marketing money and spending all the incremental money on appealing to audiences online. (...)
How much of your dealers’ sales are online?
It depends on the region. We estimate that half our sales in the North America are getting done online in some form or other. It's moved from 35 % to 50 % over the last three years.
How does that compare with your competitors?
I can't speak for those brands but I’d think that would be about par for the course for anybody that’s got a significant brand in North America. (...)
What’s the business case for going after beginners?
About two years ago we did a lot of research about new guitar buyers. We were hungry for data and there wasn’t much available. We found that 45% of all the guitars we sell every year go to first-time players. That was much higher than we imagined. Ninety percent of those first-time players abandoned the instrument in the first 12 months — if not the first 90 days — but the 10% that didn’t tended to commit to the instrument for life and own multiple guitars and multiple amps.
We also found that 50% of new guitar buyers were women and that their tendency was to buy online rather than in a brick and mortar store because the intimidation factor in a brick and mortar store was rather high.
The last thing we found was that new buyers spend four times as much on lessons as they do on equipment. So that shaped a number of things. It shaped the commitment we made to Fender Play because we felt there was an independent business opportunity available to us that we’d never considered before because the trend in learning was moving online. We also found we needed to communicate more to the female audience in terms of the artists we connect with, in terms of using women in our imagery and thinking generally about the web.
Has the additional marketing spend helped?
What we found that was a shocker to us was that Fender Play and our other marketing activity encouraged people who had never thought about buying a guitar to buy a guitar. We have good sell-through data for electric guitars in North America. In the November, December, and January we had sell- through increases of 13.5%, 15% and 15%. We’ve haven’t seen growth in the industry at that level for many years and the industry has inherently growing.
We've been growing at faster pace than the industry and enjoying that growth. Gibson’s travails are all of their own making; it’s nothing to do with the state of the industry.
by Peter Carbonara, Forbes | Read more:
Image: Fender
