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Guitar retailers worry that Fender's new online store will push them out

 
Ken Grayson, owner of Grayson’s Tune Town in Montrose, Calif., worries that guitar manufacturers will shift more to direct-to-consumer sales, increasing competition and offering lower prices.
Ken Grayson, owner of Grayson’s Tune Town in Montrose, Calif., worries that guitar manufacturers will shift more to direct-to-consumer sales, increasing competition and offering lower prices.
Published Jan. 29, 2015

LOS ANGELES — Fender's curvy Stratocasters, Telecasters and Jazz Basses have been must-have features of guitar shop walls for decades.

Music retailers, including mom-and-pop shops and big national chains such as Guitar Center, have been among the last bastion of businesses to survive online competition. Consumers like to try before they buy.

But just before Christmas, Fender Musical Instruments began selling directly to musicians on its website.

Brick-and-mortar retailers, already hurt by e-commerce sites such as Amazon and eBay, worry that Fender's online sales could increase competition and even offer lower prices. They are also concerned that other manufacturers such as Gibson Guitar, C.F. Martin & Co. and Ibanez Guitars might pursue similar tactics.

"It's hard to not call it a bit of a betrayal," said Gabriel O'Brien, sales manager at Larry's Music Center in Wooster, Ohio, which dropped Fender as a supplier a year ago, partly because it anticipated Fender would start selling its guitar lines through its site. "I feel it undercuts dealers whose backs these brands were built on."

For its part, Fender said the introduction of sales through its website would benefit retailers, still their most important partners for getting Strats and Telecasters in the hands of musicians.

The site gives an option to add a Fender guitar to their "cart," but also tells musicians the local dealer where they can try out and buy one. The company also does not undercut prices that can be found at retailers.

Richard McDonald, an executive vice president at Fender, said selling directly to customers will help make musicians more loyal to the brand and help increase sales at local shops.

"If this works, their businesses will grow," he said of retailers. "This strategy is about elevating the brand and getting closer to customers."

Not all retailers believe that.

They say if direct sales catch on, players might try out new instruments in physical stores and then order them online from manufacturers, the way many people purchase items such as personal electronics on Amazon after visiting their local Best Buy. Consumers' behavior has changed so much that they now order eyeglasses online, through firms such as Warby Parker in New York, or even electric cars directly from Tesla.

Store owners have seen Fender's direct sales efforts coming for months.

The company unveiled the plans in August at a meeting with dozens of top dealers at its factory. Many were caught off guard, dealers who attended the meeting said. Some left the meeting in anger.

Ken Grayson, a shop owner, was in attendance and said the reaction was intense.

"One guy walked out of the meeting and said, 'I'm a new dealer, and I'm sorry for that now,' " said Grayson, 71. Grayson's, a longtime Fender dealer, has been in business since 1953.

Buying from a guitar shop can be a personal experience that the Internet can't replicate, said Keith Brawley, vice president of sales for popular acoustic instrument maker Taylor Guitars.

"Musicians often have a relationship with their dealer like some people have with their doctor," said Brawley, who added that he understands why many retailers are unhappy.

Even the big store chains are apparently concerned.

But not everyone thinks direct sales will become a trend.

Brian Majeski, editor of the Music Trades magazine, said concerns over the issue are probably overblown and the bigger threat to retailers are used equipment sales through online outlets such as Amazon.

"I'm not aware of any other manufacturers rushing to follow suit, and no one I know of thinks the ability to buy a guitar on Fender.com will dramatically alter the distribution patterns of Fender products specifically or music gear more generally," he said.