The Guitar Center String Club was a special offer or “club” that ran at Guitar Center from late 2012 until mid-2019.
You bought a card at Guitar Center for $20, and for the next 12 months, it was refilled with $5 a month to be put towards buying strings.
The cards were only available in-store, and the offer could only be redeemed in-store.
So $60 worth of strings for $20 – pretty sweet deal, right?
Unfortunately, the discount was discontinued with little to no fanfare in 2019, and Guitar Center’s String Club page now redirects to their regular string pages.
Members who had already paid for a year’s worth of strings are able to get their full year of strings, but will not be able to renew.
Guitar Center after the Great Recession
At the time that GC started this discount, they were in a large amount of financial difficulty.
People always say GC are in trouble, but the reality is the years after the 2007 crisis were bad for all retail, especially musical instruments.
Right at the beginning of the crisis, in June of 2007, Guitar Center was bought out by Bain Capital for $2.1 billion dollars, which included over $200 million dollars of debt. The deal actually amounted to a 26% premium over their share price.
Without Bain Capital, GC would have without question gone bankrupt in the lean years for retail that followed. As the economy got back on its feet, luxury items like guitars were the last things on people’s shopping list.
By 2012, when GC introduced the String Club, they were looking for ways to quickly raise cash, and selling these $20 cards seemed like an easy way to quickly raise capital.
A Win-Win for GC and Customers
The $60 for $20 nature of the card was a no brainer for anyone who changed their strings once a month. It also helped that a set of Ernie Ball Super Slinkies were $4.50 at the time that the promotion started.
For GC the card was also a no brainer.
On the face of it, GC stood to lose $40 a year. However, what people don’t realize about gift cards – and this was basically a discounted gift card – is that at any given time, about 20% of gift cards in the US are unused.
The Guitar Center String Club card balance also did not roll over, so if you got your $5 for January and didn’t spend it, Feb 1st you got a “new” $5, but that didn’t make $10 – the maximum balance was always $5.
So for GC, the boon was that likely very few people would actually use the whole $60 within the year.
The other upside for GC was that customers had to go into the store to purchase the strings – and hey, while I’m here maybe I’ll get a cable, and take a look at some tab books.
The 2010s didn’t get any better for Guitar Center
Only a few months after the String Club was announced, Standard & Poors downgraded its debt rating for Guitar Center Holdings Inc to “junk bond” status, pointing to “weak operating trends”.
The following year, another private equity firm, Ares Management took a controlling stake in Guitar Center, leaving Bain with partial ownership. Ares pumped cash into GC allowing them to expand, including the opening of their 28,000 square foot store in Times Square. The new store became the permanent home of Eric Clapton’s famous Blackie strat.
However, GC never quite made it out of their funk, and in 2017, as music sales made a marked move from physical stores on online retailers like Sweetwater, Moody’s downgraded their B2 rating to negative, once again bringing them towards a junk rating. At this point, GC had $1 billion dollars in debt – only ten years after the company had been bought for $2 billion.
Thankfully GC managed to turn things around and posted a profit the last two quarters of 2017, and then in 2018 launched their in-store lessons.
End of the line for String Club
So what happened to string club? A GC employee explained it on Reddit:
String club came out of GC’s advertising budget. For a long time, it wasn’t being used enough to actually cost GC money. Customers loved it, associates got a bonus for every sign up. Everybody wins.
Recently though, Guitar Center’s attempts to not go under turned to the string club as a place to trim the fat. Managers pitched a fit to corporate, but to no avail; we all had to find any decorations referencing the string and stick clubs and pull them all.
Is the wring on the wall for Guitar Center in a wider sense? With the COVID 19 lead recession of 2020 on top of a trend towards online sales, it’s very difficult to see the company continue with as many physical stores if it continues at all. While many of us still like to play a guitar before we buy it, a year of very few retail sales is going to be a huge hit to GC.
Only time will tell.