To some people, guitars are almost as essential as toilet paper. While the Covid-19 pandemic wreaked havoc on the global economy, seriously hurting and shuttering many businesses, some companies — like Amazon and Procter & Gamble, for example — posted jaw-dropping financials. And in a less predictable turn of events, it appears the same can be said for major music retailers.
In conversations with Rolling Stone, instrument sellers Sweetwater, Guitar Center, and Reverb reported a bang-up year for online sales. In 2020, online-only store Sweetwater surpassed $1 billion in revenue for the first time in the company’s 42-year history. It also served over 1.5 million customers in 2020, up from a million in 2019. CEO Chuck Surack says shipping out 15,000 to 20,000 orders a day was normal for most of the year, resulting in about a 40 percent increase from the previous year. And when “Black Friday stuff picked up” the numbers increased to 22,000 to 24,000 orders a day, peaking at about 30,000.
While the Etsy-owned Reverb — an online-only marketplace similar in design to Etsy, but for musical equipment — has not yet released its gross merchandise sales (GMS) data for the fourth quarter, CEO David Mandelbrot tells Rolling Stone that Reverb saw its highest quarterly GMS yet in 2020’s second quarter. And the third quarter numbers were up more than 30% compared to the same period last year.
Even Guitar Center — the only one of these three with brick-and-mortar locations — saw an uptick, despite filing for bankruptcy to reorganize debt. While Guitar Center doesn’t share exact revenue figures, its chief marketing and communications officer Jeannine Davis D’Addario says Guitar Center’s online business has “been booming as consumers visit significantly more frequently, with sales up substantially in most categories compared to 2019.” According to Guitar Center, online sales more than doubled in 2020 when compared to 2019.
Pivoting with urgency
Before Covid-19 hit the U.S. hard in March 2020, Sweetwater had already opened up a new 480,000 square-foot warehouse, which was almost four times the size of its previous one. That’s because, according to Surack, sales have been steadily increasing for the family-owned company year over year. But when citizens started sheltering in place, that steady increase became a sharp spike. In April, Surack told Rolling Stone that a recent week had surpassed numbers that typically only happen around Thanksgiving. Surack immediately realized the need for even more space and requested a 50,000 square-foot add-on, which was completed by the summer.
Surack says the pandemic also led to Sweetwater moving its annual GearFest event online. GearFest, which normally takes place on the Sweetwater campus in Fort Wayne, Indiana, drew 18,000 in-person attendees in 2019; there were more than 125,000 virtual attendees in 2020. Surack tells Rolling Stone that he hopes to reintroduce the in-person event in the future but plans to keep a virtual option available as well.
Moreover, Sweetwater added 400-plus jobs last year, and that doesn’t include temporary hires. “We swelled our normal warehouse of 400 people up to about 700 and we’ll slowly reduce that,” explains Surack. “They were all temporary folks. But most of the growth [was] permanent warehouse people and new salespeople. We hired 119 new sales engineers. We hired executives at various levels. We hired a woman in charge of our human welfare. It was all over the company… Every time we hire sales engineers, we have to hire administrative help, more tech support people. You have to hire more service department people… We’re over 2,000 employees now.” Sweetwater, which plans to hire another 120 to 130 sales engineers in the near future, couldn’t have gotten through 2020 without those temps. “That was for warehouse fulfillment,” says Surack. “When we were doing 22,000 to 28,000 orders a day instead of our normal 14,000 to 16,000, we just needed extra help.”
In August, Reverb’s Mandelbrot told Chicago Inno that Reverb had 190 employees and planned to hire throughout the end of the year, “growing its product team by around 40 percent.” While a Reverb representative couldn’t disclose specifics around hirings, they did confirm to Rolling Stone that the company continued to hire throughout the year.
D’Addario says Guitar Center “rapidly launched contactless curbside pickup across all 290+ stores, which enabled customers to purchase online, in-app or via its call center, and pick up purchases at their local store. Guitar Center also “increased its pick, pack, and ship capabilities” for in-person customers who moved to online shopping and shepherded instructors to one-to-one online lessons, transitioning students from store lessons.
While Guitar Center wasn’t in a position for a hiring boom, it did have to “temporarily furlough a substantial number of employees as well as adjust and eliminate a small number of positions to support changes to the business and adhere to shutdown mandates,” says D’Addario. “We’re pleased to say the majority of our furloughed employees returned to work as quickly as we were able to bring them back.”
Guitar Center put a lot of focus on getting through its bankruptcy filing as quickly as possible, and they were able to do so before the year’s end, finishing the process on December 22nd. “Guitar Center emerged with a stronger balance sheet as a result of the elimination of nearly $800 million of debt and $165 million in new equity funding,” D’Addario says. “In addition, the recapitalization transactions boost Guitar Center’s liquidity, supporting the company’s ongoing operations and enabling it to invest in its strategic growth initiatives and execute its business plan. We have gained the financial and operational flexibility needed to support long-term sustainable growth and are poised for continued positive momentum.”
“People talk about necessity being the mother of invention. Well, necessity was the mother of access and acceleration for guitars” — Gibson CEO James ‘JC’ Curleigh
Guitars gone wild
All three retailers report that the guitar was the most popular product they sold in quarantine. “Based on what we saw in 2020, one thing is certain: The guitar is thriving,” says Reverb’s Mandelbrot. “Orders and searches for guitars have been up significantly — including an increase in searches for popular guitar brands like Fender, Gibson, and Taylor — as well as searches for music gear that you pair with your guitar, like amps, guitar straps, effects pedals, and more.” Both searches for acoustic guitars and acoustic guitar amps were up by 50 percent year over year.
He adds that living-room-friendly acoustic guitars like the Taylor GS-Mini have been undeniably popular, but Reverb “continued to sell some really rare vintage guitars — like a beautiful 1965 Fender Stratocaster that Brian Setzer sold through his Reverb Shop.” Limited edition, boutique pedals also did particularly well. Mandelbrot says the selling price of classic and rare effects pedals from vintage brands like Klon and Mu-Tron went up “significantly” in 2020. And drops of limited-edition pedals on Reverb sold out within minutes and, in one case, in less than a minute.
“We’re now selling a thousand guitars every day,” adds Sweetwater’s Surack. “It blows me away.” In 2019, Sweetwater had days where it would peak at 800 or 825 guitars, but one thousand has since become the daily average.
Fender’s EVP of Sales for the Americas and EMEA Tammy Van Donk describes 2020 as a “roller coaster ride” for the guitar industry. “Demand evaporated in March, rebounded in April and exploded from May on,” she explains. “2020 ended up being the best year in [Fender’s] history with record sales of over $700 million, up 17% from 2019.” Gibson CEO James ‘JC’ Curleigh agrees, making a Dickensian reference to 2020: “It was the best of times, it was the worst of times,” he says. “April, May, and June were a challenging three months. But since then, we’ve been more than making up for it.” Gibson’s fiscal year ends in March, so annual numbers aren’t final yet but Curleigh says Gibson has seen a “steady increase in sales and growth” since August.
About a year ago, roughly a third of guitars were being sold online, according to Curleigh. And at that time, Curleigh says he predicted it would be about five years before it became a 50/50 dynamic between brick-and-mortar and virtual sales. “What we’re seeing now is that is that the five-year prediction of 50/50 is happening now,” he tells Rolling Stone. “Even in a post-Covid world, I think the guitar and music industry will settle into a 50/50 balance of online toto in-store… People talk about necessity being the mother of invention. Well, necessity was the mother of access and acceleration for guitars.”
In with the new
Retailers also noticed an uptick specifically in new customers and beginner musicians that continued through 2020, meaning that their reach is now wider than it was at the start of last year.
Guitar Center’s D’Addario says that while guitar sales continue to increase, that’s especially clear with “beginner instruments at entry price points, particularly our Guitar Center Exclusive instruments, which have been selling out given their high quality to value.” She adds that the company has seen an increase in purchases among women and younger players. “With 40+-year-old players, we saw increased interest in learning to play an instrument,” D’Addario continues. “Additionally, we continued to see increases in our lessons students in both the 11-to-15 age range and over-40-year-old during shelter-in-place.”
Reverb’s Mandelbrot points out that people buying recording equipment — either for podcasting or DIY music-making — was a big trend, but the increase in beginners was even bigger. Based on conversations he’s had with customers, he’s found that needs for stress relief and breaks from looking at screens all day inspired a lot of newcomers. “We talked to a freelancer in Brooklyn who was having trouble finding work at the onset of the pandemic, so he found a mandolin on Reverb to help him occupy his mind and his time,” says Mandelbrot, who adds that basic instruments can act as a gateway drug to a seemingly endless world of gear. “People who bought music gear on Reverb for the first time in Q2 and Q3 continue to return to Reverb to browse for and buy music gear,” he says.
In reviewing the demand data from from spring and early summer, Fender’s Van Donk says there was a 92% increase in under-$500 purchases and a 26% increase amongst “experienced players” choosing higher end guitars in the $500-$1,000 product range. “In software, offering Fender Play free for three months encouraged nearly one million new players to play guitar,” she says.
Gibson launched its own app a week ago, which provides an array of tools and allows players to learn with two-way AR. According to a representative, the company saw double the amount of expected signups in its first week.
“A lot of people said, ‘Hey, I’ve always wanted to play guitar,” says Gibson’s Curleigh. “So, guess what? All of a sudden, beginners came into to it. Intermediate players who had sort of gotten to a certain level, picked their guitar up again and started playing. And advanced and expert players were like, ‘Oh, my god, I have a wish list for this guitar. Life’s too short not to have my dream guitar. I’m going to buy it.’ The whole spectrum started started taking action around that July, August time… I fundamentally believe, in the last year, more guitarists have been created and engaged than in the previous 10 years combined. If we manage this dynamic as an industry, we’ve got a whole new generation of guitarists for the next 10, 20, 30 years.”
Adds Curleigh: “When that kid sees, on the front cover of Rolling Stone, Greta Van Fleet playing a SG or Angus Young playing his guitar, they go, ‘Man, I wanna get that.’ Well, for 300 bucks, you can get the Epiphone one. For a thousand bucks, you can get the entry-level Gibson. And for five thousand, you can get a custom guitar. Sometimes it takes people 20 or 30 years to get to their dream guitar. Well, great. Then they’re on a journey of guitar playing for thirty years.”