Gibson cues up for mass market

Wednesday, June 15, 2005 at 1:00am

In the music world, the Gibson brand has been associated with high-end, professional-grade instruments traditionally sold in music stores. Now the 110-year-old manufacturer is branching out into the mass market.

Nashville-based Gibson Guitar Corp. is debuting a new line of entry-level musical instruments to be sold in "big box" retail outlets that carry everything from toiletries and CDs to furniture and vacuum cleaners.

Though Gibson already has sold its Epiphone brand products in some retail outlets besides music stores, it has now created its first division focused solely on mass-merchant accounts.

The company has lined up several large retailers to start selling guitars, band instruments, drums and amplifiers this summer, said Henry Juszkiewicz, Gibson's chairman and chief executive officer. He declined to disclose the retailers at this point.

To achieve the price range of $50 to $200, which he called the "sweet spot" for mass merchandising, the company is having its instruments made in China, where it already has a manufacturing plant to handle its Epiphone line, which has been its lower-priced brand, selling at $500 and up.

Gibson is among several instrument makers contributing to a resurgence in the mass-marketing of instruments. Early in the 20th century, people could buy instruments ranging from Silvertone guitars to large pianos in department stores such as Sears & Roebuck.

"It really [went] out of fashion in retailing, and almost the only instrument that was sold [in the mass market] was Casio keyboards," Juszkiewicz said. "But I would say over the last five years, as music has become apparently more lucrative and a little more stable, retailers started experimenting with musical instruments outside of just the small keyboards. And I personally have noticed guitars in such unusual places as CompUSA."

Gibson is entering a market blazed recently by First Act, a seven-year-old Boston company that sells a variety of instruments, including guitars and band instruments, starting at about $150, in stores such as Wal-Mart and Sam's Club.

"We do feel like First Act is a pioneer in that retail space," said Jeff Walker, First Act's vice president of marketing. "It has always helped us establish our mission, which is making playing music more accessible and affordable to the thousands and millions of Americans who ordinarily wouldn't have been able to play music."

Juszkiewicz said a large segment of consumers are often intimidated by the thought of going into a music store.

"Most parents do shop at Target or Wal-Mart or Toys R Us, so we are making music instruments at the beginners level accessible, giving them that choice," he said. "In fact, I think with the pricing you can get an instrument and test a child's aptitude and liking for music for less than a video game console. So it makes it a very low-risk sort of decision."

To underscore the division's commitment to music education, Gibson has arranged to donate a percentage of its sales of the new product line to five organizations: the National Foundation for the Advancement of the Arts, Music Educators National Conference, The Grammy Foundation, VH1 Save the Music Foundation, and Music Teachers National Association.

Apparently, making music in the United States has never been more popular. Sales of musical instruments and products in 2004 hit an all-time high of $7.35 billion last year, according to the International Music Products Association (NAMM).

The fastest riser has been guitars, with sales of acoustic guitars surging 38.6 percent from 2003 to 2004 and electric guitar sales rising 43.5 percent during the same period.

"Basically, guitars are sufficiently inexpensive that they have an impulse quality that they never did before," said Brian Majeski, editor in chief of Music Trades magazine, noting that Fender has begun selling products in Costco.

Not everyone, however, is embracing the mass-marketing of instruments with open arms.

"The feeling amongst the music product industry is a good-news, bad-news situation," Scott Robertson, NAMM spokesman, said. "I think the industry is split about it, much in the way they're split about a lot of things, like selling music products on the Internet."

George Gruhn, proprietor of Gruhn Guitars on Broadway in Nashville, says he's not worried because he caters to high-end customers. But he predicts other music store owners will have a mixed to negative reaction to Gibson's strategy.

"I think many other retailers do sell student-model introductory guitars, and they resent having the companies, such as Gibson, supplying better deals on cheaper stuff to stores such as Wal-Mart," he said.

Majeski believes music stores have nothing to worry about, as the new products target a different market. "Our sense on this mass-marketing stuff in the big channels is that it hasn't really had much of an impact on the traditional MI [musical instrument] business," he said.

Juszkiewicz said the average new retail account will carry between three and 10 product types, each branded specifically for that retailer. Gibson's name will be only on the box as manufacturer, he said, so as to avoid confusion with Gibson brands sold in traditional outlets.

As it prepares to launch the new line, Gibson is in search of a new site in Nashville for a major distribution facility for it. "One of the things we're going to be looking for is the ability to expand pretty rapidly," Juszkiewicz said, "because this could be huge."

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