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I wonder how long Gibson will be dumping inventory through "floor model" sales. Maybe this won't be a short lived event. Maybe it's the new sales paradigm that's intended to be a way for Gibson to back out of those ridiculous price hikes that killed their sales volume and caused guitars to back up in the warehouse for so many years.
Anyone who has tracked the prices over the years will remember that Gibson has had several dramatic price hikes in recent years. I'm not sure that after these price hikes Gibson has continued to be successful selling their guitars in volume at the high prices they're demanding -- every one of those 20% price hikes had to have an effect to cut down on sales volume, and those repeated price hikes/sales volume decreases have to be cumulative in their effect on sales. I think those price hikes are the reason that guitars are stacking up in the warehouse.
The problem that Gibson faces now is how to back out of those price hikes and start moving guitars again without alienating the customers who paid big money for overpriced Gibsons and the dealers who have paid big money for overpriced inventory. Gibson is walking a fine line when it comes to satisfying the retail stocking dealers and the retail customers vs. selling warehouses full of guitars to bargain hunters with the new floor model/no-warranty paradigm.
I've given some thought to buying a 175 or a 275 during this sale, but I've tried to temper my enthusiasm by remembering how ridiculous some of the recent price hikes have been -- like when Gibson decided to just mark up prices by 20% across the board just because they knew they could do it. You can only pull those shenanigans for so long ... sooner or later people get tired of it, and I get the impression that the inventory backing up in the warehouse is an example of people getting tired of the price hikes.
I pulled out some of my Custom Art & Historic LP last night after ignoring them for a long time. I looked at the receipts that were still in the cases. As an example, back in the day when Gibson was going burst crazy, I bought a killer flame-top R9 in Washed Cherry Sunburst, new with case and the lifetime warranty for $2800. Today those guitars list at $7500 to $10,000, which is just ridiculous. Sure, those 20% price hikes may not seem like all that much as they occur one at a time, but after Gibson does that 4 times the prices of the guitars are doubled.
I see a problem when Gibson is trying to squeeze customers to get 3x to 4x the amount that I paid for the exact same caliber of guitar only a few years after I bought one. Maybe part of the reason that people are so enthusiastic about the floor model sale is because we're not remembering that these guitars used to be so much cheaper only a few years ago. Not all that long ago you could get a new ES-175 out of the custom shop, with case and a lifetime warranty, for the price that the Memphis No-Warranty floor models are selling for today. And people are clamoring for the no-warranty floor models as if they're a great deal, just because they're being sold at "half-off". Well, half-off may seem like a great deal if you think the current list prices are valid, but half-off doesn't seem like such a great deal when you stop to consider that just a few years ago, that's what brand new guitars with lifetime warranties used to sell for.
What does this new paradigm do for Gibson? Well, in addition to carving away their warranty obligations, it provides them with a way to proceed with price cuts while keeping up the appearance that pricing is being held firm on the retail guitars. Of course they don't want to admit that their prices are too high and just cut prices across the board, so they're finding a way to cut prices without explicitly admitting that their prices have been too high. They cut prices, and legitimize doing that by claiming that it's valid because there's no warranty with the instrument. I own several Gibsons with lifetime warranties, and I've never actually needed to utilize them. So maybe giving up the warranty isn't such a big deal. Maybe selling guitars with and without a warranty will be the way that Gibson continues to sell guitars at high prices to people who will pay high prices, and sell guitars at lower prices to people who demand lower prices. Maybe the floor model paradigm will be around for a while, because the prices for the new Gibsons with warranties is just too hard for many to swallow.
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11-28-2017 09:11 PM
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The whole situation seems rather confusing... not directly in reply to your post (very interesting one) but i just saw this advertised on TV, here (Europe) .. felt so strange...
Originally Posted by BeBob
"Raymond Weill in partnership with Gibson"
Men's Raymond Weil Freelancer Gibson Les Paul Limited Edition Automatic Chronograph Watch (7740-STC-LPAUL) - WATCH SHOP.com™
Enviado do meu P00C através de Tapatalk
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Only Gibson's being discounted are ones made in Memphis. Crimson and Nashville USA are still full price.
Also CME is the only dealer offering the floor model discount.
From past experiences the Gibson warranty is not worth much more than the paper it is written on and you won't see your guitar again for 4-8 months and you pay the shipping.
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My understanding of the situation is they are moving the memphis plant, and probably have a warehouse full of unsold guitars and guitar parts/wood. So they need to clear those quickly instead of paying for moving everything to a new place, which will probably be smaller.. On top of that it looks like gibson needs some money, and fast. This is where CME steps in.. once they re all gone.. who knows..
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given their track record, and the level of attention these surely got, I'd probably want a warranty. although it's worthless and literally zero of my guitars have one.
just because these are more sensibly priced doesn't mean you'll get what you think you're paying for. I want believe, but I shouldn't. these prices kinda makes me want to roll the dice on a fixer upper, but that's a dangerous and expensive line of thinking. I'd rather talk myself into something I actually wanted and could count on, and not just a great deal on a name.
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> once they re all gone.. who knows..
I'm sure they'll keep making more -- as long as they have some degree of solvency that allows them to continue to function as an ongoing concern.
> My understanding of the situation is they are moving the memphis plant,
> and probably have a warehouse full of unsold guitars and guitar parts/wood.
unless the price changes are permanent then maybe the new ones they make are going to back up in the next warehouse for exactly the same reason.
Reports have been made that Gibson is strapped for money right now, and has to liquidate inventory to meet loan obligations. Part of the reason that they're strapped for money comes from not having good cash flow. Borrowing money to build guitars that sit in warehouses is not a viable business model. Slashing prices to move inventory in a panic is not a viable long term business model either. If their plan is to move to a new factory and continue their current business model then Gibson hasn't learned from it's mistakes and it's going to make the same mistakes all over again. Something has to change or it's going to be Chapter 11. When that happens the flood of guitars will be at more attractive prices than they are now.
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BeBob, I think that is an interesting premise, but I think it is the proverbial mountain/molehill. The "floor model sale/warehouse clearing" in not really a new thing. From what I've been told, it is pretty much a yearly thing and has only received all the recent attention due to its size (number of guitars) and corresponding lower prices. And as said, this is Memphis, not Gibson as a whole. So we may be reading a lot more into this than is warranted. The "official" leading reason given for (the size of) this fire sale is "they over produced". It still remain possible to me that there is not much more too it than that.
The question that we really can't answer is "How cheap *can* Gibson sell them new?" And that can be a rabbit hole, too. The closer the margin, the more likely there would be for things like quality cuts to maintain cost control.
Reminds me of: Someone said, "let's sell them for $5 million each." Was told: "You won't sell many at that price" Was answered: "I only need to sell one."Last edited by wmachine; 11-29-2017 at 01:30 PM.
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My guess is that until they resolve their pending debt repayments there will be nothing "normal" in the way that Gibson operates. From what I've read they really are fighting for their corporate survival. Nothing normal there.
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I don't have warranties on most of my guitars either, though I do have them on the Gibson custom shop instruments that I bought new several years ago. If I were interested in any of this new floor stock stuff, I'd be wanting a warranty too. Originally Posted by feet
Why? In part because of the color blotching that's shown up on a lot of the specimens. I don't claim to be a luthier like Gibson, but I know a little bit about woodworking. Uneven color uptake in the finish is a red flag that keeps me from buying one of those guitars. That differential uptake of stain represents non-unifomity in the density of wood; some areas are dense/less porous while others are less dense/more porous. I think that could be a warning sign to keep an eye out for possible future structural instability, especially in flatsawn wood. IMO these are the guitars that are best bought when they're 5 years old and have declared themselves as stable, not when they're new. When i see blotching in a finish that tells me to avoid the wood because that piece should have been rejected. IMO all of the specimens that have uneven color problems should be avoided. The skeptic in me thinks that maybe those guitars are being sold without warranties for a reason.
Normally when someone decides to use a piece of wood that has non-uniform porosity but is structurally sound, they'll use a sealer to fill the more porous areas before applying finish, so that the coloration ends up uniform and hides the uneven porosity problem. In the case of those uneven color guitars, Gibson didn't bother to do that. Or if they did bother, they didn't do a very good job at making the finish turn out uniformly.
In combination these two issues raise serious red flags for me -- first, the colors indicate that wood that possibly should have been rejected isn't being rejected. Second, the lack of complete sealing before finishing tells me that Gibson is cutting important corners in construction in the interest of quick production. IMO these are the guitars where warranty could be important. Buying one of them is a calculated risk.
These problems take us back to the issue of whether the new floor model paradigm is around to stay. Maybe this is just a way for Gibson to blow out their seconds. And if they're so intent on overproduction that they're using potentially inferior wood and doing a half-baked job on the sealing steps, these are visible warning signs. The visible warning signs make me worry about what I'm not able to see. All of this makes me wonder if this is another reason to expect more floor model sales in the future. We have production quality issues and financial distress issues as potential reasons for the floor model sales.
Of course, this is just speculative theory on my part, and the official word from Gibson is that they just "overproduced" this year. That's their story and they're sticking to it.
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Adjusted for inflation, the CME prices are the best prices I have seen on new Gibson electric guitars in my lifetime. A new normal? I doubt it. It seems like it is part of a one time re-structuring. Time will tell.
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Originally Posted by Stringswinger
They did this last year when the 2017 models came out and they are now releasing 2018 so they are clearing th warehouse. Then add they are closing the factory so I expect they are focusing on keeping production as close to sales as possible and avoid warehousing product. Their parent Gibson Brands has the guitar division under a microscope so they are focused on being a profit center. I worked for a computer company in this situation and no fun, they would make us an IBU (independent business unit) when not happy and bring us back under the corporation umbrella when we were making money. If Gibson Brands makes Gibson Guitar a IBU they writing's on the wall they are in deep sneakers. IBU is corporate worlds way to separate a business unit adrift so if it goes under it doesn't affect the rest of the parent corporation. IBU also done sometimes to set a company up to be sold. It's part of how corporations juggle their books to keep stockholders happy. CEO's care about stockholders way more than customers.
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I've been IBU'd too, then we were sold to the Chinese... Oh well, I was vested no problem.
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Meanwhile, the guys who need a nice new Gibson Memphis CME Floor Model guitar would have got and been playing their nice new Gibson Memphis CME Floor Model guitar and you'd still be speculating, Bebob.
If you want one, go grab one now.
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That would be me Originally Posted by Jabberwocky
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I have been reading that the ES guitars that have been coming out of the Memphis plant from 2015 - 2017 are some of the best guitars that they have built.
Myself I just bought a New Billie Joe Armstrong ES137 (p90s}2 months ago.The guitar looks well built and bought it New at Zzounds for $1440.Zzoundz told me that the Memphis plant had a few to get rid of from their warehouse.
I also bought the 2017 ES335 floor model Figured Natural from CME for $1705,,,Looks NEW.
I would love to buy another one since these look New and NOT 2nds.
To me people are not buying as many guitars as they used too so Gibson makes many more then they have too.Time to lay some of the workers off.
Myself I think Gibson will be bought out within 3 years and Most of their guitars will be made overseas.(Some will still be made in the states}
Myself That's why I have been buying some of their guitars lately,just think that in 3 years you will be buying a ES335 that's made in China for the same price as you are paying to buy a American ES335 today.....JT
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Well JohnnyT,
That's quite the handle you chose son. Welcome aboard.
Big
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If that's what I "thinK" it is... :-) Originally Posted by BigMikeinNJ
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Lets not pick on my good name lol............JT
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Gibson's in financial straits, to be sure. Coupled with that, their dealership agreement has tied their fate to the big box stores -- Sam Ash and GC. I'm unsure of Sam Ash's financial situation, but I know GC is hitting hard times too.
Things don't look good in River City.
I'm not sure how that affects the decision to blow out floor models (though I can see a quick cash infusion being helpful to the books and thus aiding a sale of the division), nor am I sure what that means so far as the quality of the guitars being sold. I do agree that corner-cutting is a dangerous strategy for a company whose tagline is "Only a Gibson is good enough".
It seems possible to me that they're doing this in order to undercut an important competitor, the used Gibson market.Last edited by Thumpalumpacus; 12-02-2017 at 06:35 PM.
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> It seems possible to me that they're doing this in order to undercut an important competitor, the used Gibson market.
Interesting idea. When a company overproduces to the point that they saturate both the new and used markets, that market saturation tends to depress demand for the new products and prices fall as a result.
I think it's very risky for any manufacturer of new widgets to compete against their own product in the used marketplace, where their product might sell for 1/2 to 2/3 of what is sells for new. For that business model to be viable, there has to be over 100% excessive price markup in the product for them to remain profitable. In other words, for that business model to succeed, a company would have to have grossly overpriced it's products to the point that they could sell them at half-price and still be profitable selling them. Of course, we know that Gibson's prices have seen several gratuitous price hikes, just because Gibson could get away with them, so maybe your idea is on target.
If you're right, and Gibson is selling their new products at retail at 2x the price they could actually be selling them for, then that's a good reason to buy something else that isn't so gratuitously overpriced. It suggests that the smart money could be buying something else.
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Indeed. I think we've all seen enough QC issues to understand that by now, Gibson is as much selling cachet as they are selling guitars. But -- when your QC is not up to what it used to be, the cachet mark-up goes to your past products. HJ's strategy of price-hikes is dangerous to the company, I think. Originally Posted by BeBob
I play new Gibsons regularly in my store visits, and to my hands and ears, Gibson's quality -- which can be fantastic, don't get me wrong, but it can also be a little wonky -- doesn't merit its markup. I flipped an SG last year because of a mis-set neck. I thought I could get a setup that worked on it, it wasn't that far off, but no dice.
A mis-set neck is not something that should get past QC.
HJ eliminated the 2nds program ... but it seems like sometimes they sneak out anyway.
The smart money, to me, is buying a used Gibby. I've done it before and will do it again.Last edited by Thumpalumpacus; 12-02-2017 at 09:45 PM.
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If you're going to buy a used one, why not buy one that's matured for a few years? By then someone should have played it enough to "open up" the top for you, and any potential structural problems that might exist should have already declared themselves. That sounds like a Win-Win scenario.
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Agreed
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Originally Posted by BeBob
Of course. I've never owned a Gibson archtop, but when I get around to buying one, it too will be used.
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Right now you can buy a new Gibson archtop at a used price. The CME deal will end and there will be many who will look back at the missed opportunity. Originally Posted by Thumpalumpacus
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