Fender’s post boom cancellations!

CavemanGrogg

elstoof said:

The shareholders want to see growth and increasing returns, it’s the CEOs job to keep those shareholders happy with pretty projections even if they know it’s pie in the sky

What share holders?

ICBM said:

They are definitely massively in debt - from memory, worse than Gibson, but with a larger turnover to potentially support it. Over half a million unsold instruments is not going to help though.

They're probably in the trap that a lot of large companies seem to have got themselves into - not just in the music industry - of requiring the capitalist model of everlasting growth just to stay afloat.

How are you getting even ballpark figures or financial information about the liquidity to debt ratio of a privately owned company, these documents and information are not available to nor made public

stickyfiddle

ICBM said:

They are definitely massively in debt - from memory, worse than Gibson, but with a larger turnover to potentially support it. Over half a million unsold instruments is not going to help though.

They're probably in the trap that a lot of large companies seem to have got themselves into - not just in the music industry - of requiring the capitalist model of everlasting growth just to stay afloat.

Yep I agree. And at this point it's been standard MBA-equipped strategy-consultant dogma for 25 years, so it's going to take some high profile failures before anyone thinks about any other models.

dindude

With so few guitars to build it’s a shame their QC is the worst it’s been for ages. Their line up is also very drab. And I’m a massive Fender fan so doesn’t please me to say it.

m_c

From how I interpret the comments, they don't actually have those instruments/amps, it was simply what was cancelled.

I'm sure some of them made it through production, but they aren't saying that they physically had 600'000 unsold guitars, they're just saying that was the total orders that were cancelled.

FelineGuitars

I have said it often before and will continue to do so: 

"Guitars generally do not get thrown away and end up in landfill like old phones, computers and tech. 

Fender and Gibson's biggest competitor in the marketplace is themselves and stuff they made previously"

If a percentage of the population bought a guitar during lockdown, they still have a guitar to play and may simply be learning new songs. 

Most will not feel the need for many more guitars (I know that sounds like heresy on this forum)

They can only hope that in the next planned lockdowns to come that more folks will want to buy a guitar??!

Philly_Q

FelineGuitars said:

They can only hope that in the next planned lockdowns to come that more folks will want to buy a guitar??!

stickyfiddle

dindude said:

With so few guitars to build it’s a shame their QC is the worst it’s been for ages. Their line up is also very drab. And I’m a massive Fender fan so doesn’t please me to say it.

I have't played enough to comment on QC but I can't argue on the lineup. I also find the model names incredibly confusing

Standard, Classic, American Standard, Deluxe, American Vintage was a relatively clear way of telling you what the model was without any other info. 

Player, Performer, Professional, Ultra, Modern, Deluxe, Vintera... I have absolutely no idea where any of those are made and which are "better" or "more vintage-y" than others. 

guitars4you

FelineGuitars said:

I have said it often before and will continue to do so: 

"Guitars generally do not get thrown away and en up in landfill like old phones, computers and tech. 

Fender and Gibson's biggest competitor in the marketplace is themselves and stuff they made previously"

If a percentage of the population bought a guitar during lockdown, they still have a guitar to play and may simply be learning new songs. 

Most will not feel the need for many more guitars (I know that sounds like heresy on this forum)

They can only hope that in the next planned lockdowns to come that more folks will want to buy a guitar??!

This by the bucket load - I've said the same for many years

I don't know how many used guitars are listed for sale today on Facebook, reverb, gum tree, e-bay etc but it will be a few thousand - Every penny spent on those is a sale the manufactures won't get to see - I can sell the same used guitar many many times over and make a buck on it each and every time I sell it - The manufactures only have one shot at it 

Manufactures have to hope your Gas problem will get far worse and/or they need to find many new customers 

A small idea they could offer is a 'refurbishment' option - Send in a used model and they will clean, set-up, as required - Offer different packages inc re-frets, re-spray etc - This could be offered world over as required, via appropriate workshops in their own distribution centres, be it UK, Germany, Japan etc - With appropriate 'refurbishment certificate' - It could add additional credibility to some used gear

Hurling_Fruitmig

guitars4you said:

A small idea they could offer is a 'refurbishment' option - Send in a used model and they will clean, set-up, as required - Offer different packages inc re-frets, re-spray etc - This could be offered world over as required, via appropriate workshops in their own distribution centres, be it UK, Germany, Japan etc - With appropriate 'refurbishment certificate' - It could add additional credibility to some used gear

Apologies for a slight thread drift, but I read this and had the bonkers idea of ordinary and well used-instruments being returned to be stripped down, refinished, and professionally relic-ed to 'add value'.

timmypix

I mean, this is just an evolution of the Gibson Demo Shop/Mod Shops. They're taking old B-stocks, returns and artist loans and either selling them as-is with a demo stamp at a discount, or giving them new finishes and features and selling at a premium for their uniqueness, and it seems to be working.

Extending that idea to second-hand/used examples isn't such a stretch in the way that @guitars4you has described.

FelineGuitars

timmypix said:

I mean, this is just an evolution of the Gibson Demo Shop/Mod Shops. 

They're taking old B-stocks, returns and artist loans and either selling them as-is with a demo stamp at a discount, 

Which explains the problems one of our forum members had with one he bought from there - it was already a possible lemon that had been returned and the problems not addressed 

Bigsby

GoldenEraGuitars said:

It’ll be interesting to see if the new RRP’s come down or if they’ll just stagnate. The new CS models (whatever they cost nowadays) will partially dictate the used market too. 

AFAIK, there's absolutely no issue in shifting CS models. I've noticed times this year when stores like Andertons & GAK have almost zero stock of CS Strats. Given the quoted build-time last summer was 'at least 12 months', such shortages of stock would reflect ordering made pre-CoL crisis, in other words, not a wise move to avoid overstock in a downturn. 

RRPs have certainly gone up in the last 12 months; one CS model I looked at last summer was £4,150, the same spec is now £5,199 (though not in stock). That's a far from modest increase! My impression is that expensive guitars are still selling, despite (or because of?) price rises, but it's the rest of the market (thus a much bigger volume) that's seeing the slow down in sales. It'll be interesting to see what happens to the existing price gap in the coming months.

Bigsby

stickyfiddle said:

fretmeister said:

So did someone at Fender actually think the lockdown boom was going to be sustained?

If so, that wasn't that clever.

It sounds like their dealers did, not that Fender necessarily did. But equally if you spend big money to serve that demand that's on you...

Yes, it's a bit unfair to criticise Fender for not seeing a downturn in sales coming. What where they supposed to do, tell the retailers to get lost? 

The scale of the cancelled orders is quite interesting though, makes me wonder quite what the scale of completed orders has been.

chris78

guitars4you said:

FelineGuitars said:

I have said it often before and will continue to do so: 

"Guitars generally do not get thrown away and en up in landfill like old phones, computers and tech. 

Fender and Gibson's biggest competitor in the marketplace is themselves and stuff they made previously"

If a percentage of the population bought a guitar during lockdown, they still have a guitar to play and may simply be learning new songs. 

Most will not feel the need for many more guitars (I know that sounds like heresy on this forum)

They can only hope that in the next planned lockdowns to come that more folks will want to buy a guitar??!

This by the bucket load - I've said the same for many years

I don't know how many used guitars are listed for sale today on Facebook, reverb, gum tree, e-bay etc but it will be a few thousand - Every penny spent on those is a sale the manufactures won't get to see - I can sell the same used guitar many many times over and make a buck on it each and every time I sell it - The manufactures only have one shot at it 

Manufactures have to hope your Gas problem will get far worse and/or they need to find many new customers 

A small idea they could offer is a 'refurbishment' option - Send in a used model and they will clean, set-up, as required - Offer different packages inc re-frets, re-spray etc - This could be offered world over as required, via appropriate workshops in their own distribution centres, be it UK, Germany, Japan etc - With appropriate 'refurbishment certificate' - It could add additional credibility to some used gear

I think PRS already offer this, but it has to go back to the states.
I enquired about having a private stock in northern lights refinished as it’s faded but they won’t do it in the same colour and want to charge £1200.
Im not sure on the customs implications. 
Doesn’t seem great value to me.

barnstorm

chris78 said:

I think PRS already offer this, but it has to go back to the states.
I enquired about having a private stock in northern lights refinished as it’s faded but they won’t do it in the same colour and want to charge £1200.
Im not sure on the customs implications. 
Doesn’t seem great value to me.

Don't want to derail the thread, but is it a recent guitar @chris78 ;? Just interested to know if they still have their particular problem with blue. Or has it actually become a desirable thing among PRS fans, like a faded burst on a LP?

chris78

barnstorm said:

chris78 said:

I think PRS already offer this, but it has to go back to the states.
I enquired about having a private stock in northern lights refinished as it’s faded but they won’t do it in the same colour and want to charge £1200.
Im not sure on the customs implications. 
Doesn’t seem great value to me.

Don't want to derail the thread, but is it a recent guitar @chris78 ;? Just interested to know if they still have their particular problem with blue. Or has it actually become a desirable thing among PRS fans, like a faded burst on a LP?

@barnstorm Here's a private stock 2019 which has faded dreadfully that wildwire are trying to sell in "as new" condition https://wildwireguitars.com/prs-private-stock-modern-eagle-v-in-aquamarine-dragons-breath-ps-9261-pre-owned/?setCurrencyId=1&sku=20800&gad=1&gclid=EAIaIQobChMIxIaFgJeHgQMVSPntCh1tEwWOEAQYBSABEgKJ__D_BwE

Clearly PRS are still having issues with blues and also purples.
It's not desirable, other than possibly on a blue jean finish, but even then, I think most PRS buyers still want the blue showing. Some I've seen on the original modern eagles have totally faded.
I'd imagine @guitars4you would have experience and also views on fading in PRS finishes.

stickyfiddle

Bigsby said:

stickyfiddle said:

fretmeister said:

So did someone at Fender actually think the lockdown boom was going to be sustained?

If so, that wasn't that clever.

It sounds like their dealers did, not that Fender necessarily did. But equally if you spend big money to serve that demand that's on you...

Yes, it's a bit unfair to criticise Fender for not seeing a downturn in sales coming. What where they supposed to do, tell the retailers to get lost? 

The scale of the cancelled orders is quite interesting though, makes me wonder quite what the scale of completed orders has been.

Well.. yes? In most industries it's quite normal to turn down sales if you don't have capacity to deliver, or in cases like Rolex & Hermes where they have plenty of capacity but no intention of selling to regular folk

Pjon

Bigsby said:

stickyfiddle said:

fretmeister said:

So did someone at Fender actually think the lockdown boom was going to be sustained?

If so, that wasn't that clever.

It sounds like their dealers did, not that Fender necessarily did. But equally if you spend big money to serve that demand that's on you...

Yes, it's a bit unfair to criticise Fender for not seeing a downturn in sales coming. What where they supposed to do, tell the retailers to get lost? 

The scale of the cancelled orders is quite interesting though, makes me wonder quite what the scale of completed orders has been.

I work in the bike industry where we saw a massive boom through lockdown, with rapidly decreasing supply. People were actually buying any old crap they could get their hands on just to get out of the house, and suppliers were offering us bikes from any random place. They all sold. Discounting stopped. Shimano, who make a huge amount of componentry stated that they were NOT going to be opening a new factory to deal with demand, and this led to supply problems which have now pretty much gone, except in a few specific areas. (I'm thinking here of the problems I had finding 12 speed drivetrain for one of my bikes a short while ago.) That was the correct approach, in the long term.

I had many conversations with my colleagues and suppliers about what was likely to happen post-Covid and we generally decided that if everyone bought a bike in 2020-21 then few people would need a bike after that. Most would gather dust. We might see demand rise a few percent as a few keen people carried on in their new hobby. And that's exactly what we've seen. But not everyone saw that, for whatever reason.

Similar to guitars, bike shops started cancelling orders as demand dropped, and meanwhile the suppliers were opening new warehouses as stock arrived from the Far East and sat unsold. This summer, we've seen constant reductions in trade prices, with related discounts at retail. We've also seen big companies fold, and this will continue as the poor planning and cashflow problems start to hit. There is a huge stock of unsold bikes sitting in warehouses around the world and meanwhile new stock, ordered several years ago, is still being produced and marketed. It's a complete mess. I'm guessing this will be the same in any hobby industry that did well during Covid.

Norlin4life

chris78 said:

barnstorm said:

chris78 said:

I think PRS already offer this, but it has to go back to the states.
I enquired about having a private stock in northern lights refinished as it’s faded but they won’t do it in the same colour and want to charge £1200.
Im not sure on the customs implications. 
Doesn’t seem great value to me.

Don't want to derail the thread, but is it a recent guitar @chris78 ;? Just interested to know if they still have their particular problem with blue. Or has it actually become a desirable thing among PRS fans, like a faded burst on a LP?

@barnstorm Here's a private stock 2019 which has faded dreadfully that wildwire are trying to sell in "as new" condition https://wildwireguitars.com/prs-private-stock-modern-eagle-v-in-aquamarine-dragons-breath-ps-9261-pre-owned/?setCurrencyId=1&sku=20800&gad=1&gclid=EAIaIQobChMIxIaFgJeHgQMVSPntCh1tEwWOEAQYBSABEgKJ__D_BwE

Clearly PRS are still having issues with blues and also purples.
It's not desirable, other than possibly on a blue jean finish, but even then, I think most PRS buyers still want the blue showing. Some I've seen on the original modern eagles have totally faded.
I'd imagine @guitars4you would have experience and also views on fading in PRS finishes.

What would they do about the hand signed headstock on a Private Stock refin do you know?

Musicman20

Pjon said:

Bigsby said:

stickyfiddle said:

fretmeister said:

So did someone at Fender actually think the lockdown boom was going to be sustained?

If so, that wasn't that clever.

It sounds like their dealers did, not that Fender necessarily did. But equally if you spend big money to serve that demand that's on you...

Yes, it's a bit unfair to criticise Fender for not seeing a downturn in sales coming. What where they supposed to do, tell the retailers to get lost? 

The scale of the cancelled orders is quite interesting though, makes me wonder quite what the scale of completed orders has been.

I work in the bike industry where we saw a massive boom through lockdown, with rapidly decreasing supply. People were actually buying any old crap they could get their hands on just to get out of the house, and suppliers were offering us bikes from any random place. They all sold. Discounting stopped. Shimano, who make a huge amount of componentry stated that they were NOT going to be opening a new factory to deal with demand, and this led to supply problems which have now pretty much gone, except in a few specific areas. (I'm thinking here of the problems I had finding 12 speed drivetrain for one of my bikes a short while ago.) That was the correct approach, in the long term.

I had many conversations with my colleagues and suppliers about what was likely to happen post-Covid and we generally decided that if everyone bought a bike in 2020-21 then few people would need a bike after that. Most would gather dust. We might see demand rise a few percent as a few keen people carried on in their new hobby. And that's exactly what we've seen. But not everyone saw that, for whatever reason.

Similar to guitars, bike shops started cancelling orders as demand dropped, and meanwhile the suppliers were opening new warehouses as stock arrived from the Far East and sat unsold. This summer, we've seen constant reductions in trade prices, with related discounts at retail. We've also seen big companies fold, and this will continue as the poor planning and cashflow problems start to hit. There is a huge stock of unsold bikes sitting in warehouses around the world and meanwhile new stock, ordered several years ago, is still being produced and marketed. It's a complete mess. I'm guessing this will be the same in any hobby industry that did well during Covid.

Interesting comparison!