Wednesday, February 11, 2015

Is the end of Guitar Center the end of big box retail? We can only hope.

As my friend Clint noted when passing along this essay, "Longish and a bit wonky, but this section caught my eye."

Indeed. To be honest, I was unaware of Guitar Center's existence, although its probable demise provides a few important eulogy bullet points. Skipping straight to the conclusion ...

The End of Guitar Center, by Eric Garland

... Here’s what this really means: it’s the end of big box retail, an irrational addiction to growth, and the scourge of unregulated structured finance. For a few years, unwise urban planning and unregulated banks created a new bubble in the American suburbs. People bought homes they could not afford and turned their houses into lines of credit. This swindle eventually brought the economy to its knees and has taken most a decade to regain some state of uneasy equilibrium. Still, it was particularly stimulating to a certain type of retail that also depended on constant growth and financial trickery. The objective truth is that the growth of the last decade was financed by banking fraud, and that financial trickery of this sort only fools people in the short-term. Eventually, you must have a product people demand, sold by competent people who care about the business, financed in a way that makes sense.

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