As chairman of the nation's largest retailer of musical instruments, Larry Thomas caters to superstars and upstarts willing to pay big bucks for the right sound

In 1977, Larry Thomas was a struggling musician in need of a steady gig. To make ends meet, he took a job as an accessory salesman at a small Hollywood-based chain store called Guitar Center. It was a step that ended up changing his life.

By 1992, he had moved up to president and chief operating officer, and then became chairman and co-CEO of the company.

Under his leadership, Guitar Center, now headquartered in Agoura Hills, has gone public and grown from eight stores to 80, making it the nation's biggest musical instrument retailer. Thomas said he gave up a career as a musician to become "a student of retail."

Question: You cater to professional musicians and wannabe rock stars, as opposed to the beginners. Was that the strategy from the beginning or has that evolved?

Answer: We lucked out because one of our first stores was right here in Hollywood, right at about the beginning of the guitar craze in 1964. So by default we became the Guitar Center. The founder of the company, Wayne Mitchell, who was a tremendous mentor to me, had a company called the Organ Center, which sold home organs. Wayne, really by accident, got into the guitar business because the guy that sold him Thomas Organs was selling this new line of guitars and amps from England called Vox. The two of them did a deal where Wayne would rent him the space and the other guy would create the sign and put in all the gear for sale. That was about 1964, and the Beatles hit and Vox was an instant success.

Q: How did the Sunset Boulevard location help in terms of who shopped there?

A: Being in Hollywood as the guitar craze was catching on, we were catching a lot of bands as customers because the Sunset Strip was so popular. I started at Guitar Center in San Francisco and in those days we were already doing professional clientele business because we were bigger and had a better selection than other stores. You can buy just one set of strings anywhere, but a lot of the traveling bands in the '60s would go in and buy four dozen sets of strings. I came to work there as somebody who had been out playing professionally, so I understood the needs that professional musicians had. Over time, we realized that if you cater to the professionals you could bring all the wannabes into the store. We had people like Stevie Wonder and all the rock stars. We had the Starship's account and the Grateful Dead's account. We realized that you can't be all things to all people, and we knew that if we were giving 9-year-olds guitar lessons, it would chase the pros out of the store.

Q: Guitar Center was the first to go large-scale in musical instrument retailing. With Office Depot and others so successful in other sectors, why hasn't large-format been embraced by other musical-instrument retailers?

A: The U.S. musical-instrument store count of about 8,000 stays very consistent from year to year. Music stores go out of business every year and music stores open up every year, because musicians open up most music stores when they stop chasing the dream (of hitting it big as a performer). These tiny shops are all across America. It keeps the rejuvenation and entrepreneurial spirit in our business alive. Also, if we look at who makes our products, like Martin, Gibson or Fender these are hand-made, so you can't bring an Office Depot style and buy carloads because only so many are built. Musicians are also looking for information from qualified salespeople.

Q: Is that why stores like Target and Sears sell almost everything except musical instruments?

A: When you get into more-complicated instruments, like our keyboards, the salespeople in those stores wouldn't be able to sell them. The one thing about Guitar Center is that we have 3,000 employees and 2,000 of them are just like me musicians that couldn't catch the star playing, so they took their passion and they did something to make a life for themselves. It is kind of like a ski bum who lives in Aspen and will do anything in the summertime just to be there in the wintertime to ski.

Q: But aren't musical instruments essentially just another product type, like cars or washing machines?

A: In this business, you are really selling dreams. If you look at the wall on our guitar floor you see Hendrix over there; there are huge pictures and portraits of (music stars) because they are people we aspire to be. Interestingly enough, when I go to Wall Street and do road shows, there are analysts across the table who at nighttime are Hendrix wannabes or Stevie Ray wannabes or B.B. King wannabes. So what we do is try to provide an environment where we say it is great to have a dream. One of the things different about us is that you can play anything you want here. I took down that old Martin guitar; you can take down that Martin. You don't have to be "a somebody" to play it. We even put mirrors in some of the stores because sometimes a guy or girl just wants to come in and see how they look.

Q: Do the customers come in and ask for their certain salesperson?

A: Professionals are in the store two to three times a week sometimes. They are coming in, not just for supplies, but for knowledge and to check things out as far as the latest gear. We have an artist relations manager who deals with the recorded bands, the signed bands, the up-and-coming artists and the record companies. Mostly he deals with personal relationships. This business is all about personal relationships. I would tell you the personal relationships are probably why I am still here today. This is a wonderful industry to grow up with people and get old with people. And for me, those people are drum makers and guitar makers, as well as the artists.

Q: The average Guitar Center generates around $9 million a year in sales, which is pretty hefty for a retail outlet. How is that level achieved?

A: The sales are huge. It is because the items are bigger-ticket and because of the frequency that those people are in the store buying. There were some guitars on the stage downstairs in the vintage room and one of them is going to sell for $70,000, another is going to be sold for $25,000. I think they are both selling today. Sometimes we sell lighting and pro-audio systems in the $20,000-to-$100,000 price range. We sell drum sets for $10,000. And the pros want the best because they want something that is not going to break down. The wannabes stay up too because they are pushing the dream of playing at the Roxy, or maybe they want to be a recording engineer, so they will build a home studio in the hopes of getting someone over to record there.

Q: Is that large array of big-ticket merchandise what separates Guitar Center from all the "mom and pop" stores?

A: Yes, we can afford to show more and have a greater selection because we have a big, established business going here. But I think the mom-and-pops first get confused about what business they are in. Are they in the music business or are they in the retail business? I realized early on in my career at Guitar Center that I was in the retail business, and that separated me from a lot of people. With some mom-and-pops, the guy owns the store, but is playing three nights a week at the local bar with his band. He is playing to midnight, so he drags himself in the next day and barely gets open by 11 (a.m.). For us, we learned how to merchandise our stores and advertise. We learned how to build a mailing list 20 some years ago. Combined with our catalog division, we have over 5 million customer names.

Q: Guitar Center has a huge collection of vintage instruments for sale. Is that an important segment?

A: Yes. Some of these instruments are historical. There is only one No. 1 (the first made) D28. That is a guitar that Joan Baez made famous way back. It is a guitar that Stephen Stills collects like crazy he has a huge Martin Guitar collection. He is somebody else that we can call and say, "Do you want to buy the first one." And people will do it. There is so much money in the economy today. The rock star guys, the big ones, have always made money, but today I think they are keeping it longer.

Q: Does Guitar Center have the largest collection of vintage instruments in the world?

A: I think for sale, most definitely we do. We don't even have everything on display.

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