Well its hard to turn on the T.V. or Radio without some "expert" or "politician" banging on about the "credit crunch" and ensuing recession. Its worth having a look at what's happening in the guitar market. At the vintage and top end stuff still seems to be moving around between dealers but the retail sector has gone flat...it's that old consumer confidence thing again.
On the whole things look upbeat as long you aren't carrying lots of stock, stuck with lots of middle market Japanese and Korean stuff or have a huge overdraft with Mr. "Banker".
The top end of the market seems to be remaining buoyant but is definitely changing. I had a customer last month reject a guitar because it wasn't in good enough condition. This has important implications for both vintage and "relic" reissue guitars. The guitars that seem to be moving now have to be very high quality and near mint condition. This may be a consequence of the recession when things "smarten" up a bit anyway. There is also a "flight to quality": effect in uncertain times.
Those who have money will always have money and there is also the "Banking Disaster Buy a Stratocaster" effect. I know myself that I should have sold more shares and bought guitars I liked for me instead of playing safe. The ones I did sell shares to buy have gone up in value; the shares I kept back for a "Rainy Day" sadly are trading at around 20% of their boomtime value...go figure sports fans!
The tightening of consumer purse strings in the middle market is having an effect and the Sound Control meltdown is I fear the first of many middle market players who will get badly burnt over the next three years. I had expected the cull at EMI now that they have gone private equity to have an effect on high end and vintage sales. This does not seem to be the case as with bands making less on recorded music the live circuit suddenly looks more attractive and bands need gear to tour!
The key to survival for guitar dealers will be specialism rather than trying to be "generalists". Either stock the very best or stock interesting specialist guitars... avoid anything that requires finance and if you have cash in pocket spend it well and spend it wisely... go for the one off piece rather than the mass produced middle market guitar.
I recently advised a friends son to buy a late 1980's Les Paul Standard with an uncertain "mongrel" pedigree. £50 of bits off Ebay and he has a guitar that is unlike anything else anyone plays at college and it looks awesome if well gigged. It cost £700 out of the local paper and leaves anything new at that price point to shame.
The gap between near mint and secondary level guitars is widening, and there are some bargains to be had in the "messed about with" category, they will be the guitars to stick hold of until all this credit nonsense is over. I can see this gap widening until there are only project guitars that need TLC and the rest of the vintage market will be defined by mint condition stuff. Prices will also shift around but wont hit the peaks of 2006 for some time.
