Summary
With the decline of luxury goods sales Steinway Musical Instruments and Guitar Center could be affected. Steinway's Piano Division is the largest segment of their business. The majority of that business is Steinway product (not Boston or Essex) and is focused toward the luxury market. Guitar Center generated $3.7Million last holiday season when it sold out in short order the reproduction of Fender's Eric Clapton Blackie guitar. If the affluent spenders begin to curtail spending of luxury items, it seems logical that Steinway's sales would follow the trend. It also seems reasonable to think that whatever Guitar Center has planned for this season's luxury item may face a reluctant audience.
Analysis
Steinway's Piano Division is focused on the luxury buyer. With the rest of the piano industry in a 3 year down trend, this could point to troubled waters ahead. Guitar Center, who has had great success generating big revenue by selling limited edition products, could also have it's holiday profits squashed if luxury buyers bow out this holiday season.
The music products industry is flat at best. The piano industry is down. The "mom and pop" type of retailer who sells Steinway products are hurting and there is no end in sight. If the affluent buyer exits the market for as is indicated in this article, it could create a vacuum. Music products fit in the "not necessary" category similar to furniture and draperies.
Watch the luxury buyer closely. If they don't buy, it could spell big trouble for the music product giants as well as the "mom and pop" retailers who dominate the retail segment.
