In the fall of 2023, Gabe Dalporto assumed the position of CEO at the nation’s largest musical instrument retailer. In the ensuing months, he has brought his unique pairing of digital retail expertise and passion for music to bear on a number of comprehensive shifts at Guitar Center. It’s all been enacted with an eye towards making the in-store process more of a sought-after “experience” and the online one more targeted and streamlined for the consumer.
In identifying the business’ “core customer” and tailoring all of Guitar Center’s offerings towards that base, Dalporto and his team have already achieved results that can be observed in both analytical metrics and personal testimonials.
MMR recently touched base with Gabe to learn more about his personal and professional background, his thoughts on the challenges facing all of MI retail in the present landscape, and his plans for the future of GC.
First of all, this past October marked your one-year anniversary at the helm at Guitar Center. Congratulations!
Thank you! [laughs]
For any our readers who maybe don’t know much about you personally, can you talk about what background you have professionally – in particular anything specific to the MI industry?
Well, this is the first time in my career where I’ve been able to join my personal passion, which is music and playing, gigging, and writing music, with my professional life. I’ve had a very rewarding professional career outside the music industry, and I’ve also had a very fun and rewarding musical life, but they’ve been separate up until my time at GC.
I was born in the deep mountains of West Virginia in this old 1860 farmhouse, and my father had set up a recording studio in our living room and people would come from all over the state and spend weeks there playing and recording music. I was always just surrounded by music and at some point, I decided I didn’t want to live in my room anymore – I wanted to be in the middle of the recording studio! So, I just started sleeping out there in the middle of all the chaos. In a way, music is just really kind of in my DNA. My father taught me how to play guitar, and I did that individually for a long time, until I wound up creating a band, and I’ve been playing in the same band now for well over a decade. Then, at some point started writing music. This was my personal journey with music.
Professionally, I’m a little bit of a purple unicorn (I don’t know what the metaphor is), but I’m a nuclear engineer by training. At some point I was working for nuclear power plants and building computer models and simulating accidents and making sure they didn’t [lead to] anything bad like a meltdown.
Eventually, I moved into marketing and worked my way up the marketing ranks to become a chief marketing officer, primarily at financial services firms like E-Trade and Lending Tree. At Lending Tree, I took over as president and then I took over as chief financial officer. So, I’m probably the only nuclear engineer who has been a chief marketing officer and a CFO of a public company. But these were all digital-centric companies. Consumer focused, but digital centric and really driving disruptive technologies and innovations. Around 2017, 2018 – I think 2018 – I met with Ares Capital who was the private equity owner of Guitar Center. We started talking about digital innovation, retail, and Guitar Center and how they had built this incredible legacy brick and mortar business, but Sweetwater had kind of emerged as a very large competitor, and Guitar Center was kind of getting their lunch eaten in the digital space.
We spent about a year just talking about how you innovate at a retailer and how you capture digital [sales] and how you think about the future and not just the past. When they asked me to join the board, I spent five years working with management and helping them envision what could be in terms of taking the best of digital, but also injecting new technologies and figuring out how to compete effectively online. And then they asked me to join as CEO.
This was the first time where I had a chance to merge the two: my personal passion and my professional skills. Before I said yes, I said, “Well, let me put together a vision and a strategy for you, and you tell me if that sounds right.” So, we spent some time going through and talking about that, and then they said, “Yeah, that’s it exactly, and go do it.” There was a good alignment and that’s how I got here.
Makes good sense. Your background in online retail leads nicely into the next subject I wanted to cover with you: Ever since I’ve been with MMR – closing in on 23 years – the two biggest perceived threats in the minds of most independent brick-and-mortar dealers have been big box chains and internet sales. The latter category has really outpaced any other sales avenue, and that shift was accelerated during the pandemic. Even certain types of purchases which used to “require” the in-person experience – big-ticket items – are now regularly online transactions. I mean, people buy automobiles sight-unseen online nowadays. What are your thoughts on this trend and what would be your messaging to those smaller storefronts trying to compete in today’s landscape? Do you feel that traditional brick and mortar retail outlets will continue to have a value and a space in a viable way, or do you feel like this really is the way that things are going?
First, you have to not pretend that things are not going to change. I can click a button on Amazon and have something show up tomorrow (sometimes today). That is pretty game changing and if we think that’s not going to change our business than we’re being silly. For our part, Guitar Center didn’t take digital seriously enough, and to a significant extent, that’s contributed to other digital retailers being as big and successful as they are.
That said, the first thing we’re going to do is we are going to be incredible digital competitors. We are investing significantly in our digital business in terms of our talent, and our technology, and how we go to market. We have to fight that battle otherwise, there is someone else who’s going to win, and we won’t accept that, not on my watch. You can’t pretend that things are not moving digital, and you can’t pretend that everything is fine.
That said, when you ask people why they go into brick-and-mortar instead of online, they’ll say a few things. Obviously, a lot of times they just want to touch and feel and hear a product. But I think as importantly as that, which is kind of obvious, they’ll use words like, “My local store is like my Disneyland. My kids might want to go ride Space Mountain. I just want to go and play music.” And then they’ll say things like, “Yeah, I read all the reviews, but I just don’t know. I need to talk to someone who really knows their gear and product.” Those are the three things that a store can uniquely do. And I would say that if you can deliver an exciting, fun experience, think of yourself as an experience center, then you have a reason to be. I mean, it is fun to go to a music store. It is fun to try out the millions of different instruments. Each is unique and brings joy.
For example, we had these two Les Paul custom signature guitars (they were the same SKU). I played them both. They weighed different and had different grains, so they both felt and looked a little different. So, if you lean into the fact that you don’t know exactly what you’re ordering online, but if you are experiencing it, then you can find the instrument of your dreams. If [an MI retailer] really kind of leans into that musician community, I think you have a reason to be, but if you don’t have the right assortment, if you don’t have a deeply experiential environment, if you don’t have great sales knowledge and treat your customers with respect, then you’re in a hard place because digital is easy. And if a customer has a bad experience, then they’re just going to go online and buy it online. It is like that. It forces us all to pick up our game.
I think that’s a great answer. I had mentioned in passing the pandemic. I was curious if you could give your impressions, overall, about where we’re at today. Are supply chain issues no longer a challenge? Do you feel that things have gotten back to normal, or do you feel that a better way to look at it is that things are at a “new normal”?
I think things are kind of at a new normal probably. The massive negative year-on-year comps have mostly gone away, but the industry is generally down a couple points this year. We’re actually up a couple points this year. We’ve made a lot of investments in our stores, our store experience, our Associates, our product and assortment, and that seems to really be paying off. So, the things I talked about, really leaning into the experience, and improving the customer experience: It’s working!
I think it certainly would be nice if the overall industry had tailwinds and then all ships rise, but in a kind of flat to slightly down environment, you have to pick your game up and you must be really excellent.
That’s fair. In looking back at your first year, I’m sure it went by really quickly, but in your first year at the helm what are some of the initiatives and changes you’re most satisfied with?
Well, I can’t tell if it went by in a week or 10 years. Sometimes I’m like, “Man, I just blinked and that was a year.” And sometimes I’m like, “Oh my goodness… it was exhausting.”
I think the most important thing we did was get clear about our core customer. Over COVID, you could be forgiven to think your core customer is an entry-level customer because everybody jumped into music, but then just as quickly they jumped out and started going to back to their regular activities.
So, for us, it was going back to basics. We did a bunch of research on the market and the segmentation and basically concluded that what we call “the serious musician” is our core customer. Funny story, I had lunch with Marty Albertson, the former CEO from the 2000s last week, and he’s like, “Yeah, our core customer’s a serious musician.” I’m like, “Well, you could have saved me some time there, but thank you!” [laughs] But I caught a lot of shit for that. Tom Morello [Guitarist for Rage Against the Machine – Ed.] tweeted, “I never thought I was a serious musician.” [In reaction to a published Dalporto quote stressing the need for more premium product in GC stores – Ed.] Anyway, it was kind of awesome because we got a lot of attention for what we’re doing.
That is great – albeit in a roundabout type of way.
I think it was a bit misinterpreted. To me, the serious musician is like a mentality, it’s people playing music and making music a big piece of their life. It doesn’t mean you’re a professional musician, doesn’t mean you’re buying a $3,000 custom shop guitar. It just means you’re spending significant mental bandwidth and passion against playing and making music. And that’s really who we really want to connect with and really serve.
The outcome of that was we decided we needed a better assortment of product in the stores because we had way over-indexed in entry-level, and we needed drool-worthy product in all of our categories. It meant we had to think about the stores as experience centers where a musician would walk in and spend their hours. I don’t care if you buy something, I want you to come in and have a good time because you will eventually buy something.
It meant that we rebuilt our sales training team, starting with the foundational stuff of, “Oh, okay, here’s what your core customer expects, and how do we delight that customer?” I think the thing I’m proud of is just getting clarity on who our customer is and how we serve that customer well. There are a million tasks underneath that, right? Things as simple as just getting our stores clean and organized, unlocking the guitar walls so people can grab a guitar and not have to ask someone, building out experiential displays. We now have these giant pedal boards that have 50 or 75 pedals and one board, and you can plug in and just to your heart’s delight, go to town. But fundamentally it was aligning on our core customer.
Some of what you just said dovetailed nicely into the next topic that I wanted to discuss and that is Guitar Center’s role in community engagement and your role in terms of reshaping that or targeting that.
Someone I spoke to the other day said to me, “In the ‘90s, Guitar Center was the coolest place to hang out on the planet for kids.” And then she goes, “That’s where I made some of the worst decisions of my life,” [laughs] which I thought was hilarious, but it’s just young people hanging out because this is a core pillar of the musical community, and that’s I think, a real insight there. You need to authentically connect with musicians and support them. And, if you support them, they support you back, so we discuss it a lot here. We don’t have all the answers yet. The thing we want to do is to really connect with the performing community, the musician community, and be a place where we can be kind of part of that community and kind of be a hub where they feel comfortable hanging out. What that means in terms of how we operate differently, we’re still kind of working through, and part of it just comes down to what’s important to them and how can we support them in their journey.
As a former habitual teenage loiterer in many MI stores – GC included – I couldn’t agree with you more! To wrap this up, are there any announcements or news that you’d like to share with MMR readers?
No, not really. I would say this is relatively tactical, but when we set about transforming our inventory in our stores, the first thing we really zeroed in on was our electric and acoustic guitar assortment as of November 1st, and we met our goal. This is stage one, but it’s a significant move forward in terms the percentage of premium and mid-tier and used product compared to entry-level product. So if people go into Guitar Center today, I think what they’re going to find is a much more enjoyable, much more accessible assortment, but we have a lot of work to do in other categories like keys and live sound so there’s still a lot of work to do. Some of the core foundational elements are there now. Some of them are in progress. There’s a lot of motion still happening. I’d say we’re probably like 40% of the way to where we want to be as a company, but we’re feeling really good about it.
And, if you look at our customer status, like our net promoter score is up and all the sub metrics around that are also up, so people are noticing, which is great, and it’s rewarding.
I don’t want to say we are perfect because we’re far from the vision that we set out, but we made a lot of progress in the middle. This is a journey, and I think there’s a tendency for every company to say, hey, we’re perfect and we’re not. We just have a lot of work still ahead of us, and I think we need to be humble and realistic about that while also feeling good about the significant improvements we’ve made along the way.