MI Pro

It might seem paradoxical at a time when Nintendo Wiis, iPhones and Blu-Ray players seem to be the ‘must haves’ of our time, but reports from across the UK’s MI industry suggest that it is traditional instruments – and that means really traditional instruments – that are staring recession in the eye and forcing it to back down.

Gremlin Music, for example, has been banging the drum (or should that be bodhran?) for traditional instruments for over 25 years and whenever owner Pete McClelland or manager Chris Rudd are interviewed, they report that business is just fine. Of course, so do many others, but the facts bear out the duo’s optimism. Just over a year ago, the Sussex-based company moved to a greatly expanded warehouse and offices facility and business, since then, has just kept on growing, with plenty of new products on the way and a greatly enhanced website, bearing witness to continued investment and growth.

Pete McClelland is too experienced a hand to take this success for granted, however, and he has some sharply observed views about the state of the industry, which soon emerge, as we speak. But first, how is Gremlin doing and what does he see as the driving force being behind its continued success and the general good fortune being experienced by the traditional sector?

“From our experience, the market is definitely good. There’s quite a strong demand from retailers and we’re undoubtedly selling more to them. We’d like to think we’re doing so well because people like us and find us easy to do business with but, obviously, there’s some element of traditional instruments being more recession proof than mainstream ones.

“That said, there seems to be evidence that instruments, generally, are selling better than some people had been predicting. The figures that I’ve been reading from the MIA, for example, about guitar sales holding up are pretty much true from our experience, too. I think
we were up 12 per cent recently and
that is definitely due to demand. We’ve done the right things, we advertise, we put out catalogues and we keep our website very up to date, but we haven’t done anything spectacularly better than before, so that increase has to be due to improved demand.”

Despite Gremlin’s success, McClelland admits he is deeply concerned by the problem besetting the industry as a whole – particularly, the spectre of a plummeting pound and the price increases from overseas suppliers.

“What we are doing is putting our prices up as we get the goods, rather than imposing blanket price increases beforehand, which means some of our prices have gone up more than other people’s, while others haven’t gone up at all yet. For that reason, I don’t know that we’ve really felt the heat yet, because a lot of retailers and their customers haven’t yet seen the full-force of the impending price rises.”

As McClelland admits, when the price rises do work their way through the pipeline, they can be eye-watering. “The worst yet has been an item which we hadn’t bought for over a year. When we did, by the time we had worked it out, it had gone up by 70 per cent. Typically, they are 35 or 40 per cent increases which, when I hear some distributors are putting their prices up by just 20 per cent, makes me wonder about their margins.

“But we are definitely going to put our prices up. I’m a margins man, which means that the sales we’ve made have been profitable, so I’m in a good position at the moment. But I am fearful that when people come to restock their guitars and see how much they cost they will want to buy less. The staff probably think I’m being unduly pessimistic, but I don’t think we’ve hit the problems, yet.”

The test of the times

The acid test – and it is one facing the entire industry – is not, however, what retailers or distributors think, it is what the end-user feels when he is asked to pay considerably more for the instrument he wants to buy. Here, McClelland (who, like everyone at Gremlin, plays in a band and has day to day contact with gigging musicians beyond those he encounters at work) is optimistic. His belief is that most musical purchases are made on such an irregular basis that, for the most part, musicians simply aren’t aware what the price of the instrument they are considering was, say, six months ago.

“The salesman might be nervous, thinking that the instrument has gone up, say, 50 per cent, but the customer will have researched it on the internet, and he will simply try to get the best price he can today.

“That said, it doesn’t mean they will have the actual money to actually buy the products – that’s a different question, so there are still worries ahead.”

“I think prices have been way too cheap for a long while,” adds Chris Rudd. “People have actually asked ‘how can they make this so cheap?’ and it’s just bad timing that the increase has been so high and at a time when the news tells people there’s a recession. If it wasn’t for all the news reporting about the recession, would anyone actually know there was anything different going on?”

As an aside, both McClelland and Rudd are less than happy with the role the media in general, and the BBC in particular, have played in spreading the recession meme and Rudd is also less than impressed with the government’s VAT reduction. As he says: “Ooh, I’m saving 5p – it doesn’t make a lot of difference to the end-user, does it?”

“There is another aspect to the price rises that some may not be aware of, which is that they affect this country particularly hard,” McClelland says. “The global market isn’t affected by currencies to the same extent – it is only the British market that has been so badly hit.

“I’ve looked at India, Pakistan, Turkey and other non-EU countries,” he continues (Gremlin procures instruments from a tremendously diverse range of sources), “and they are all much less troubled than we have been.

“It’s almost unique to us, because other currencies are tied to the US dollar one way or another and we are not. That means our factories and suppliers don’t understand our dilemma. They don’t realise that if they force us to take stuff at a stupid price it will strangle business
with them.

“This could have quite an impact on distributors, generally. People could lose lines because they’re thought not to be doing the business they ‘should’ be doing, by suppliers who don’t realise how badly the UK has been hit.”

Can MI escape?

That said, McClelland’s view is that MI might escape the worst of the recession, because it has undergone a significant cull in recent years, with the loss of Williams and Sound Control as well as the folding of some smaller distributors.  

Gremlin’s strategy for handling the rough seas ahead is simple but guaranteed to appeal to its customers. Quite simply, it plans to do everything possible to make it easy for a retailer to do business with them. Musical traditionalists McClelland, Rudd and the Gremlin team may be, but they are anything but Neanderthals and a full time member of staff is employed to keep the company’s website absolutely up to date. Revamping the website has been a major project, but one that is vital to their continued success, they believe.

“Our whole focus is in backing retailers, McClelland says. “This applies both to online and shop sales. Everybody criticises online selling but it’s the future and providing a retailer has a shop and it is open, we are very keen to help them sell online as well and we will do everything to assist, including drop-shipping, of which we are doing an increasing amount. The retailer makes the sale but we do everything else – not just delivering to the customer, but providing all the information they need to be able to sell our products: which is where the new website comes in.

“Obviously, we’ve had a website for years, but what we have now is greatly advanced and, importantly, it is fully up to date. Prices have to be current – not just up to date for this year or this week, but to the actual day. And it’s no use just having a few words to describe a product – all the relevant information needs to be there and it is.”

“We’ve looked at a lot of other people’s websites in the process of developing ours,” says Chris Rudd. “I think, as a result, that ours is far better than a lot of others – for example, in the way the search function works and also by having up to date pricing and information on each item, as Pete says. Each instrument has its own page with a lot of detail. It is a very easy to use site, both for consumers and retailers, with a fully secure area for dealers, with online ordering, secure credit card handling – everything we can think of to make it easy to use.”

Distributing customers

Having a good website is only half the struggle, however. How does Gremlin attract users to it and what does it do to send them, once they have found what they want, to a retailer?

“I think quite a lot of customers find our site because they’re looking for something that not a lot of retailers stock – Chieftain whistles, Ashbury banjos, or Exclesior melodeons, for example and normally we’ll be on the first page of Google. From there, they usually drop us an email and we forward them to their nearest Gremlin dealer,” Rudd says.

And if that dealer doesn’t happen to have the product in stock? That’s not a problem, as McClelland mentioned earlier, because Gremlin has been one of the first on the block to do what white goods manufacturers have been doing for some time – drop-shipping for its retail customers so that, as far as the consumer is aware, the product he bought from John Smith Music, is delivered by them, complete with John Smith’s own paperwork.

“We’ve been doing this for a handful of customers for the last couple of years, because it saves the shops having to hold more stock than they need and it has worked very well, which is why we’re expanding it considerably,” Rudd says.

It is this mixture of forward thinking from a company steeped in the Folk tradition that perhaps catches people unaware. The more you learn about what Pete McClelland and Chris Rudd are trying to do to improve service to retailers, while still maintaining a personal, friendly approach, the more you understand that Gremlin is being run by some of the sharpest knives in the drawer. It might seem a bit laid-back and folky, but in terms of the hard-nosed business thinking needed to have grown as much as it has and as far as having an appreciation of how the industry is changing, it is at least the equal of companies often regarded as the UK industry’s trailblazers.

One unusual aspect to Gremlin’s business and which is also helping it weather the storm, is the number of domestically produced products it sells. “We do still have a core of products made here,” says McClelland. “Our Gremlin range has a fairly strong number of UK products – particularly woodwind and that’s a protection against the recession. A whistle is going to look 30 per cent cheaper against a guitar if it is made here and, of course, we handle export for a lot of these companies too, and they are very well placed in overseas markets because of that.  

“As everything we import has gone up in price so rapidly, it’s certainly making the products we distribute from the UK look more attractive,” adds Chris Rudd. “In fact we’re always searching for new UK makers who are looking for distributors and, of course, we can help them with export, too. Most of our UK-made instruments are things like whistles and bodhrans, but there are also the stringed instruments from Fylde and it’s another thing that makes us different from companies that just go for Far East produced instruments. We are actively looking for UK products now,” he adds, refreshingly.

Help is at hand

Retailers who have already seen the traditional instrument light may not need an introduction to the plethora of brands and instruments Gremlin offers, but those that haven’t and who are tempted by all this talk of a thriving market sector they may not previously have considered, will find a lot of food for thought on the company’s new website. And if they find themselves growing more intrigued but don’t feel secure enough to take the plunge into an area of, it has to be admitted, sometimes quite niche products, then help is at hand. Gremlin is happy to go in, consult and then advise. And, moreover, what it is consulting and advising on, Messrs Rudd and McClelland are quick to point out, are brands that are not subject to fierce box-shifting discounts. Nor are many of the instruments it sells also in the shop window of every other dealer in town. For dealers that decide to take the plunge, on offer is a Gremlin ‘Folk Dealership’, which costs £1,000 at trade prices, and offers increased margins and a lot of hands-on support and advice.

Meanwhile, what is in store for those who have already realised the benefits and are looking for more ideas from Gremlin? Well, last year, the Ashbury range began to make useful inroads into the UK market with some impressive guitars, designed by Bristol-based specialist luthier Phil Davidson, being produced in Vietnam. Now on the way are Ashbury mandolins, the first batch of which has just arrived.

Rudd says: “There are a lot of guitarists out there that seem to be wanting to start picking up the mandolin and the handy thing about the Ashbury range is that it has a wider fingerboard, so it’s easier for guitarists to play.

“In fact, Phil and I are going to Vietnam this month, to work on the next project – which will include mandolas, bouzoukis and citterns, which will probably be ready for retailers at the end of this year. There’s a big hole in the market for affordable instruments of this type. The mandolin has been far more readily available in recent years but, in fact, for most players used to the guitar, the mandola is probably a lot easier to approach, but there just hasn’t been an affordable one so far – and now there will be.”       

It may be a world away from Strats and distortion pedals – and a light year from software – but the UK is experiencing not a boom, but a steady, consistent growth of interest in Folk, Country and traditional instruments that has been underway for several years.

If that sounds like a business opportunity in troubled times, who better to help than the company that has done so much to help sustain and encourage that very market sector?

Gremlin: 01903 203044