Guitar Center has invested a significant amount of money in information
technology systems that provide real-time information on their stores. These systems
have been designed to integrate all major aspects of the business, including sales, gross
margins, inventory levels, purchase order management, automated replenishment and
merchandise planning. The system capabilities include inter-store transactions, vendor
analysis, serial number tracking, inventory analysis and commission sales reporting.
In 2006, they developed and implemented a data warehouse that enables them to
improve their marketing techniques and inventory planning. Also, in 2006, they began
operation in their new data center, which augmented the previous operations center by
providing increased capacity, improved service levels and improved recovery flexibility.
The new data center infrastructure also improves Guitar Center’s ability to support
anticipated business growth and new technology initiatives. They are in the process of
developing and implementing a new point-of-sale system to replace the current sales
processing solution which is built on an aging infrastructure and is difficult to enhance
for future business requirements. The point-of-sale system is presently scheduled to begin
a pilot program in 2008 and will provide them with enhanced customer sales information
and more intuitive training modules.
Their direct response business maintains an extensive multi-channel retail transaction
processing system, as well as systems supporting e-commerce operations, catalog
operations, marketing analysis and internal support information. These systems provide
the direct response business with marketing, merchandising and operational information
and provide call center and customer service staff with current inventory and customer
They are in the process of developing and implementing a new multi-channel retail
transaction processing solution that when implemented will function as the core retail
platform, supporting merchandising, inventory management, order management, order
entry, distribution center operations and various other major multi-channel direct
response business functions. This system is presently scheduled to begin operation in late
2007 or early 2008 and will provide a more flexible and efficient retail platform
supporting continued growth objectives, possible international expansion and various
other direct response enhancements.
The operations of their direct response business are highly dependent on its
information technology systems. The direct response business does not have redundant
Internet or operating systems and currently would be vulnerable to catastrophic events. In
the event of a disaster, our direct response business would most likely experience delays
in processing and shipping orders until we executed our failure recovery plans.
They continue to invest significant resources in the development and implementation