The RetailWire Podcast

Sweetwater: Harmonizing Music Passion and Retail Innovation

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What if I told you that the path to innovative retail success involves a Volkswagen bus and a lifelong passion for music? That's the fascinating journey of Sweetwater, the leading e-commerce retailer of musical instruments and audio gear in the U.S. Joined with us today is Mike Clem, the new CEO of Sweetwater, Mike shares his unique transition from musician to retailer, and provides insightful anecdotes about the creation of Sweetwater by founder and professional musician, Chuck Surack, who started his venture from the back of a Volkswagen bus!

Are you ready to tap into the secret sauce behind Sweetwater’s success? Get ready to be enthralled as Mike sheds light on the company's unique relationship-based selling model, their fulfilling workplace culture, and their focus on heart and understanding. He also highlights Sweetwater's innovative strategies used for guitar sales, providing a seamless experience between local and online buying. Moreover, he offers an engaging peek into the future of Sweetwater, including how AI might just be the key to making music creation more accessible. Tune in, get inspired, and learn how Sweetwater strikes a chord not just in music, but in the business of retail too!

RetailWire is the retail industry's premier source for news, analysis, and discussion. With a focus on the latest trends, technology, and consumer behavior, RetailWire provides a platform for industry experts and thought leaders to share their insights and perspectives. Whether you're a retailer, supplier, or service provider, RetailWire is your go-to destination for staying informed and ahead of the curve.

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Speaker 1:

Welcome to the Retail Wire Podcast, your go-to source for all things retail. Whether you're a seasoned industry veteran or just dipping your toes into the world of retail, our podcast is your one-stop shop for all the latest trends, insights and discussions that are shaping the future of retail. I'm your host, chase Benny, and today I'm joined by Mike Clem, the CEO of Sweetwater. Welcome to the show, mike hey. Chase, it's great to be here. Thanks, yeah, great having you. I have a particular interest in your sector of the industry, so I'm going to start with the hardest question first what instrument do you play?

Speaker 2:

I've played several instruments, but drums would be my primary instrument. And now I'm learning that you're a musician. So now I'm curious what's your instrument?

Speaker 1:

Anything with a string, all right. My guitar was my first thing, I think. When I was 11 years old I said Dad, I want to play bass guitar. And he looked at me. I remember driving in the truck and he goes you want to play electric guitar? So he brought me to set me up with like lead guitar. So that kicked it off and so you've always been a drummer. Is that kind of something that's the base of your musicianship.

Speaker 2:

Yeah, play a number of things, but drums is the instrument I fell in love with going back to high school and college. Played in a bunch of bands, recorded some music, wrote some music, and then you have a young family and you kind of set that aside a little bit. But I'll get back to you. Then you tell the instruments, that's right.

Speaker 1:

Yeah, I was thinking that it's probably a requirement to play some kind of music if you work at Sweetwater, like most of us do. Just a little background that I learned about you. Mike Clem is a distinguished retail executive with a rich history spanning over two decades. He kickstarted his career as a marketing analyst and swiftly gained recognition for his data-driven strategies and insights. Sweetwater is a company that's based out of Fort Wayne, indiana, and it is the number one e-commerce retailer of musical instruments and audio gear in the US, and I also learned something about it's in the top 10 of Indiana's privately held companies as well. So you guys are making waves as an Indiana state privately held and it's kind of one of that on that cusp where it could be public but it's private.

Speaker 2:

And very proud of that, and just here in Fort Wayne and our community one of the top employers and our founders from here, and so we're actually very proud that we get to give back to this community that was good in growing us up.

Speaker 1:

Can you tell us more about what got you into the retail sector Was it the love of music? And just more about this category that you're in?

Speaker 2:

Yeah, sure. So lifelong musician, and so how I got to the music industry is one part of the story. How I got to retail, total accident. And so my background is technology and marketing going back to 1990s, kind of at the beginning of the Internet, and came out of school, worked for some digital agencies and just by chance started in retail and working with some big names and also some startups. Had a lot of fun doing that and then found my way here in 2003 and married the two passions, as they say.

Speaker 1:

Nice. Maybe there are some in our audience who haven't heard of Sweetwater before. Can you share a little bit about the company we heard? There's a really interesting origin story. I don't know what part you love to tell.

Speaker 2:

Sure, yeah. So the US leading online retailer of musical instruments. It's about a billion and a half dollar company, about 10 million customers, from the beginner down the street learning to play guitar, all the way up through Nama, rockstar. We very likely work with them Churches, schools, nfl stadiums, cruise ships based in here in Fort Wayne with about 2,600 employees. The most interesting thing about our business is this is not pure play e-commerce. This is what we would call consultive, relationship based selling, and so the magic here, the centerpiece, are these 700, what we call sales engineers Super highly trained. They're experts from all over the country. They come here to Fort Wayne as a customer. You get paired up with one of these experts and then each time you interact with us, you get that same guy or gal who then truly is like learning everything you're trying to do with music and just kind of nurturing that relationship and helping you along that journey, and so you can imagine the loyalty and retention that that spins off and it just makes us really unique in our industry.

Speaker 2:

Oh, the origins story. So Chuck Sturrock, our founder professional musician back through the 60s and 70s who, when he was not on the road, was running a recording studio literally out of the back of his Volkswagen bus. As a starving musician he's got this great story. The bus was full of spray paint and Bondo and he would travel the country with it. But he was using some really tip of the spear technology very early in the industry and he kind of became known as a technology pioneer and was all of a sudden the phone is ringing and these very, very major artists are calling and saying hey, we hear you're the guy that's figured out this technology, and so over time it just evolved then into hey, do you think you could sell me the gear? And that's where retail was born. So there's your origin story.

Speaker 2:

So he was like the techie guy who was figuring out the sound samples and cartridges and back before it was a digital, I mean the kind of software based you got it Like these earliest synthesizers and digital sampling was a brand new technology and there weren't very many people that knew how to do it, and so, interestingly, we kind of started at the top of the pyramid, if you will very major artists and a lot of our growth is actually coming down market, which is fairly unique in retail. It's a fun story.

Speaker 1:

That is quite different than a lot of industry players may have started as more of traditional instruments, band instruments and wooden instruments and things like that and then started to say, well, we better add some of the electronic stuff.

Speaker 2:

I think that's fair and we talk a lot. Even in our marketing we're careful to say we sell to music makers, not necessarily musicians, because you may be on stage, you may be behind stage, out at the mixing board, and so, yeah, we serve all the way, from the instruments on the stage to the technology and everything in between.

Speaker 1:

That's it's important little detail, the little changes in verbiage from musician to music maker. With your role as CEO, I know this is a new thing. Well, you've been with the company a long time, but with your new role, I was curious what are your priorities with Sweetwater and how do you plan to lead the company into this new era of retail?

Speaker 2:

Yeah, sure. So, yeah, I've been here for 20 years and I guess you know, being in technology and marketing, no shortage of good ideas here. I think we know exactly how to grow this company into the next generation of kind of digital first shopping. I think probably my biggest opportunity as the leader is really knowing what not to change. This is a playbook that's been refined for four decades and really is unique in its human relationship based approach, and so you know, we win by being the most human. We obsess over details, we take a long view with our customers and invest for very long term relationships, and so so our founder, chuck, always taught us you take care of one customer at a time, one detail at a time. The money will follow, and that's always been true, and so I think my goal as leader is to keep us thinking through that lens.

Speaker 1:

I love the lens and I love that legacy that he's passing on to you Something to some court a torch to carry. That does tie into one of my next questions, which is about company culture. As a company that sells gear and you know this stuff is kind of technical gear at times is in addition to musical instruments You'd think that you would talk more about the features and all that stuff, but it sounds like you put a lot of emphasis on the people, the human side of it. I read that Sweetwater had been recognized as one of America's greatest workplaces in 2023. And you've won countless awards, such as the best company compensation, best company perks and benefits, greatest workplaces for diversity and best company culture. How is this placed in your, in your priorities as a CEO?

Speaker 2:

Right at the top. And so thank you, what wonderful question. We were relationship based company in a high passion industry, and so it's really important for us that, as we hire, that we're hiring people that are in it for love of the game, so that you can reflect that that same passion and positivity back out into our customers and at every touch point with a customer. And so we're very careful how we hire. We have a really unique training program. So you talk about like kind of technical expertise versus customer service.

Speaker 2:

We have what we call Sweetwater University. It's a 13 week training program. When we hire a new sales person, that guy or gal will literally go through 13 weeks of training before they ever interact with a customer. I've never seen anything like it. And it's a combination of business training, technical knowledge, customer service, all of our systems we talk a lot about. You're either adding to our credibility or you're taking away, and so it's very important to us that as you roll out onto the sales team, that you're able to come in at a very high caliber and have that balance of both expertise and relationship. And then we do a lot of training into our leadership team. Those frontline leaders we think are really important. So we're very intentional about building up our folks so that we can maintain that culture.

Speaker 1:

The word credibility stands out to me. It's something that you can build and retain, but it takes a lot of extra effort to plan that out. We talk a lot about credibility.

Speaker 2:

We also talk a lot about character. There's a lot of things I can teach you, but we're looking for people that have the right heart coming in. Are you here to serve, to be part of something bigger than yourself? So we really are looking for that right profile that says I'm in it for love of the game.

Speaker 1:

What are some other specific initiatives you've implemented for this positive work environment?

Speaker 2:

Yeah, well, one thing we have invested in space. So our campus here in Fort Wayne is 176 acres with almost a million square feet under roof with a number of amenities. So we have a diner, we have a coffee shop, a doctor, a nurse, a fitness center, massage therapist, concierge, on and on. We think it's important not just for recruiting and attracting talent, but also listen. We're displacing a lot of these employees from around the country from their normal support network. We think it's really important that as you come in here, what can we do to build that culture but also just ease some of life's burdens, if you will? It's really important to us as we still think very much like a smaller company and a very family mindset. So we invest a lot in the campus and that's really paid off for us.

Speaker 1:

Well, Can imagine that fosters more of a community and a nice place to work.

Speaker 2:

I think, in the campus and then also we just invest in families. We try to do things outside of the work together too. We talk a lot about doing life together, not just business, and that goes into visits to local sporting events or, you know, the zoo or concerts or things in our backyard. So we're very intentional and proactive about that.

Speaker 1:

How do you strike this balance between fostering the strong work ethic and then, you know, also ensuring that it's a fulfilling personal life outside of work? You mentioned you know doing things together, you know the outings, the community involvement. Fort Wayne is not the largest city in America so I think that you're, you know you would be kind of a bigger anchor in that community. Just curious about that balance between you know working hard and a fulfilling workplace.

Speaker 2:

Yeah, it's the right question. And so we, you know we invest in this culture, we invest in this campus, these family events. Beyond that, fort Wayne is actually. There's a wonderful, wonderful momentum here. We have a reputation as kind of a old, rusty manufacturing town, but there's actually a really cool resurgence going on and I think Sweetwater, in a unique way, has been part of that to bring in all this. You know, musical creative talent from around the country. So it's really really hard to go into a bar or a church and not find great music here in town. So we have that kind of common bond and I think really, you know, in work-life balance, I think a lot of us find our outlet by being part of the creative culture here now in Fort Wayne.

Speaker 1:

I've seen that kind of snowball in different cities that when they became known as. Like Bentonville, arkansas is starting to be known as the mountain biking city, and so you get people moving here just for that. So on weekends you'll see, you know, mountain bikes off the back of the trucks and it's just a common thing you know at the local pubs and coffee shops. Like I could imagine that being a similar effect in your town.

Speaker 2:

Yeah, thanks very much. I love your presence.

Speaker 1:

That's great. Do you have any advice for other companies striving to create this workplace culture that you've created?

Speaker 2:

Advice for other companies. So sure, so we. I think the way I would say it here is we start with heart. Every conversation starts with heart, and then we have to break apart and say, well, what does that mean? And so you can talk about having a heart for customers, but what about employees? What about vendors, what about this community? And so then we try to think strategically about that, which is like what are the proactive things that we can write down on a roadmap and then make sure we get those done, protect time for it, protect resources, even measure it like is it working? So we talk a lot about heart here.

Speaker 2:

I mentioned frontline leadership earlier. That's really, really important, I think, this concept of what's the saying you quit a boss, you don't quit a company, and so we really believe that here, which is like we really want you to have a great experience all the way down to the interaction with your local leader, and so we invest a lot in frontline leadership. I think that's one thing we've learned and for our culture, we're very much in-person. A lot of companies now distributed, remote, which works great for some. I think what works well for ours is being in one place when you're such a creative kind of collaborative culture. For us it's all the training I just mentioned like so more meaningful to do that in-person hands on the gear and the instruments, and so maybe that's my advice, is that's the things we've learned that have really enabled the culture for us.

Speaker 1:

Kind of relying on the connection between the team members as much as relying on, maybe a system or a process that's kind of strictly laid out.

Speaker 2:

I think that's right and we've just learned that that's best done in proximity and we're just all part of this fabric, this culture that kind of passes down through generations, and so we've learned that's the best way to approach it.

Speaker 1:

On the e-commerce side, I'm curious about how Sweetwater has managed to stand out in the online space when you don't have the physical in-store presence that some of the competitors in the music space have, and then just to stand out amongst other competitors I won't name them, but you have competitors in the online space as well. How do you stand out and out-compete?

Speaker 2:

Yeah, I think there's probably many answers to that, chase, but I think that maybe the one I would lift up to you is we really focus on adding more value, and not just adding more value, but adding unexpected value. Examples might be with most of our purchases, we throw in a two-year warranty for free. We throw in tech support after the sale for free shipping. We even throw free candy in the box unexpectedly. We do a cool thing with guitars Any guitar over $3.99,.

Speaker 2:

We actually take these guitars out of the box. When we receive them, we inspect them. They go through what we call a 55-point inspection. Technicians are actually looking for defects, cosmetic issues or adjusting the instrument and then we photograph them so that online you can actually choose the exact guitar that shows up at your door with this wood grain and not that wood. It's like little details like that, I think probably the one thing that really helps us stand out, because otherwise it is very much a brick-and-mortar kind of purchase. It's an emotional purchase. I want to see it, hear it, feel it. For us, we've been able to bridge that gap, if you will, by offering all these values. I think been able to really accelerate our growth by thinking very consciously about how do we bridge that gap to an otherwise local purchase?

Speaker 1:

Have there been any challenges to that where you knew that you had to step up your game in the online space? Is there anything that you remember that was a difficult challenge?

Speaker 2:

Yeah, I think there's a challenge. I mean, yeah, I probably could name all kinds of challenges. It's an expensive business model is one problem. When you're giving all that value to customers, we have to be very efficient in all the other parts of the business and run in pretty lean ways. That really is the strategy. We win by giving where other companies win by cutting costs or cutting corners. We believe it's just the right thing to do for human beings. This whole business model is based on how do we just make that experience great and go just a little bit over the top for you? That's kind of the heart of this company.

Speaker 1:

I like that. A little bit over the top goes a long way. What strategies have you has Sweetwater employed to reach and engage your target audience? Maybe that word, target audience, is up for grabs here too.

Speaker 2:

Sir, we maybe a couple of directions here. One is, like I said we're very much the human, one-to-one relationship company. Even when you buy online, you're paired up with one of these sales experts and we're on the phone with you. Not just online behavior like Amazon or others. We're really hearing all the emotion and passion under the purchase. We're learning you collect guitars, left-handed guitars, vintage. We're carefully learning about you and you can imagine just the amount of personalization that we can do one-to-one marketing, the web personalization.

Speaker 2:

We also empower all of our folks to just go the extra mile to solve any issues that we might have with the customer. They go to great lengths. A funny story we had a customer recently just screaming at us that we really ruined a purchase. And we get through the call and we find out they did not buy it from us, they bought it from a competitor Chase. To solve it, we just went ahead and replaced it for free and just blew their mind that we would go to those lengths. It's that kind of culture that says we just want to go over the top.

Speaker 2:

You say what strategies do we employ? I really think at the heart of our business model is we just want to be real and human and just take care of the. So that's at the center of the answer. The other thing I would say to you we really talk about demonstrating that expertise and that relationship online I think especially online today, very crowded. A lot of this generation is just looking for price and availability, and so it becomes really important to interrupt those digital journeys for all of us retailers and say how do I stop you and sort of tell you my unique story? We do a lot of bringing that expertise up into our website. We talk a lot about being the research destination and how can we educate and how can we? You know, we bring more videos or tech support or quick start guides. A lot of our investment is really in not so much a marketing strategy or tactic as much as like how do we just provide value to you and sort of interrupt an assumption you might otherwise have?

Speaker 1:

Just thinking about the entire journey of how someone becomes a customer, what do they need even before and after becoming a customer and immersing your company into that with? All the content you provide.

Speaker 2:

I think that's right. I have this theory in retail, like where we transact potentially becomes less interesting, but where we research and where we discover new products, I think is where a lot of balance of power is. For us, that's a pretty big investment that we continue to make, even into the future.

Speaker 1:

Well, it's an industry where a lot of research is done before making a purchase. Very much so, that's right, thank you. Anything about the future of Sweetwater? Do you have any visions for the challenges ahead, the changes in technology We've got all kinds of things with AI coming up and behavioral changes in how people purchase and how they interact online? Just general vision for the future.

Speaker 2:

We very much think about how do we just stay true to who we are and invest in these relationships, these existing customers millions of them and how do we just continue to add more value than others? That's the core, if you will, we think a lot about. Then there are new markets that we're finding really great growth in. Band and orchestra instruments like K-12 is a new space for us. Content creators, not just musicians or music makers, but now podcasting and streaming and so forth. Huge market for us, used gear is something we've not done a lot with. I think we have growth areas like that. You mentioned artificial intelligence. We actually think a lot of debate. You probably can't do a podcast now without ending with JNAI somewhere in the conversation.

Speaker 1:

Yeah, I know, I didn't even want to say it.

Speaker 2:

Hey, listen, in the music industry we actually are pretty excited about it. In an interesting way, I think it will actually for us, we believe, lower the bar, if you will, or ease the entry point into making music. Oh wow, this is fun. Now maybe I move my way into real instruments and buying gear. We actually think it expands our industry. Then obviously, all the conventional ways that we think it can help us in making our people smarter and more efficient. I always say, being such a human relationship-based company, I'm interested in AI that augments our humans and not replaces them.

Speaker 1:

Yeah, that's a really mature perspective. I think a lot of the best companies are taking that stance on it. I did like what you said about that. Music has a hurdle to get into. When I took guitar lessons it was three years Now. After a year I could start to learn stuff of my own. But yeah, three years of guitar lessons gave me a good foundation. Not everyone has the I didn't know any better, so I was, I think, 11 years old. Now, if you tell me I challenge you to learn the flute I know how long it takes to learn I almost get like I don't want to take on a new project.

Speaker 2:

Yeah, it's a concern. It takes grit and it takes determination. Generationally we may be moving to a little more instant gratification kind of mindset. I really do think AI and listen, other kind of apps and software-based there's a lot of music making that's moving into more digital ways. That excites us. If that's a new entry point, then we think that's not just great for our sales and business, but just as a society we just think that's fantastic to unleash more creativity.

Speaker 1:

Another wave of music making growth. I remember in kind of the mid-2000s, although home audio systems started to be $99, and you're like I can actually start recording at home for like a couple hundred dollars of equipment. That's right, and that was a big kind of a revolution in music making. Yeah, you got it. We talked about this already. Really, we hit on the technology side of how Sweetwater is leveraging technology to your advantage.

Speaker 2:

Yeah, I think all the things we said. I think the other thing that's top of mind for us technology would just be personalization, this business model. We just understand our customers at such a deeper level, we have such a rich understanding, and I think our focus is on how do we use more and more technology to, not as a business tactic, but as like how do you create more value for that customer. The more we can understand them, the more we can drop the right moments in front of them, whether that's product recommendations or even just content or education or entertainment, and so I think that's top of mind for us in our technology roadmap.

Speaker 1:

Being able to personalize and treat everyone like the individual unique customers that they are. That's right Now. This is kind of a I'm going to ask you to predict the future. But do you see any big innovations that might catch e-commerce retailers off guard, or any in the industry, but especially where you are, anything that you think would kind of disrupt or catch others off guard?

Speaker 2:

Yeah, I think it's gen AI, so I can't use that as my answer. I think that listen. The other thing, chase, I think is you know, we think a lot about privacy, consumer protection very important to our heart. We're a relationship based company and so we work really hard to build those relationships, get permission to contact customers, and I think we're seeing a lot of legislation, we're seeing a lot of mindset evolving around here. So one thing I guess I would encourage is don't be caught off guard by that. We are taking steps to say, hey, listen, this is we've been doing it the right way for four decades, creating relationships, and there's a lot of retailers that are maybe getting surprised by states that are closing some of those doors. Cookies are crumbling, like how will I reach my customers, and so if you're not paying attention there, I think that's one that we would lift up and encourage you.

Speaker 1:

Very important, kind of on the not something that everyone thinks of, but it's something that's near and dear to most people is the data privacy.

Speaker 2:

Yeah, and our heart would be listen. We believe in that. Let's do it the right way. We don't want to be creepier across that line. In the same vein, we have an incredible head start because we really have been nurturing those relationships for so many years, and so there will be a moment where some will accelerate some and decelerate other retailers.

Speaker 1:

Mike, catch you off guard on this one. I'm looking for some new music to listen to. Any recommendations? Oh boy.

Speaker 2:

I can't answer Chase, because they're all customers and we love all of our kids here, so I'm going to have to dodge the question. I'm sorry. What's your normal playlist? Where are you normally?

Speaker 1:

Normal playlist is kind of in a little bit of like indie folk. You know kind of indie folk sounds Sometimes I don't have any names coming to me at the top of my head. I used to be really into like I'd get a super fan of a specific artist. And now I've got kids, I've run a business and now I just hit shuffle.

Speaker 2:

I'm exactly there with you. My favorite thing is, like I don't know Spotify. You just tell me and I discover so many new things and I actually love that.

Speaker 1:

Well, this has been fun. Mike, thank you for coming on. Great insights. Loved learning about the company and your vision, and thanks to everyone listening for taking the time to listen to today's episode. If you found it valuable, please share, hit, subscribe, connect with us on LinkedIn or find us on your favorite podcast platform. Mike, thanks again for coming on. It's been great. Hey, I had a lot of fun, thank you.

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