After decades of supporting musicians the coda is playing for the Santa Monica Music Center. The historic music store operated by Mayor Pro Tempore Lana Negrete and her family will not survive in its current format but just how it will change, or close, is still up in the air.
At best, the store will close its current location on Santa Monica Blvd and move to a smaller footprint somewhere else. At worst, the Santa Monica-based family business will exit the city altogether and run entirely out of their Culver City location.
Either way, the sour note is a direct result of losses incurred by the business due to theft and a weak, or nonexistent, safety net for small businesses.
The store was started 50 years ago by Negrete’s father Chico Fernandez who had a dream of opening a practice space and photography studio for local musicians to jam, record, take lessons, shoot album covers and share music with the community.
The Music Center evolved over the years, with Chico’s brother Victor introducing the now integral retail shop and Chico’s daughter, Lana, founding a nonprofit based on Chico’s values of community and sharing a love of music. The shop has also moved from its original storefront on Lincoln Blvd over to a larger space at 1901 Santa Monica Blvd.
While all stores deal with petty theft, the Music Center has experienced a wave of crime with four burglaries in three years.
Negrete said the store experienced little to no theft during most of its history. Its original location on Lincoln Blvd. included a heavy gate that prevented easy access and while the store did have one daylight robbery in its early days, the repeated, high value thefts are not something the business was prepared for, let alone the unexpected consequences of the losses.
The first of the recent wave of thefts were actually full looting during the riots of 2020 that spread from Downtown. The store was then burglarized in 2021 when thieves smashed a window and stole several guitars. Those instruments were actually part of Negrete’s nonprofit music charity that operates out of the same location and while they were replaced through community donations, the location was broken into a second time just a few months later resulting in the replacements also being stolen alongside a lot of other inventory. This year, a thief broke into the store in May.
“The insurance companies will pay you for some of the loss that you can prove, but we didn’t get everything, like loss of business and certain structural damage and consignment replacement because they don’t value used instruments. That was the whole issue for us. So we lost that money,” she said.
The rash of thefts hit after the business, like all retail stores, had been severely impacted by the prolonged Covid-era closures with much of its reserves depleted to just stay afloat during lockdown.
The monetary losses alone are a challenge for a small family-owned business. Due to various deductibles and loopholes in insurance policies, the Music Center has had to spend about $90,000 out of pocket on repairs to its property. However, it’s not just the one time loss that’s jeopardizing the business, it’s the way that loss is magnified overtime.
Because significant quantities of inventory were stolen, customers were simply unable to find the items they were looking for in the store. Those individuals took their business to the internet or big-box retailers depleting the cash flow needed to actually restock the items in the first place by about $250,000.
“Even with the pandemic, we could have opened up a little except all our equipment was stolen and our computers were smashed and our interior demolished. So we weren’t open for those two months because we had to rebuild back a physical space. And that has been very hurtful, like, I didn’t pay myself during that whole time when I paid my employees. So we never really fully recovered from that because even though people were signing up and trying to support us by buying a guitar and a keyboard, it was a short-lived thing. And then everybody moved on and went back to shopping on Amazon.”
Inventory problems were exacerbated by various supply chain problems that emerged in the years following the pandemic.
“Then the production of musical instruments was deeply impacted because a lot of it comes from China,” she said. “Now the shipping issues pushed us back so far that schools that purchased from us traditionally had to unfortunately not. They wanted to, but they were forced to buy from big box retailers because we can’t buy as deep as them so we didn’t have a back stock of everything they needed and that hurt us because there was like $147,000 loss of revenue that the schools normally would have purchased from us that we didn’t get.”
The store has found itself in a downward spiral with a lack of inventory causing lost sales that are in turn preventing it from fully restocking inventory. All the while potential customers are following larger retail trends and while they may come into the store to browse or ask questions, they ultimately choose to purchase from Amazon or other large corporate websites.
The problem has become a crisis now because the store’s business cycle is cyclical with a dearth of institutional payments over the summer months.
Negrete said she’s been frantically searching for a way to bridge the emerging chasm but she’s realized much of the alleged government aid for small businesses is more mirage than money for a business like hers.
She said county agencies have sent her links to inappropriate aid programs, like a grant for minority-owned food businesses, or that when she has gone through several county processes, they have either not had money available, have had additional qualifications related to demographics or are more about offering advice than funding.
“I just went through a process and at the end, after I enter all my business information and financial information, they say they will evaluate applications including neighborhood characteristics, including unemployment rates and poverty rate. So if we don’t have a high poverty and unemployment rate in Santa Monica, I’m excluded.”
She said the way many programs operate actually segregates minority businesses. In her case, the business would probably survive and have access to significantly more resources if she were to close the Santa Monica location and move it to another part of Los Angeles, where the median income is lower.
“It’s just an unintended consequence of us trying to create more opportunities in underserved communities and incorrectly defining community. Community and a census tract are two separate things,” she said. “If you’re trying to help people who come from a shared inequitable place in life, you’re totally missing the mark … You’re trying to create programs, I think to help people like me, and you’re not helping us because you’re looking at the community as based on where the physical business is located and not with respect to who the people are that are running the business.
So you are driving the generational gap wealth issue even farther and farther and farther because you’re literally redlining small minority owned businesses. Making it so that minorities have to do business in the hood, where it may not be profitable for your business, to be able to obtain access to these programs — and makes it more difficult to actually do businesses in a city like Santa Monica that claims to want to diversify the local business community.”
Traditional loans, if available, would only delay the fiscal crunch, she said, due to their high interest rates.
“I’ve done all that I can to be a good businesswoman, I accelerated all our debts and I thought I was doing the right thing, we’re a triple A rated company. We paid rent during the pandemic, while people got free rent, I continued to pay my employees during our closure and sacrificed paying ourselves as owners often do.
“As a small business and checking off the boxes woman of color you might be eligible for a loan that’s going to charge you an exorbitant amount of money along with fees that puts you in an even deeper hole. But if you’re a wealthy person who’s folded 10 businesses, taking advantage of PPP loans, has lawsuits filed against you pending, you can still get another bailout and another loan from the bank. No problem. Companies that have bankrupted and reformed get millions, no questions asked.”
As a member of the City Council she said she’s aware of the kind of programs Santa Monica has to offer and while she wouldn’t take any city aid due to her position, it wouldn’t actually help as the local programs are all too small to actually help a struggling business. She said that in all honesty, spending more time at work and less on the dais would have made some difference to her current situation, but she hopes that no matter what happens with the store in the near future, she wants to make sure the work she’s done on Council reflects the struggle small business owners face.
“Serving on Council has definitely been a percentage of this happening because if I had focused more on my business I would have been able to do more, but I want to make sure that any policy that I’m working on at least can help someone else avoid this,” she said. “I also feel anyone who hasn’t had to make payroll shouldn’t be making policy around economic recovery and small business programs.”