I think that the big thing with Guitar Center is much the same as what happened to Radio Shack. Primarily, they lost their focus....or, should I say, ownership and leadership lost focus.
"Drive revenue!! Every department needs to drive revenue!! Even the Service Department needs to DRIVE REVENUE!!"
That's not a bad thing in and of itself. Hell, every department in any business should be able to support itself and bring in a profit (or lend itself to the profitability of one/all I.E. HR or IT).
But just like Radio Shack, Guitar Center has lost sight of it's main focus - bringing quality gear at lower prices through massive buying power, a large network of stores....oh, and top notch customer service and a knowledgeable staff. Quite honestly, there is no good reason why these two companies are failing as they are. Rather, both of these businesses forgot about their customers and what the market asks for.
Yes, online sales has played into it the failure of both businesses. But it was their failure to adjust and provide a better mouse trap that did them in. However, there are many online stores with store front properties that do quite well no matter the markets.
Best Buy is going down the same route these days.