Independents Battle Internet Competition and Rising Costs – In Many Industries

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Internet competition, unfair supplier terms, high health care costs, and growing marketing expenses were the top challenges for independent businesses in 2014, according to a new survey released this month.

Results were based on completed questionnaires from 3,057 independent businesses from a number of industries including bicycle retailers, as well as those specializing in toys, books, running, inns, flowers, records, and miscellaneous others. “Independent businesses” are loosely defined as companies that are locally owned and operated.

About half of the respondents were retailers. The rest were a mix of service providers, manufacturers, farmers, banks, restaurants, and wholesalers. The 8th annual survey included 2,954 businesses in the United States, and 103 in Canada, employing a total of 39,682 people. The survey was conducted by the Institute for Local Self Reliance and Advocates for Independent Business, a group partially supported by the National Bicycle Dealers Association.

Revenue – Sales were pretty good in 2014 for most of the businesses, with average revenue growth of 8.1% being reported. As a group, retailer growth was a little less robust at 5.1%. Bike shops Continue reading

The “S”-Word: Dealers Speak Out

cogsBy many measures, Shimano is one of the bicycle industry’s great companies, consistently bringing product innovation and excellence to a willing marketplace.

But from the perspective of many independent bicycle dealers in the U.S., Shimano has become a huge problem, choking the life out of them by supporting distribution that leads to rampant Internet discounting from Europe.

Many say this makes it increasingly difficult for them to carry Shimano products without looking like price-gougers. Distributors face pressures from Shimano’s policies as well as margins are squeezed, with some even developing their own brands to compete. Bike brands also see their products de-valued as original equipment Shimano components sell elsewhere for huge discounts, the same parts on new bicycles being offered at full price.

Many dealers say they are distancing themselves from Shimano, trying hard to support other component makers, and worrying about a future that allows European retailers to sell to American consumers below dealer cost.

In a recent article in Bicycle Retailer and Industry News, Shimano American management claimed it cannot do anything to control European distribution, a part of the world that doesn’t allow MAP or MAP enforcement. Yet, other companies seem to control European distribution effectively.

The NBDA’s new Supplier Scorecard report, in which dealers rate their suppliers on various criteria, shows that Shimano finished above average in most categories except one. The company earned a C minus grade on the Commoditization Index, Continue reading

Support Your Local Bike Shop, Rule 58

therulesimageCasual cyclists sometimes feel intimidated in bike shops because they don’t understand the equipment, the complexity or even the people working there.

They may not know why they are uncomfortable, but they may have a sense that they just don’t fit in somehow, that they are missing something, that everyone knows things that they do not. Did they miss the orientation session? Did they not get the secret decoder ring? What is all this STUFF? What does it all do? What is up with that $8,000 bike? Am I not special and entitled here?

To address this, store employees are often encouraged to clean up, to simplify, and above all not talk down to those who are interested in cycling but don’t know where to start. Ask probing questions, we are advised. Don’t talk tech. Ask questions and wait for the answers. Be supportive. Ask questions.

These fundamentals help a lot, but the fact remains that many experienced cyclists, especially road cyclists, are part of a subculture that they may not even fully understand themselves, and that can befuddle the uninitiated. The subculture has taken many decades to develop, may not always make sense, and takes some time to understand. What may strike the experienced cyclist as common good practice can cause a neophyte to gasp, run for the door, and take up bowling instead.

Help is now available in an irreverent and funny book entitled The Rules, authored by the mysterious and sacred Order of the Cycling Disciple called the Velominati. It describes 95 specific Continue reading

Opportunities Exist for Progressive Bike Shops

????????????????????????????????????????????????????????????????????????????????????????????????While independent bike dealers face many challenges today, there are also clear opportunities for those who pursue them, according to a group of 15 experienced bike shop owners and managers who conducted a SWOT analysis of the bicycle dealer channel in November.

For those unfamiliar with SWOT, it is a planning technique that can be applied to businesses, industries, projects and even people. It is designed to focus discussion to evaluate both internal factors (Strengths and Weaknesses) as well as external factors (Opportunities and Threats). With a SWOT analysis in place, a business can take a clearer look at their overall situation and build an informed strategy going forward.

The dealer SWOT session led to a wide variety of ideas and concepts, some repetition, but surprising consensus on the issues of the day. Ideas flowed with animation and passion as the participants focused on all aspects of bicycle retailing. Here’s the SWOT list Continue reading

Bike tourism helps the bike trade

ragbraiThe bicycle business may be awakening to the potential for bicycle events and tourism, as many in the industry push to not only sell more cool bike stuff, but to support more riding.

The industry was represented more than ever at the National Bicycle Tourism Conference held in early November. Many came away intrigued by the potential for stronger ties between the business and bike-related tourism to get more people riding, and buying, more often.

This was the conference’s 25th year of existence. Much of its history was focused on bicycle events, but this seems to be evolving. A broader focus on “bicycle tourism” attracted a range of people interested in bikes, cycling event promoters, advocates, travel professionals, public officials, as well as some from the bicycle industry.

This year PeopleForBikes was the title sponsor, for the first time. Companies in attendance included Primal Wear, Advance Sport International, Pedego, and Bike Friday. Bicycle Retailer and Industry News was represented for the first time, as were the National Bicycle Dealers Association and Bicycle Product Suppliers Association.

The Adventure Cycling Association’s Jim Sayer talked about how bike tourism has become a huge and emerging sector in global and American travel markets. He gave examples of more states and regions focusing Continue reading

Will Bike Shops Serve the Changing Market?

3d_pie_chartOne of the important metrics for bike shop success is store traffic. Living and breathing visitors are a necessary part of the retail business model for brick-and-mortar stores. Without them, retailers would be left trying to sell bikes to air, and that is very hard to do.

Getting people into stores is becoming a greater challenge though. New research shows that consumer traffic at bike shops is declining across the board. While this is distressing news at first glance, there are also clear opportunities to reverse the trend.

The 2014 American Bicyclist Study, conducted by the Gluskin Townley Group, examined the demographics of adults who are current owners of bicycles. The fieldwork was done in February 2014 representing the 2013 calendar year. Results were then balanced to the U.S. population based on the latest U.S. Census data.

The data show that 26 million adults (age 18 and older) owned a bicycle in 2013, up 2.5 percent from 2011. That’s the good news. The bad news is that in 2011 most bike owners visited a bike shop Continue reading

Sloth and Torpor Are Cycling’s Big Challenge

fatguyCycling participation is a big topic in the bicycle trade. The idea that “a rising tide (of participation) lifts all boats” is great in theory and gives direction and hope for the future. But when the tide refuses to rise, the quest for individual company growth can lead to all sorts of tension as companies start to focus on each other more than the consumer, fight desperately for market share, push for floor space and open-to-buy, and wear out calculators to squeeze margin points that aren’t really there.

Despite an apparent uptick in urban riding, overall growth hasn’t been happening in cycling, at least not recently. In 2013, cycling participation dropped by nine percent from the previous year, according to the National Sporting Goods Association (NSGA), with cycling by children (ages 7 to 17) down 43% since the year 2000, the lowest participation number of the last decade at least.

That’s not good news, but the problem appears to be much bigger than bikes though. There’s mounting evidence that flat or declining participation is part of a much larger trend of physical inactivity in the population at large. In fact, the magazine Discovery has referred to sitting in a chair as “the next smoking” in terms of negative health consequences Continue reading