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Use us or lose us, bike shop owner urges - BikeBiz
If independents are to survive they need to work together to bring change, says this bike shop owner, suggesting IBDs down tools for a week to protest at bikes and bits bought online.

Clearly, online ordering has changed the marketplace for bicycles. Consumers may say this is a good thing, but I argue that – in many ways, and most especially for consumers – it is not. [This article was written by a bike shop owner who wishes to remain anonymous.]

I also contend that the bike shop sector may think it’s rough out there right now, but it ain’t seen nothing yet. We need to fight as one or bike shops will become history, an outcome in nobody’s interest, not even the online-only sellers.

Let’s start with prices. Customer perception around pricing has ratcheted down to the point where ‘on sale’ has become the new normal. For retailers, this means that the traditional model of manufacturer cost + distributer margin + retailer margin = RRP is now but a distant memory. Current consumer perception is more like RRP minus 30 percent – that’s unsustainable. 

We are vulnerable as IBDs because of that “I” – we may be independent but that also means we are fragmented and uncoordinated. We survive on a volatile cocktail of imagination, personality and hard graft. But this mad mix is no longer good enough, because what the manufacturers often lack in creativity and passion, they more than make up for in accountants, strategists and capital. Quite simply they are seeing clearer and further than we are, with the specific intention of maintaining their margin and market share, whatever the collateral cost. But manufacturers and distributors are also vulnerable; more vulnerable than they know or care to admit.

SECTOR VULNERABILITIES

The manufacturer we need producers of things that can then be distributed and sold. But big manufacturers are now exposed, mainly due to poor decision making over the last decade or so.

All too often large bicycle companies are now design and branding houses, with all production outsourced to relatively few companies in the Far East. This has made products increasingly homogeneous and therefore more price-elastic. 

For example, in the 1990s, if you wanted a premium-quality, oversized aluminium racing frame with sanded welds, the obvious destination was Bedford, Pennsylvania, and a handmade Cannondale. It was a distinctive product, linked to both philosophy and community. One senses that even if it was possible to produce Bordeaux in China or Parmesan in Taiwan, it would be resisted to the respective producer’s dying breath. The manufacturers have, in some cases, sold the family jewels – and their own brands have and will suffer. 

Failure to differentiate – where manufacturers do have valuable IP and technical points of distinction, they are frequently poor at communicating it, leaving the consumer comparing like-for-like spec, and wondering where the missing hundreds – or sometimes thousands – of pounds are to be found.

Unimaginative reliance on Shimano – this has caused poor brand/product differentiation, hence the consumer is increasingly happy to shop on criteria rather than brand (demonstrated by the growth of Canyon, YT Industries and their ilk). The other side of Shimanofication is an industry-wide weak supply chain as brands subordinate themselves to the whimsy of a largely indifferent company. 

Weak brands – they may think they are Apple or Coca-Cola, but most big bicycle companies are, in reality, brand-weak. As a consequence, the consumer will only pay, on average, a 3-7 percent uplift in price over a known internet brand to buy a ‘big name’. Brand loyalty is largely dead because brand distinctiveness and individuality has seeped away.

Overpriced – the net effect of the above is that many non-internet direct bikes are perceived to be over-priced. (Brexit, when and if it actually happens, will make this worse.) The big companies are protecting their own margins by maintaining unsustainable retail pricing.

The distributor - Distributors, in more ways than one, are distant from the customer. They are box-in-the-front-door then box-out-the-back-door, and, in reality, add little value. Their role is purely logistical – linking a company in one part of the world with a dealer network in another. The distributor is the weakest link in the chain and therefore often plays both ends against the middle – selling out the front door to IBDs, back-door to Chiggle and increasingly direct to the consumer, too. This will only be tolerated in the short- to medium-term or whilst the brands they represent feel like they are being exposed to the right kind of consumers. Too many IBDs are happy to go along with this. Not good.

The IBD – You may have a lovely shop in a great community and serve killer coffee, but that’s no longer enough. It won't guarantee your survival. Nor will passion and knowledge. Things have to change.

If the manufacturer brings the product, then the dealer, using local knowledge, passion and the power of sharing and communication, brings the customer. But we are in a daily race to the bottom. 

We are all exposed to the ravages of the market in three main ways:

Fragmentation – we talk to manufacturers and distributors, but not each other. Their power is consolidated; ours is dispersed. This must change if we are to survive. Our interests, and those of the rest of the industry, are not always aligned, most especially right now.

Capitalisation – Poor margins and weak supply chain make for poor fiscal underpinning, especially today when, really, we need a fighting fund to survive. 

Worked to the bone – Whilst the rest of the industry takes the weekend off, we will be in our shops Saturday and Sunday, gladly standing in front of our customers, because that’s when it suits them to see us. We pay ourselves too little and work too hard because we love it too much. All of this is assumed, factored in on supplier’s spreadsheets.

internetwontfixbike

YOU'LL MISS US WHEN WE'RE GONE

By not truly supporting bike shops the supply side of the industry is a number of years in to a monster mistake. There’s still time for suppliers to change, to learn from others doing the right thing. Those manufacturers and distributors with an eye on the future rather than the short-term hit are hugging their retail partners close. Is that your experience? Are you being pampered by your suppliers, or is the ground being quietly prepared for the day when they assume you are no longer here?

The idea that manufacturers and distributors can communicate directly with our customers as well as we can is laughable. The passion, determination, heritage and hard work that our customers demand – and which we give in spades – cannot be downloaded as an attachment from a supplier’s HQ. 

Personally, I think the bike shops that suppliers ought to be hugging closest are the single-store specialists, not the chains. Think about it, the best restaurants are the standalones, run by a chef with vision and clout. Chains in any industry always end up dumbing down – and diluting – the experience.

Canyon and Chiggle may think they’ve got things sussed, but nothing stands still and I reckon some time soon they will have to get closer to their customers, including with bricks and mortar shops. Customers justifiably want real-world humans to consult with, and get enthused by, and, if necessary, to complain to if things go wrong. Face-to-face customer management is one of the IBD’s most bankable assets.

We are the friendly face of the industry. Remember what you offer:

  • Great products and real-world product knowledge
  • Stores in which to display product that people can touch and try out and connect to
  • Workshops, coaching, bike-fitting, cafes, group-rides, holidays, advice, support, humour
  • Passion and the skills to communicate, enthuse, and tell stories that resonate
  • Sound judgement to help customers get the best experience from products that suit them best
  • Customer service – a friendly face when things go wrong. (You’ll search in vain for a telephone number on Wiggle.co.uk.)

Despite all of these benefits bike shops remain on a war footing. But we should be fighting the system, not each other. The ACT is neither willing nor able to fight on our behalf – to fight for our precious industry – but there are actions we can take to ensure our group survival.

For starters, I propose Bike Shop Week, seven days of working to rule by Britain’s independent bicycle dealers.

During this week we refuse, en masse, to touch internet-sourced products and bikes. No servicing of them, no passing on advice about them, no nothing. Blank them. It may even mean that people are discouraged from turning up on online-only bikes during shop-organised rides. Tough love.

Such direct action would hopefully start a debate about the kind of retail landscape people want. IBDs cannot survive on workshop labour alone. After the week is up we would review the results, and then, if we’ve been successful at stimulating debate, we’d start planning another event. Customers would hopefully get behind the idea, ditto for suppliers. 

And perhaps even the online sellers would see the light, too. Chiggle and Canyon need us; more than they probably realise. For them to sell more bikes and accessories, there must be someone out in the community to fit, service, repair their products.

We also need to ram home the benefits of our community outreach – our good-citizen role is too often taken for granted. But customers (and suppliers) must come to understand that, if things don’t change for the better, we will not be here much longer.

It would be good to get the bike press on our side, physical mags as well as digital. The specialist journalists know that bike shops are essential, but they don’t say it loudly or often enough. The endemic press should stress that bike shops are not out to fleece customers, they are providing an essential service to cyclists: shout it loud, use it or lose it. 

No doubt there are many other direct courses of action we should be taking and I’d welcome your ideas and comments over on the BikeBiz Facebook. Independent bicycle dealers are more necessary than is ever really appreciated. 

 

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