How was business last year? What were the highlights?
2008 was a good year for the company. We grew by about 40 per cent, which we have done every year since we started, but you would expect a young company to grow at that kind of level. Saddleback, the company, is not even four years old yet.
It was a great year for us as we saw major and international brands come on board. Even though we’re a young company, brands like SRAM are seeing us as a major player and a worthwhile partner.
It’s flattering as there are a lot of well-established distributors out there doing a good job with great people. It shows that we’re getting things right, that we’re going down the right track, and that we’re different and interesting to these brands.
Have there been any categories that have grown beyond expectation?
The area that we stand out more than anything in is probably in triathalon – I think that when people think of Saddleback, they think of us in those terms, with brands like Felt, Zipp and SRAM.
I guess the road sector is a natural consequence from that. Those are definitely our strongholds.
How big was the SRAM road distribution news for Saddleback? How has that gone down with dealers?
It’s huge. In our industry, SRAM is massive in turnover and stature –it is about as big as it gets next to Shimano and Giant. For SRAM to see us a valuable partner is a huge boost for everyone in the business.
We spent nine months speaking to the brand to secure the distribution deal and already we are proving that it made the right choice. I think that we are biggest road distributors for SRAM in Europe, which is very encouraging.
It’s given us access to a whole new dealer-base and we’re finding that we’re selling other brands to dealers, where perhaps SRAM was their initial enquiry. It’s huge for us and it’s a great partnership.
You were awarded Zipp’s international distributor of the year – what did that mean to Saddleback?
We were awarded Zipp’s international distributor award in May last year, after only ten months with them.
Do you hope to achieve that again?
We’re on target to. We’ve been Felt’s distributor of the year outside the US and Germany in
2007. And I think we’re Castelli’s second biggest distributor now.
We don’t have a strategy of having 20 different brands that we distribute and then doing an average job with all of them. We’re very much focused on high-end brands that all link together.
We want to be able to focus and do a good job on all of them. I think that becomes very hard when you have lots of big brands with lots of product lines – I struggle to see how you can do them all justice. We don’t have that approach. Awards are nice. They flatter and pat you on the back, but ultimately we’re not here to try and win awards or to try and say that everything went great – it’s about doing the best that we can and achieving everything that we’re capable of.
You’ve just picked up distribution for Vredestein – you said that it complements Zipp product – how important is it to you to stock complementary brands?
As a company, we’re not going to be doing downhill body armour or kid’s leisure bikes, or whatever, because it doesn’t fit with our strategy.
We’ve spent quite a bit of time recently developing the focus of the company and that’s clear for everyone involved in the business. It’s also clear for dealers –and actually the consumer as well – that we are a supplier of elite performance brands. Brands have to be able to live up to that tag, or we’re not interested in dealing with them.
Lots of companies around the world are interested in working with us, but if they don’t fulfil that requirement of being an elite performance product we won’t consider it.
Has it been a good start for 2009?
It has, but we’ve had to work very hard to achieve considerable increases. From January to March we’ve seen a 44 per cent increase year-on-year, but that’s not fallen in our lap. We’ve not had dealers banging the door down wanting to make lots of orders –we’ve had to work hard for it.
Price increases seem to have affected the trade across the board. Is it tricky to balance those and still give dealers a good deal?
Hugely. Ultimately, we’re seeing huge increase in sales of turnover, but our margins have been hit massively – by cost increases from suppliers and from massive exchange rate variances.
It is a challenge this year. We can’t keep changing prices for dealers every day, and yet the prices we pay from suppliers of our product do change every day. So the challenge for our business right now is not only that we sell what we bring in, but that we remain profitable and ultimately are able to grow the business and offer a service to the customer. As soon as we stop being profitable we can’t offer a service to the customer.
We found out in January that Castelli’s Aero range is to be worn by Cervelo Test Team – just how important is that kind of thing in driving sales?
If it was any team without the profile of Cervelo then it wouldn’t make a lot of difference, to be frank. But it has been great – we’ve seen maybe four or fives times the amount of kit shifted than when Castelli sponsored other teams.
What marketing plans have you got lined up for the rest of the year?
We’ll do lots of things and despite the uncertainty of the world’s economic situation we’ll continue to grow our marketing spend in 2009. Considerably. We’re not seeing it as an opportunity to cut back to less than we did in 2008. It’s time for us to do more, including lots of events and advertising. We see marketing as an important part of our business and we always have done.
What’s going to be the biggest story for Saddleback in 2009?
There are a few brands that we’re talking to that I hope will appear by the end of 2009. But I can’t tell you what they are. We’d like to be able to say that by the end of the year we’ll be able to make as big an announcement as we were able to make with SRAM. For me as an employer, the biggest story would be to get through the year well; that we are still here, made progress, that we haven’t gone backwards and that we remain financially sound.
I think you can have great brands and teams, but ultimately the business needs to be sound.
2009 will be a tough year for many – it’s a year to get through, not one to expect any great gains. I’m sure every company director would echo those thoughts.
What have been the key factors in Saddleback’s success?
We’ve been successful because we’ve employed good people. We all work very hard and have a very focused strategy. We don’t try and run before we can walk. We genuinely know our target customers and dealers and we know how to market to those people successfully. That all sounds really obvious and normal, but it’s the reason we’ve been successful. And of course having support from excellent suppliers has been really important.