IBDs will get the letter below within the next few days. Suppliers won't, so this is their chance to read what Madison's chief exec has to say in advance of his company's Dealer Convention in February:
"Coming into work this morning I found myself reflecting on the state of our industry and the prospects for the New Year. The various financial reports I have read since Christmas have all generally alluded to a flat festive trading period, but with an important ingredient thrown in; trading across London and the South East was down year on year. It is in this region where the changes in economic fortunes start, so to my mind, this signals a strong warning for the 12 months ahead!
"If we throw into this cautious note the added misery of a bicycle industry still reeling from the significant decline of its most prestigious and fashionable mountain bike business, the added misery of more multiple/mass retailers dabbling around the fringes of our industry selling ever increasing numbers of cheaper bicycles, and the now well established trend of wetter summers, the facts suggest that we have little reason for “rose tinted optimism” in the year ahead!
"I can already hear some of you saying “bah humbug” and possibly with some justification. In your particular shop you may have had a good Christmas; you may be exploiting new trends in the market; you may have found expansion or diversification opportunities and therefore think that none of this applies to you. If that is the case, great, keep it up! I know from my own experience that there are many reasons why businesses can out perform economic and industry trends, so my words of caution are merely to alert you to what I believe will be another challenging year for our industry.
"When reflecting on the past year and the current trends in the market, I couldn’t help but think about the ongoing ludicrous scenario of bicycle companies forcing large quantities of bikes into dealers in the autumn on extended terms and expecting payment in spring. It is this style of selfish behaviour that fuels so much of the instability in the market that everyone moans about; “too much stock”, “too much price discounting”, “too many cheap bicycles” “insufficient cash to pay my bills”, I hear this all year, every year! Since the turn of the year we have had dealers ringing into Madison saying that they cannot pay their bill this month because they have big bike invoices to pay and they haven’t sold through their stock yet. On what basis is it fair for me to finance the selfish agenda of other bicycle suppliers and for how much longer is the industry going to stand for this selfish and uncommercial mentality? Virtually every other industry I know has had to adapt to the demands of their market by offering more flexible supply and hear we are still dogged with bicycle madness!
"I am proud to be where I am today saying that Madison has built its reputation and position in the market by “breaking the industry mould”. We have always been prepared to think outside the box, to break with convention and act in a responsible way in support of our dealers. In the challenging year ahead we are investing further in service and development initiatives (soon to be uncovered at the forthcoming Dealer Convention) to improve the efficiency and profitability of our committed customers. We’re not resting on our laurels, we want to see our dealers grow their profits and strengthen their position in the market, whatever the economic climate.
To conclude, my message for the New Year is simple; the current market demands caution, it demands good management controls, it demands simplicity and consolidation, it demands the best of everything you have to offer to make the consumer's experience of your shop enjoyable, it demands considered cash control (experience has taught me that cash, not stock, is KING) and it demands a clear vision for your business. Madison will be there, as always, to help and support in sensible commercial ways. In the meantime, tell your bike suppliers that you can’t pay their bills until you’ve sold through their overstocks!"