Here’s the letter.
I find myself writing to you concerning developments within our respective businesses during the past two or three weeks. The American Bicycle Group prides itself on being the manufacturer of five of the most prestigious brands within the cycle business, Litespeed, Merlin, Tomac, Quintana Roo and Real Design. The products of these companies are available through a very select network of specialist retailers throughout the country of which your business is one. Each dealer has its own specialist marketplace, be it triathlon, road, mountain or mail order. Our Elite Dealer invests very heavily in inventory, image advertising, staff training and their retail store. It is these dealers that I must ensure are looked after by the American Bicycle Group. Having spent a great deal of my time in retail I like to feel that I have a good understanding of what works, what fails and what is expected of suppliers. Recommended retail pricing is always a contentious issue but one that needs addressing in a very professional and direct manner. This is especially relevant for the American Bicycle Group brands that are sold at the very high end of their respective markets. This is where we have certain issues. Most dealers would be the pot calling the kettle black if they stated that they did not discount. I for one will admit that during my time in retail I gave more than one or two dodgy discounts on a cold and wet winter’s morning when a customer was looking to purchase an expensive bike. I am not proud of those sales because everything sells at a price. However, I am proud of the fact that most of my customers bought product at full retail and returned because of the ambiance of my business and my knowledgeable staff. My mail order business also blossomed on recommended retail pricing. Why? We had niche desirable, technical products not available in every store illustrated in an attractive format; we had stock, knowledgeable staff and a prompt service. The profile of my old business fits that of many of the American Bicycle Group retailers and the products of the American Bicycle Group would most certainly have been in my old mail order catalogue. So, Mitch, I think that you know where I am going. On the Wiggle website there is listed nearly every sku on our system. These include the new Quintana Roo state of the art wetsuits that have only just arrived, at 10% discount. This coupled with you advertised loyalty scheme (giving another 10% discount) gives you 20% discount on a product we have only just launched having spent a considerable amount of both time and money in developing! I will not let the product be devalued in such a way. The product sells on technical merit and not on price. Our dealers who have invested in Quintana Roo feel that they give out the information and you complete the sale. I am sorry if this sounds direct, but having been there I know that is what would happen in many instances. Some of our new triathlon clothing is also listed with 5% discount. Litespeed and Merlin with 10% of stuff free. Do I wish to see those frames being offered with 10% of stuff free? No, I wish them to be portrayed as the flagships that they are at full recommended pricing. I could add more but I know we are both very busy people so I will finish by saying. Mitch, I respect you for running a very successful business and taking your style of mail order to a new level. I still see potentially profitable business between our two companies but only if you are prepared to:Invest in stock. Invest in staff training and comply completely with our recommended pricing structure. If you are not prepared to do all of these then it is best we both go our separate ways and remain friends. I will not have the brands of my company or the loyalty of our dealer compromised in any way. Yours Sincerely
Over on the trade-only bulletin board this letter is already generating comments, especially along the lines of ‘but what will the Office of fair Trading think of this laudable stance?’