By Trey Richardson
Source: bicycleretailer.com, March 2019
Editor’s note: Trey Richardson is a marketing professional for hire who spent nearly three decades in virtually every supply channel of the cycling industry. In lieu of payment for this column, Trey would like to encourage appreciative readers to make a donation to World Bicycle Relief.
I started writing this several months ago but decided to sit back and chew on some popcorn and see how things fell after the smoke cleared (still waiting). Between Interbike’s 2019 walkout, the ASI/Performance outcome, the number of companies changing hands and now brands like Trek and Cannondale partnering with REI … that was a lot to take in over a period of about six months.
I took several steps back and looked at everything as if I had no knowledge of, or experience in, the church we call “The Bike Industry” and came to a conclusion I have yet to hear:
‘The Bike Industry’ has ended
We … all of us, use that phrase ‘The Bike Industry’ a lot. If there was one thing I would say that may make many of the IBD woes go away, it would begin by putting a stop to perceiving “The Industry” as exclusive to who it belongs to and accept what it is and will (not) be in its future state. The days of trying to control how it operates in virtually every channel have been dissipating fast for some time now.
Since anyone alive can remember, bicycle and bicycle-related manufacturers have (mostly) used the same, exclusive distribution channels. “The Industry” had made it a practice to determine who belongs, who doesn’t, and how it wants to operate without any outside influence. Add to that, retailers expected faithful support from their suppliers and demanded exclusivity, MAP, margins … I could go on. Today, money flows in from a lot of different directions and most of it goes into a funnel that is the internet.
I have always said, three shops working together will increase ridership in their community more so than six shops working independently.
Many are upset by (fill in the blank), but the reality of it has ALWAYS been that a business should forecast growth potential based on tomorrow’s bottom line … not how dedicated a retailer was in the past. Especially if said retail channel can no longer support the highest possible ROI for them.
It sucks, but that is how business works.
The new (big) kids on the block
Today, while many shake their fists at the Amazons out there, many don’t see them for what they really are. Sure, they warehouse and sell items, but their real business is being a marketplace for others to use as a sales channel. That in itself is what has helped Amazon grow. (Well, that and them streamlining the ordering and distributing process in addition to offering many outside services.)
Then you have a company like REI. They have a massive network of stores that have managed to maintain if not increase foot traffic in their brick-and-mortar locations as well as have an e-commerce website that includes third-party sellers — kind of like Amazon, but I wouldn’t necessarily consider them a marketplace … yet.
History repeats itself
Around 150 years ago, general stores killed the specialty stores and street markets selling locally sourced goods when trains started delivering mass amounts of goods to populated areas. Then Sears & Roebuck knocked those out when their mail-order catalogs made goods available to anyone with a street address. (Additionally, communication technology exploded with the telegraph and later telephone system, cutting the time it took to a company like Sears to make deals with their suppliers.)
Sears managed to get a massive and wide range of products from their suppliers and into customers’ hands in a fraction of the time it used to take. Sound familiar? (The way things are looking, the IBD is going to far outlast Sears, once the pioneer in delivering goods to the mass market.)
What was — The bike industry
A bike mechanic, company rep and customer walked into a bar …
Years ago, as we were wrapping up our shop’s weekly pub crawl one night, a few of us were having a conversation about ‘the state of the industry’ over beers and burritos. One of our favorite regulars, who was never short on jokes, started making fun of our conversation.
“I never knew the bike industry was such an elite organization. Do you have a secret handshake?” (Three fingers go up.)
We went on to explain how there is a sort of dedication that puts passion above money and the entire industry works to support each other. “We’re family” and not here for the money. I look back at my response as a reminder to not ever base a business decision on how much I like something. Instead, I hope the business decision I make ultimately supports that passion.
What was “The Industry” is not what I would consider an industry today. It is instead a supply channel to the overall marketplace. For instance, the auto industry still relies on a closed-chain supply channel requiring their main products (autos) to pass from manufacturing and authorized dealerships before making it to the end user, though this is changing as we speak. Although there are fluctuations, all adjustments are made by companies within that closed supply channel. That closed-chain supply channel is what defines them as an industry.
Until recent years, every bicycle manufacturing, distribution and sales channel had to pass through the IBD in order to reach the consumer. Similar to the auto industry, that is what made it an industry.
Today, “The Bike Industry” only supplies a niche product category to a small percentage of the marketplace through more generalized channels. Manufacturers and distributors channels are selling through an endless number of nonexclusive retail channels (IBD, outdoor, e-commerce …), as well as direct to consumer. The bicycle-related supply channel now lives in the same space as most consumer products do. While laying on a beach in Europe, I can order toilet paper, dog food, Swiss Cake Rolls and a bike, all located in three different states, and have it all shipped to my address in Atlanta. That would take me as little as 5 minutes to accomplish.
In addition to my above statement, no matter how everyone wants to be recognized, the general, money-spending consumer doesn’t see us like some major player in the economy either. Bloomberg probably can’t even spell Schwinn.
The next 4.0 version of “The Bike Industry” everyone seems to be waiting on simply doesn’t exist. Like most, I will still call it “The Bike Industry,” but we need to stop looking at it as such operationally. Complaining about MAP, margins, exclusive brands, etc. is a spinning-your-wheels waste of time and resources.
We’re ‘The IBD Industry,’ and need to champion that!
“The IBD Industry” is not new because, theoretically, it’s been like this for years. But it needs to organize and make a better impact. It needs to make the right impact.
Since the playing field has been taken over by consumer demand and a more streamlined supply channel scrambling to fill it (while leaving the IBD in the dust), IBDs need to reset their approach to doing business. While this is hard to conceptualize because it goes against everything we’ve been (wrongfully) taught, retailers need to begin focusing on growth instead of survival — like they should have 20 years ago.
A large percentage of people running things on the retail side are trying to justify how they can keep things the same with the same number of people while fighting for a harder-to-obtain-than-ever dollar. Most of those still around live on a constant up-and-down “net profit” roller coaster that has caused the health of their business to suffer, much less grow.
This needs to end, and shop owners need to make a huge shift in their personal roles.
Do you own a business … or do you have a job?
This is one of my favorite questions to ask people who have or want to open a shop — or any business. If an owner attaches themselves to the labor of their business, they have a job. No title or tax identity changes that. Not to sound like a complete tool, but if you own a shop and take on any of the day-to-day items like sales or service, by business standards you just have a job. A business owner’s only responsibility should be focused on growth and branding. Owning a business in which you wear several hats is the No. 1 growth stopper. If there isn’t enough time in the day to follow up on what could be some great opportunities, you’ll never get out of that up-and-down cycle.
This is also where I feel the hobby versus business line gets drawn. Owners who prefer to make a difference from within the walls of their stores often do so because it’s what keeps them motivated and/or they see it as one (or two) fewer payroll checks they have to divvy out. Many say it allows them to best serve and keep their customers, but that only includes customers who willed themselves to go to your store in the first place.
I know “hobby” is a strong word to use, but would an owner be that willfully present in the day-to-day operations of their business if they were running a paper supply store? Would they strike up conversations about what their customer printed last week or tell war stories involving paper cuts and copier jams? “Hey, come look at this 32-pound-weight almond paper made of imported linen!”
IBD Business owners in what was the ‘Bike Industry’
So back to my statement of being an “IBD Industry.” Shop owners have a lot of hard decisions to make and more often than not, overwhelm themselves. Many decided to give up because they only saw things getting worse. Most of the ‘owners’ I know who closed their shop were really only an elaborate employee at best because they were a manager first. In some cases, it may work out, but it is 100 percent not how the ‘to grow a business’ manual lays it out.
On the surface, the owner/employee role sounds like a thrifty way to start or even run a business. There are a lot of business gurus out there that make running business sound easier by resorting to laying out a plan with a bunch of bad or outdated habits based on low entry fees, first-person service, low head counts, etc. The mentality to run tight and efficient is today’s poor excuse that most often results in a business’s inability to nurture growth.
Changing tubes and selling bikes with a free tuneup isn’t how you grow. Forget about that “right now” money and go hunt down some of that “next 5 years” money!!!
Business owners in today’s IBD Industry … You have ONE job
The IBD Industry is made up of thousands of community-based stores that have the ability to provide services far beyond their traditional means, which will gain them huge amounts of exposure in return. Alliance marketing is one of my favorite topics. It involves forming partnerships with other lateral and local businesses who are willing to collaborate and even promote yours in exchange for the same.
Do not walk down the street and ask if you can leave some business cards or a countertop ad at the local gym or running store. You need to think bigger and do some old-school hustling. In fact, freshen up those roached-out Vans, toss a sports coat over your shop T-shirt (or at least put on some deodorant … this person knows who I’m talking to), and walk out the door.
If there is a bike shop, there is a 99.9 percent chance there is a community around it consisting of several other small business, associations and events. There may even be some larger companies who host a large number of events for their employees (see some examples below). A shop owner should be focused on knocking on doors, attending Small Business Administration meetings, asking questions and finding new ways to be involved. This could include advocacy, community events, offering services to corporate wellness programs and many other avenues.
The possibilities are unlimited, so why would you limit your access to these?
Generally speaking, owners should spend two or more days a week dedicated to networking outside their shop, and not just in the offseason. The best time to promote your business is when things are in full swing! I know I make this sound simple … because it really should be.
If a shop owner is in a rut being one of two employees in their shop, well, they’re going to have to work a lot harder in order to achieve that level of growth. A common business practice in our industry is to cut corners to save money when, in fact, it is likely costing what could be potential new business. Sometimes a person will just have to say eff it, get out of the shop and plan on doing some damage control. That may involve coming back and working late or going in on your typical day off. If you stick with it, things will eventually level out and you’ll begin to really appreciate your newfound perspective of running your business.
Competition is your friend!
I have always said, three shops working together will increase ridership in their community more so than six shops working independently. There are three competing shops around me who are great at working together. They often communicate and work together on things both have an interest in. From where I stand, it almost seems as if they are competing more on who can offer better community support than who can sell more bikes. Regardless, we have a healthy riding community that still loves to shop locally.
Bringing it all together — branding
Once you have enough plates spinning in the air, you need to focus on bringing it all together and associating your efforts with your brand. A brand is different from a business in that it is the strategically planned out identity of your business. Holding a road ride twice a week brands you as a roadie shop; supporting your community brands you as a pillar of that community. The best problem you could have is that your networking efforts have created a pile of opportunity requiring you to hire more help or professional outside services.
The best part is that once an owner begins to nurture these efforts, they suddenly get excited. Motivated, even! Seeing your efforts increase the community’s appreciation of your business will rewire your brain and relight that entrepreneurial fire I’m sure many have missed.
Stop letting things outside of your control run your business
Business 101: The structure of a business should be established so that any products or services brought in will only complement that establishment, not run it. Putting your trust in someone else’s hands is the greatest risk an owner could take.
This is what a lot of past and current retailers are going through. Bike companies and distributors hung a super juicy steak out there making it irresistible to do business and led everyone to a level of dependency. Skip ahead to today, because those once “dedicated” supply channels have been breached by “outsiders,” there is no more special treatment or entitlement being given to dealers. What you did yesterday or for the last 20 years does not matter to a company’s future bottom line. Rather than burying yourself with how things like bad margins, MAP and how other entities selling your brand affects your business, focus on earning that loyalty back from your community — one you’ve probably missed for a very long time.
Places you should network
I’ll throw out some ideas but more so, want to spark some thought. If you have something that works, share it in the comments!
- Schools and universities: In addition to NICA, find out when a local school is having a play day and offer to include a bike event. Offer a middle school a couple of bikes at wholesale to add to their PE classes. Park your mobile shop van in a high-traffic area of a university for a couple of hours each week and do repairs.
- Large businesses: Most have a wellness program and love it when a health-related business offers to come out and give a class (we did this 25 years ago on everything from training to bike basics and maintenance). Even better, negotiate and see if a company will pay you to repair or maintain their employees’ bikes as an incentive to their employees staying healthy. (This is currently a thing.) Help start a bike club within the company!
- Small businesses: See what they’re involved in, let them know what you’re involved in, and find ways you can help each other out or make connections with people they know. Join or start a small-business association.
- Chambers of commerce and city officials: If you sell e-bikes, take a ride with every person with decision-making power in your community. This is how you open doors to bicycle infrastructure. Bike companies may even want to help out with this, so ask.
- Charities: From the Humane Society and cancer organizations to helping someone local in a dire situation, find ways to be of service.
- Other shops, including co-ops: Get with other local shops and collaborate on how to better penetrate your market. If you have a co-op or shop that serves a great purpose like WeCycle Atlanta here, be a resource for them and offer anything you can to get involved.
- Churches, hospitals, doughnut/bagel shops, restaurants, rehab facilities, professional sports teams and the facilities that rehab them … I could go on.
If it’s not on LinkedIn, it didn’t happen
For goodness’ sake folks, polish up (or create) a LinkedIn account and list every business-related effort you do — especially advocacy. I spelled this out a while back regarding how every person associated with an IBD should promote their professional identity to their customers. The goal should be to bring the community, your branding and your business together in as many ways as possible to initiate and drive a more progressive way of doing business.
The funny thing is …
In many ways, I am contradicting what I’ve stated in other articles. I have said that there are too many bicycle-related businesses fighting for the same dollar, and the approach to increasing overall ridership to match what has become a bloated industry is a backward approach.
These things are still true when spoken as if there needs to be an industry-related effort to repair it. As individuals, that is not the case. But you’re going to have to wash your hands of any and all concepts related to any of your suppliers fixing things for you. If you have a business, GET OUT THERE AND OWN IT!!!
Your friendly neighborhood chucklehead — Trey