Leftovers

How to Lose Half Your Business in One Easy Step

Walk into a Lululemon and you'll see 10-20% of their floor dedicated to menswear. I know Lululemon wants more men buying their clothing, as of January 2013 only 12% of their sales were to men. So what should Lululemon's first step be? My thought: they should be dedicating more of the store to men.

Retailers get caught in an anti-growth cycle. If the sales of last year don't show opportunity then big investment becomes too risky (especially in the case of a public company like Lululemon). Lulu sales to men are only 12%, so they dedicate 12% of the order and floor space to men, and surprise-surprise that year's sales to men don't top 12% for some reason. If Lululemon wants to attract more men, they're going to have to take a risk and dedicate more of their floor space and marketing toward men. 

The reverse is true for many bike retailers. Dedicate 12% of the product mix and retail floor to women then don't be surprised when women's product sales don't break 12%. Sometimes, customers reflect the inventory- not the other way around. 

Reflect Inventory.jpg

To grow a women's market in bike retail we can;t be afraid to make some serious investments. In product mix, in floor space, in advertising, and in marketing. Women are 51% of the US population and control a large majority of household spending. In some major cities like Los Angeles, New York, and Miami the Gender Gap has flipped and women are earning as much as 19% more than men. 

If a retailer is under-serving women, they are under-serving 51% of their potential market. 

The first bike retailer that jumps on this, that dedicates 50% or more of their store to women (or even opens a women's only store) will win their local market. At the very least, every female cyclist in the city would visit once. For the right retailer, one visit is all they will need to win them over. 

If you found this insightful, it would mean a lot if you shared it. Thank you - Donny

Sales Per Sq. Foot in Bike Shops? Take A Guess.

If we were to center a microscope over brick and mortar retail what many people tend to find is that it’s a real estate game just as much as a retail game. If an IBR can earn significant dollars per square feet then they’ll have opportunities to set up business in a location with great traffic, parking, and amenities that facilitate a positive shopping experience. If they cannot earn the dollars per square foot then they’re blocked out of the prime locations and will work harder to convince customers to seek them out. This is how the phrase, “We’re a destination location” was born.

Sales per square foot is a popular metric used in the retailing industry and is simply the average revenue a bike shop creates for every square foot of sales space. Investopedia, a website dedicated to educating people on finances, investing, and more defines sales per square foot like this, “Sales per square foot is used by businesses and analysts alike to measure the efficiency of a store’s management in creating revenues with the amount of sales space available to them. The higher the sales per square foot, the better job management is doing of marketing and displaying the store’s products.”

Signature Cycles . It would be a safe guess to say they are outside of average for bike retailers.

Signature Cycles. It would be a safe guess to say they are outside of average for bike retailers.

According to the National Bicycle Dealers Association the average square footage of a bike shop in the United States is 4472 square feet.  In a survey done by RetailSails, a retail and consumer goods consulting firm, they measured the average square footage of the nine most successful retailers in the US. They found that the average retail space of Apple, Tiffany, and Coach was similar to bike shops at just under 5000 square feet, the difference was how much those stores earned per square foot- and it was a drastic difference.

Apple was the runaway leader by far, earning $6050 per square foot nearly double over second place Tiffany & Co. The yoga-inspired apparel store Lululemon came in third at $1936 per square foot. And what about bike shops? Depending on their size a bike shop will earn between $100 and $250 per square feet.  While most bicycles are more expensive than most Apple products, and require a highly knowledgeable and educated staff, they have the same earning power as a low-end department or a RadioShack.

It’s this kind of earning disparity that tells us bike retailers are clearly playing the retail game, not the real estate game. This means there will rarely be a bike retailer next to an Apple store, Tiffany & Co. or even a Lululemon. Most IBRs simply can’t afford to run a profitable business in those locations.

Since IBRs are playing the retail game they have to convince people to find them and when they do, the people working at a bike retailer have to win them over with an engaging experience, incredible product knowledgeable, and a rooted sense of trust with all cyclists walking in.

Thanks for reading this far. I know you're busy, but if you found this valuable it would mean a lot if you shared it. Thanks - Donny