Leftovers

In The Way-Back Machine: Bike Retail in 1890s

Arguably the first person to ever combine bicycle sales with shrewd retail savvy was John Wanamaker. Wanamaker was a merchant who lived from 1838 to 1922. Along with being a retailer he was a religious leader, political figure, a pioneer in marketing, and considered by some to be the father of modern advertising. He was born and for most of his life lived in Philadelphia. He has been credited as the first person to ever take out a half and full page ad in a newspaper and the first retail merchant to hire a full time copywriter. While he sold nearly everything such as furniture, clothing, and tools he was also one of the largest bike retailers in the United States at the time.

An advertisement for bicycles from The Wanamaker Store in 1898. Retail experience and education of the sport were just as important to Wanamaker as price.

One of his more notable achievements was being the first major merchant to offer a return policy and establishing the common use of the price tag. Before Wanamaker, prices were constantly changing depending on a number of factors. If the product was in high demand, the price went up. If the store was busy, the price went up. If you were not a regular customer, the price went up. If you were only buying one instead of two, the price went up. If the store owner was having a rough day or just didn’t like you, the price went up. Many customers saw this as an unfair system while the retailers saw it as smart business. In the mind of the retailer, if demand or costs go up then price should go up as well.

Wanamaker had a vision that all shoppers get treated equally and fairly. To do this Wanamaker introduced the price tag. He believed that there should be one price, all the time, no matter who they were or how often they shopped there. This simple strategy won over customers by the thousands and further established Wanamaker as one of the nation’s best retailers.

Another Wanamaker ad from the 1890s, this one focused on price, quality, and selection.

While the price tag is still alive and healthy today, we have never let go of the idea of a marketplace where price tags don’t exist. Customers feel they deserve both a fair price and better pricing if they have demonstrated their willingness to dedicate themselves in some way to the IBR. Wanamaker’s price tag, as it turns out, is a facade. The bike industry has never let go of negotiable or moving pricing structures. Manufacturers offer better terms and pricing based on the volume and inventory purchased. Thousands of retailers will offer different pricing to their customers depending on their amount of purchase, frequency of purchase, or loyalty to the store. Peter Fader may have said it best, "Charging everyone the same thing and treating everyone the same way, as retailers do today, is 'Six Sigma' thinking which is great for producing widgets on a production line, but it makes no sense in a world where customers are inherently different.”

IBRs have built dozens of systems that allow us moveable price tag. Frequent buyer programs, club memberships, buy two get one free, discounted tune-ups in the winter, or buy a bike and get 10% off of accessories. All of these are strategies to relive the glory days of the early 1800s when price tags did not exist.

Some Numbers Comparing Running Retail to Bike Retail

As the bike industry is just beginning to move their catalog of goods online, practically the entire floor of a running store is filled with items that can be purchased from the manufacturer websites- and in many cases it can be found cheaper. In many ways, how a running store is operated today could be a blueprint for how bike retailers may have to operate in the future. So how do running stores stay afloat when everything they sell can be purchased from a phone?

When I ask IBR owners and managers this question, a popular response is that running stores can survive because there are more people running than cycling. They believe the customer base of runners is so much larger that they can work on massive volume. This thinking may be incorrect. Running participation in the US is nearly identical to cycling. In a 2013 study done by the National Sporting Goods Association the number of people participating in cycling or running activities was very similar, with 39.3 million people cycling and 40 million people running. The NSGA classifies participants as those who ride or run at least six times during a calendar year. The NSGA then takes the total number of participants and breaks it up into three categories: frequent, occasional, and infrequent.

Total participants (in millions):
39.3 cycling, 40.03 running

Frequent, more than 110 days per year:
5.35 cycling, 9.22 running

Occasional, 25-109 days per year:
18.55 cycling, 18.56 running

Infrequent, 6-24 days per year:
15.41 cycling, 12.23 running

While the number of runners and number of cyclists may be similar, there is one reason many bike retailers will call out when they are compared to a thriving running stores. There just are not as many running retailers as bike retailers and therefore the running stores command a larger portion of the market. In this instance, they are correct.

According to Leisure Trends Group there are more than 1038 specialty running stores in the US, compared to just over 4000 independent bike retailers. Though it should be noted that Leisure Trend’s numbers only reflect specialty stores, they do not include everyone who is selling running shoes. Those 1038 stores represent approximately 22% percent of all running shoes sold, the remaining 78% is split amongst online retailers, general sporting goods stores, and discount stores. In a similar fashion 74% of bicycles sold in the US are sold by department stores and discount stores.

Do you think bike retail and running retail are similar? Are they the same customer base? Do they have the same challenges ad opportunities?

Please remember to comment and share. Thanks- Donny

Check out my book. Leading Out Retail is a creative look at bicycle retail and teaches retailers simple strategies on how to increase profit through service, what the most important question to ask every customer is, and how to manage the dreaded Timmy Factor.

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.

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

What Happens Before We Buy?

Have you ever visited a store and saw something awesome, then went home and checked it out online, then asked your friends about it, and then went back to the store to buy it?

I like to call these points in time, micro conversions. Nearly every purchase we make is preempted by a micro conversion or a series of micro conversions. When someone is overwhelmed by micro conversions it can become too much to handle. The desire to purchase is like an enormous weight on their shoulders. These are the people that walk into the store, throw down a credit card, point to a bike and say, “That one. Now!”

In bike retail it’s easy to focus on the macro conversion (when someone makes a purchase). That’s where we find the glory of the sale, that’s where the commission is, and that’s when we feel the satisfaction of a job well done.

However, I like to remind retailers- without a healthy strategy around acquiring micro conversions, we will never see macro conversions.

If you found this post valuable. It would be amazing if you shared it. Thanks - Donny

When Bikes Ruled The World. A Trip Back In Time.

Imagine a moment in time when bicycles were the biggest topic for everyone to be talking about. It happened and greatly influenced bike culture today.

The greatest year to be a bike retailer in the United States was 1972-1974. These are the years many industry veterans refer to as the Bicycle Boom. Time Magazine said it was “the bicycle’s biggest wave of popularity in its 154-year history.” In the early 1970s there were approximately 15 million bicycles sold each year which, for the first time in decades, surpassed car sales. To create a sense of how big this boom was, seven million bicycles were sold in the US in 1970- and only 200,000 of those bikes were lightweight 3-speed or derailleur equipped bikes geared toward adults. The majority of bikes sold in 1970 were children’s bikes, approximately 5.5 million. By 1972 the bikes for adults grew 40x with sales breaking 8 million making it the first time since 1890 that nearly one-half of all bicycle production was geared for adults. The Bicycle Boom was so enormous that the US has yet to match those annual sales numbers.

We can give credit to the Baby Boomers for sparking such growth in the cycling during the early 70s. As many of the Boomers were in their early twenties they were seeking inexpensive transportation and a new form of recreation and exercise. Boomers also had an eye on reducing pollution and they saw the bicycle as their answer.

But the Baby Boomer’s weren’t the sole cause, it was a perfect storm of events as manufacturers in Asia were producing lightweight and affordable bikes for adults. Brands like Fuji, Miyata, and Nishiki are credited as the brands of the Bicycle Boom. They were so dominant that they caught US manufacturer Schwinn on their heels, unable to produce a bike that could compete on quality and price. This arguably started Schwinn’s 20-year demise from their throne as the brand of choice in the US.

National Geographic, May, 1973. Grove, N. “Bicycles are Back, and Booming.” — National Geographic, May, 1973. Grove, N. “Bicycles are Back, and Booming.”

The three largest US-based bicycle manufacturers still operating today were all born from the 70s Bicycle Boom; Cannondale in 1971, Specialized in 1974, and Trek in 1976. Many of the bike retailers in the country also began in the 1970s and the ones that were already in existence saw massive growth. Bicycles were in such high demand that bike retailers weren’t the only ones cashing in- department stores, gas stations, and small garage shops popped up like flies, selling whatever bikes they could get their hands on. Prior to the boom many bike shops were known as one-stop fix all service centers and you were just as likely to find a grease covered mechanic working on a lawnmower as a bicycle.

If bike retailers that started up in the 70s played their cards right, they rode on four more distinct waves in the cycling trends. They likely continued to sell lightweight, Asian-made road bikes in late 70s and early 80s. They expanded into BMX in early 80s but by the end of the decade were focused on the massive growth of mountain biking fueled by American manufacturers like Specialized, Cannondale, and GT. Mountain bikes would carry them through a good chunk of the 90s until 1999 when road cycling made a monstrous comeback on the coattails of Lance Armstrong’s Tour de France performances. As the 2000s came into focus many bike retailers could have also jumped on board with the growing army of triathletes.

From 1970 to 2000 IBRs grew from sales and service to true community hubs. People would walk into their neighborhood store, grab a magazine, and talk about the sport. Discussion bounced from newest bikes, to comparing technologies, dissecting suspension systems, and which riders were lighting up major tours. Club rides started at the IBR and when they finished everyone would grab a beer from the communal fridge. Everyone knew each other’s name and every store had a distinct club-like feel. If you were in the club, you were in for life. If you weren’t in the club, you were only a purchase and a bike ride away from earning the secret pass to belonging. It was a true subculture. Bike retailers were their own niche and the center of all cycling knowledge for their community.

If you read this far and found this article valuable, I would appreciate it if you shared it. Thanks - Donny

Getting Paid Hourly? 5 Ways You Can Get Screwed!

If you’re working for a bike shop and getting paid hourly there are some things you should be aware of.

1. Minimum wage in the US as of 2009 is $7.25 an hour. Anything less is illegal.

2. Your boss is not required to pay overtime for Saturdays, Sundays or holidays unless you went over the forty hour mark on those days.

3. If you’re under 20 years old it is legal to pay you $4.25 per hour for the first 90 days of employment. Luckily it is illegal to terminate someone making $7.25 or more and replace them with an employee making $4.25.

4. Many states do not require breaks or meal periods for hourly employees.

5. While the laws are very clear that overtime happens after 40 hours in a seven day period, it is not so clear on how many hours per day before overtime is required. Working 11 hours in one day may not equal 3 hours of overtime.

If you’re an owner or manager- don’t be a jerk, don’t do these things.

In the US, you can learn more about the labor rights by visiting the Department of Labor.

Thanks for reading. If you found this article valuable I would appreciate it if you shared it on your social channels. Thanks- Donny

Hiring People in Bike Retail is a Nightmare. Unless You're Cheating the System.

Finding the right person to work in bike retail is about landing on someone with the right personality and skill set to do the job and move the business forward, In order to do that many retailers may have to search deeper pools of talent and begin courting people respectfully and professionally. Hanging a sign in the window isn't good enough any more. Here are some of my tips for finding great people.

Get it posted. Put the job description up on your site. List out all the duties, who they will be reporting to, what will be expected, and all the benefits of working at the store (list benefits all the way down to “free socks” if you do it). Pics of the store and their work space would be nice if you have them. As would general information about the city and the cycling culture.

Widen the search. The more qualifications you want, the wider the search has to be. Finding someone who is awesome in your city can really narrow the talent pool. You’re usually left with the 2-3 people that no one else wanted. Be prepared to hire from out-of-city or out-of-state and have people relocate. This is expensive on the front end, but done right the return can be made back within a year. Relocation packages usually require a moving and living stipend.

Hit Linkedin. Doing a search for “bike fitter” on Linkedin has more than 100 results (you have to upgrade on Linkedin to see more). You could also search "bike mechanic" or "bike technician". I would message all of them with the link to the job and ask if it seemed like a role for them. This is a hook to have people start researching you, and ideally beginning the interview process. If they tell you no, ask them if they know someone qualified, and increase your search by 100x.

Hit Twitter. A people search for “bike fitter” or "bike mechanic" on Twitter brings in a couple hundred more results. Send them a direct message similar to your LinkedIn message. It’s ideal if you didn’t message the same person twice.

Look for the person in second place. If you start looking to hire from other shops, I would look at look at the number 2 person doing fitting or service there. That person is usually being blocked from growth by the number 1 fitter, they are generally more open to opportunities elsewhere, and likely to be cheaper.

Once hired, pay accordingly. First, establish the level of service you want given. With that done, I would build a pay structure around the profit from the that area of the store (not sales, not margin- but profit). If this person doesn't have a fit or repair to do, they will want to be in the store selling it.

Train heavy. For bike fitters or technicians, I would want them trained everywhere and build them up to be one of the most knowledgeable people in the world when it comes to their skill set. I would want this person to have every certification possible. However, the better they get the more money they deserve.

Don’t forget bedside manner. Technical knowledge only goes so far. People in bike retail need to have an amazing bedside manner and an eye towards creating an amazing experience.

I hope this helps you out on your next search.

Thank you for reading this far. If you found this information valuable I would appreciate it if you shared it on your social feeds. Thanks again- Donny