Thursday, April 16, 2009

Bicycle Industry's Big Guns Talk Bike Economics

Monterey, Calif. -- Late morning featured three big guns in the bike industry talking economics: Jim Thompson, CEO of Performance and Nashbar; Steve Flagg, founder of Quality Bicycle Products and Stan Day of SRAM.

As a guy who represents the collective interests of SWFBUD member independent bike shops, obviously I'm not a big fan of Performance and Nashbar, which stocks bikes products by the warehouse and can sell bike gear cheap. Thompson didn't reveal much specifics about sales, except to say "flat would be a good year."

He talked in generalities, saying that not only does he have a baseline plan, now you have to have a contingency plan and backup plans that are activated by specific triggers.

Flagg and Day were more forthcoming with sales trends of their companies. Flagg's QBP supplies parts and gear to retail stores, while Day's SRAM provides the original components that go on new bicycles.

Flagg said 68 months of growth came to a "screeching halt" in November 2008. The trending models that showed 20 percent growth could not be trusted anymore and that his staff's human views might have to override the computer. Now, it involved re-examining inventory, he said.

Day said SRAM's sales were like a rollercoaster ride in the past 15 months: Flying high at a 35 percent growth rate the first three quarters of 2008, then the "switch turned off" in October 2008 and sales are now down 25 percent for the first quarter of 2009. He expects sales to be down 25 percent the second quarter of 2009 as well.

Indeed, times have changed. Thompson said there has been a cultural shift about consumerism in this country and that when we emerge from the other side of the recession the "consumer will be changed."

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