By Tobie DePauw
When the forecast is ugly, it can be hard to find that silver lining and remember that the sun will shine again. In the bike business, the skies have been looking pretty dark for a while, but that silver lining is there if you look for it.
As a bike retailer, the industry headlines and the trend forecasts for retail have been looking ... rough. Container ships, like storm clouds, continue to appear on the horizon, heavy with inventory destined to downpour on the saturated showroom floors and erode bottom lines from coast to Costco. Overstock, bloated inventories, rising prices, shrinking margins, market turbulence, yada yabla blah blah ... You get it. You've got it. You've got it up to the eyeballs, so let's move on.
From the customer point of view, though, this same forecast is looking ... fantastic. When they look at the horizon, all they see is the glowing dawn of great deals and the future is looking very, very bright. The coming years will be a phenomenal time to buy a bike, maybe the best in a lifetime. If they give even a passing glance at their options, they will see that numbers are already turning red. The "NOW" prices are quickly turning into the "WAS" prices. All they have to do is exercise a little patience and a good deal is all but guaranteed.
So, what happens when the wide-eyed, wheel-hungry customer walks into the store, stoked to the teeth about getting a killer deal, and collides with the heavy-headed, margin-mourning retailer? What happens when an unstoppable force (desire + discounts + a credit card) meets the immovable object (any bike retailer on a bad day)?
(Pause to stare in the middle distance and ponder. ...)
This year, I believe it's going to be essential to keep your head up, keep your heart in the business and lead with empathy. I invite you to put yourself in the place of your customer and embrace their excitement. The industry's woes are not the buyers' burden to bear. If you let the grim realities of the bike business get in the way, you might miss out on an incredible opportunity.
I believe there is incredible potential for retailers who can harness the momentum of excited riders in the wake of the bike boom. Like in judo, you can use their inertia to your advantage. If you get in the way or hold your ground too hard, the force might knock you down and neither party will appreciate the bruises. Instead, come alongside them, cognizant of your profitability and prepared to make up margin where you can, and guide their momentum right to the register.
Give your customers the tools to spread their excitement, too. If you can engage customers to play a part and encourage peer-to-peer marketing, it relieves you and your staff of some of the effort. By offering an enticing referral program and being ready to make up margin with additional accessory sales, you can make hay even when the sun isn't shining.
Stewardship Retail
Before we get to the best practices, I should explain the philosophy at work here. Back at our shop, we developed an ethos I have come to call "Stewardship Retail."
Stewardship Retail is based on the idea that we are stewards, or caretakers of the cycling experience. It is our job to equip customers with everything they need and prepare them for the best possible experience after they make their purchase. The register isn't the finish, it's the starting line. Stewardship Retail has three tenets: Empathize, Anticipate and Communicate. The basic idea is to use your experience as a human being, as a retailer and as a rider to empathize with the customer in front of you, anticipate what they might need, and then humbly and authentically communicate the solutions.
If you're interested in learning more about Stewardship Retail, click here for videos and more information.
Getting Started
There's a juicy report just waiting to be run in your point-of-sale. I'm not saying it's a gold mine ... silver, maybe ... but you do have to do a little digging.
Pull a sales report of everyone who has purchased a bike in the last two years, including their add-on units/dollars and last transaction date. This will be the target audience for these strategies. Develop a communication plan to engage these riders and embrace their momentum. I think many of the people that bought a bike in the last couple years fall into one or more of these categories:
- The Excited (or The Upgrades in Waiting)
- The Underserved
- The Lone(some) Rangers
The Excited (The Upgrades in Waiting)
These riders bought a bike and really caught the bug. They're excited about riding and eager to get back to it when spring arrives. They've ridden their new bike enough to warrant significant service or maybe racked up enough stoke to be considering an upgrade. It's time to embrace that inertia and make them aware of their options. Even if they're not ready for service or a new bike, they might be itching for upgrades and add-ons.
The Underserved (The Saddle Sore Strangers)
Don't take this personally, but I'll wager there are many customers from the last couple years who didn't have the best experience in your store. Maybe they bought a bike at the height of the bike drought and had no choice but to buy a bike that was well above their intended budget. Maybe they caught you at your most exhausted. You may have done your actual best to get them to buy accessories with their bike, but they didn't. Maybe they didn't have room in the budget, or maybe they didn't believe you that those bike shorts really do make a difference. Now they know, from experience ... you were right!
The Lone(some) Rangers
People who picked up cycling during the pandemic were at a disadvantage when it came to connecting with other riders. The social aspect of cycling was sketchy for a while there.
Not finding other people to ride with is one of the biggest barriers to cycling. People (generally) don't want to ride alone (forever). Riders who have found a buddy or a group to ride with are much more likely to increase in their riding habits.
It's possible that this rider bought a bike, caught the bug, but got bored of riding alone. Maybe they've been telling peers and family to come ride with them but those folks didn't have a bike and couldn't afford a bike when prices were so high.
So, now those lonesome riders are on the lookout. When they see bike prices are coming down, they'll be on a mission to get a partner pedaling along with them.
All three of these groups represent opportunity. They might have different motivations, but they all have good reason to get back to the store and do business with you ... even if they don't know it yet. The key is to develop a series of communications that inspires them to come back to the store and scratch their itch.
What exactly you tell them is up to you, but I'd like to share a few ideas and practices that might get you started. The goal is to give those riders a reason to visit the shop, embrace their excitement and bring a friend.
YOU get $50 and YOU get $50 and ...
... the shop gets hundreds, maybe thousands of dollars.
We created an ultra simple referral program that converted customers into salespeople. We handed out a "50/50 Card" with every new bike. We'd write the customer's name on the card and the card said whoever presented the card when they bought a bike would get $50 off and the original customer would get $50 in-store credit.
This requires a little training on behalf of the staff and a little administration, but when this technique is applied well, the results can be surprising. The physical card worked like a burning dollar in their pocket. We had one entrepreneurial young man convince his whole family to buy bikes and he racked up some impressive credit at the shop.
When you reach out to your pandemic rider list, include a 50/50 card in the email or simply tell them to bring a friend in to buy a bike to activate the referral discount. This will immediately appeal the the Lone(some) Rangers on your list.
The 5/10 System
Another way to use the aforementioned report is to determine the untapped potential for add-on sales. There will be riders who need or want some fun new stuff for their riding season, so give them a reason to come back in soon.
The Stewardship Retail practice for add-on sales is called "The 5/10 System." We created hangtags for our bikes that had a list of essential accessories. We'd pull the tag when the customer selected their bike and we'd go down the list of important add-ons during every bike sale. If they purchased five or more accessories, we'd give them 10% off those items that day.
This practice helped us nearly double our add-ons within a year of implementing the practice.
This is an easy way to increase profitability and improve the riding experience for your customers, both moving forward and looking back. You can apply it moving forward by implementing the system in-store with all new bike purchases. You can apply it retroactively by reaching out and offering it to bike buyers from the last two years.
A quick note on discounts ...
I know there are many shops who put their foot down when it comes to discounts, and I can understand why, but I'm afraid shops not willing to bend are going to break. The industry-wide overstock is going to level the playing field when it comes to discounts (on complete bikes, anyway) and many core accessory categories are going to be affected as well. So it's best to go into the season with a strategy.
Discount is not a four-letter word. It's not. My friend Ryan from SmartEtailing recently referred to discounting as "buying revenue," which I think is a great turn-of-phrase. There are strategic ways to approach discounts, just like you would approach any investment.
I've always been a fan of controlling the narrative when it comes to discounting. As you can tell from the aforementioned 5/10 system, I prefer a quid-pro-quo approach, as opposed to a blanket, store-wide "sale" approach.
Now, back to our regularly scheduled best practices. ...
When you run that report to find out who bought bikes in the last couple years, look at their add-on numbers. If the add-on units or dollars fall below your target, you can see which riders might be interested in adding accessories today and who might appreciate the 5/10 discount. Even if you don't use the 5/10 system, but have an established goal for add-ons per bike sale, if the average add-ons fall below your average, you still have an opportunity.
Invite that group to come back into the store and get set up for spring. Include a checklist (bonus points if you segment your list and customize the checklist to the bike category) and consider offering a price break if they buy five or more items (or three, or however many you'd like).
Using this method, you can avoid putting the whole store on sale, prevent a perceived depreciation of goods, and surrender a discount only after you've already made money. You can also steer consumers toward specific items with higher margins, overstocked categories or zombie inventory (Zombie inventory is dead stock that won't go away or returned items that haunt your showroom floor.)
If you're interested in adding the 5/10 System to your store and want a head start on designing the hangtags, you can buy the templates here.
Gold Stars for Participation
Another approach to quid-pro-quo discounts is to incentivize participation in your shop events and other local activities. Riders who are regularly riding in group rides or attending your activities are more likely to do business with you.
The idea is to create a "Community Punch Card" that offers riders a juicy incentive for attending a certain number of group rides, shop clinics or community events. (This is, of course, assuming your shop hosts events, rides or clinics of some kind. If not, you should! If that's just not your jam, then skip to the next section.)
People are busy, so it's remarkably helpful if you can lay out the shop's activities and events through the end of the year so riders have enough time to mark their calendars and plan ahead. Park all that info in a single place on your website or a pinned social media post and refer to it in promotions around the "Community Punch Card."
Once you've made your activities easy to find, offer riders a particular discount (ie: XX% off your most overstocked category) or reward (branded merch, bottles, etc.) if they attend a certain number of activities this year. Design and print some punch cards (work with a local designer or letterpress shop to make something neat) and then buy a couple hole punches. If you're worried about people punching their own cards, just buy odd shape hole punches (stars, hearts, etc) or punch a unique pattern at each event. Hand the cards out with new bikes and invite everyone else to come in and pick one up at the shop. Push it on social and hype it up. Maybe raffle off a "grand prize" among everyone who completes their punch card this year. Have fun with it. People like fun.
New Horizons for New Riders
I know, and you know, we all know bikes can be enjoyed in all sorts of ways. But does everyone know that? Maybe not? Pandemic riders jumped on their bikes for many reasons — many of them just to stay active and stay sane, so they might be interested in learning (from you) about all the different ways they can use their bike.
Consider a short email or social media campaign that introduces new ways to ride, like biking as transportation or riding on alternative surfaces. Bikes nowadays are remarkably versatile, so most hybrids and gravel bikes can be put to work in all sorts of ways.
It might seem obvious to us, but not everyone knows that riding their bike instead of driving a car is possible or realistic. If you can give them a short list of accessories that will make it easier, you might just convert that rider into a commuter. Challenge them to pick a destination, like a grocery store, a city park or their favorite coffee shop and ride their bike to that destination a couple times this month. Remember to put yourself in their shoes and celebrate even the smallest errands accomplished by bike.
Sharing some routes that get riders away from traffic on multi-use paths or lesser traveled gravel roads might open up a whole new horizon for someone who's been white-knuckling their way into cycling the last couple years. Share a few routes in an email on social that give them an alternative and, if you have the staff or bandwidth, host a group ride on one of the routes.
PLUG: PeopleForBikes Ride Spot is just one platform that makes route-sharing and hosting group rides a little easier for retailers. If you want a hand getting started on Ride Spot, let me know.
The Silver Lining
The opportunity in front of you begins with empathy. Meet these new riders where they're at and harness their excitement. Take a moment to remember some of your personal cycling breakthroughs. Maybe it was riding your bike to school as a kid and the sense of freedom that came with it (that was a big one for me). Think back to the first time you rode 20 miles and the joy you felt after that accomplishment. Remember the excitement you felt when you first added a rack to your bike and went for your first grocery run on two wheels. It can be easy to forget that those purchases can be a big deal.
If your memories are too encrypted by decades of being into bikes, try to remember some customer interactions that remind you of the joy that bikes can bring: a kid getting his first two-wheel bike, a college kid rolling away on a bike that opened up her campus in a whole new way, the middle-aged mother positively stoked to be training for her gravel century, or the grom who grew up and just bought their first full squish bike. Now ... hold that thought! Do what you can to camp out in that headspace this year and remember the joy.
I hope these ideas get your wheels turning and brighten your outlook on the year. The forecast hasn't changed. The storm is still coming, but you don't have to hide out below ground in a bunker full of preseason bikes. You can keep your head up, embrace the momentum of this new wave of riders while protecting the long term value of your business.
If all goes well and you can focus on that silver lining, then silver might just be lining your pockets as well.
Tobie DePauw is a veteran retailer, event promoter, consultant and friend of the bike industry. He works on the Ride Spot program at PeopleForBikes and is the owner of Mordecai Book Building & Letterpress.
To hear more about the topics in this article, check out the “A Brighter Perspective on Retail in 2023 with Tobie DePauw Part 1: Be Nice" episode of the "Inside the Outdoors Podcast", presented by PeopleForBikes and the Outdoor Industry Association.
