You might recall a recent post War in the Bicycle Economy from January, and it looks like the fall out has gained some momentum already. Momentum not in the phase where it’s a problem, but where whole industries recoil and have to come up with new strategies for survival. The basic problem is that with the rise of smart phones, price checking and internet discounters there’s an ever increasing squeeze on all retail shops from indie bike shops to bohemoths like Target. Here’s some background and local response from NYC’s 718 Cyclery, a true innovator in the cycling retail space.
Today via Outdoor Retailer:
Feb 01, 2012
Specialty retailers and brands were reminded last week how competitive retailing has become when news emerged that Target Corporation and J.C. Penney & Co. are launching new pricing strategies and pressing vendors for more help in combating “showrooming.”
In an email to its vendors, Target asked for help responding to the growing trend of consumers shopping products in their stores only to walk out the door and buy them online from Amazon.com or other online retailers. Some outdoor specialty retailers refer to this practice as “theft of service,” arguing shoppers are using highly knowledgeable store staff and brick-and-mortar inventory to select and fit specialty items such as hiking or ski boots, bicycles and technical clothing only to use that information to buy products online.
The phenomenon has received more attention in the last two years with the proliferation of smartphones and price comparison apps and is increasingly being cited for the declining fortunes of such big box specialty chains as Best Buy and Barnes & Noble.
In its email to vendors, Target suggested they offer the discounter more exclusive products to make it more difficult for consumers to compare prices online, according to a report in The Wall Street Journal. When such products are not available, Target asked vendors to provide lower prices so it can match those offered by online rivals. Either way, the email may foreshadow a new era of closer cooperation among vendors and multi-channel retailers, and might lead to repercussions up and down the supply chain.
If that doesn’t scare you, it should. Now for a local shop owner’s take on his strategy:
I hear and read the same complaint from so many of my bike shop peers. “The internet is kicking our ass”. Trade magazines are full of articles about shops (not just bike shops) that have just run out of ideas.
I say we (“we” being small local businesses) need to be Better than the Internet. I know what you’re saying…”Joe, whats better than ordering a part for 40% of MSRP and having it delivered in 3 business days?” You were saying that, weren’t you? Well, if you werent even remotely thinking along those lines, here is how we have made our shop Better than the Internet
- Staff: We have the best staff in the business, as far as i am concerned. I tell people that the robot at the discount super-warehouse that picks your item and shoves it in a shipping box could care less about you and your choice. Does it know that maybe you need a mid-cage derailleur instead of a short-cage one? No, it doesn’t. However, my staff will make sure its what you want before we order it, not after. It’s the human interaction that sets a brick-and-mortar shop apart.
- Installation: I use this quote all the time, “You cant hammer a nail over the internet”. Lets say you do order something online, and it shows up. Now what? Expert and safe installation by qualified mechanics is very important on a bike that you will be hurtling through traffic with. Many shops will not install parts bought elsewhere/online, but we will. This has become a major sticking point with bike shops. Hey, I shop online….I book an airline ticket based on price; its the way the world works. We are not smug enough to believe that you will buy everything from us…but we will help you install it.
- Price: We get this question every once in a while, ‘Can you match this online price?”. My answer is always no. If we start chasing online price slashing, where mega companies have razor-thin margins because they sell 2,000 of that item in a day, we’ll be out of business shortly. We offer fair and competitive pricing. We pay our employees fairly and do everything by the books in terms of payroll and all of the assorted required taxes. It’s an expensive way to do business, but its the right way.
- The Economy: Buying locally contributes to our shared local condition. Taxes are collected and presumably used appropriately. Not paying taxes on online goods has caused disconnect issues in our local economy too grave and numerous for this blog to list. Buying from a warehouse in the Upper Midwest certainly helps their economy, but really has none of the added benefit that buying locally does in terms of tax distribution. i am not an economist, so I’ll leave it at that.
- The Experience: This is hard to quantify, as many people don’t need an “experience” to purchase a durable good. If you are the kind of person who wants to be assured you’re making the right choice, that it will be installed correctly, and that you can come on by with any questions/issues subsequently, then our shop is the place for you.
If you want to try something on, good luck. Interested in checking out the full line of products from your favorite brand? Not anymore. It’s a major bummer because not only does it squeeze retailers and local business, but it means that the products they carry have to be super exclusive, negotiated and *safe* that means fewer risks with new or strange products and less innovation and awesomeness. If all of that seems terrible, there’s an easy way to make it right: Shop Local.