A valid question and something I have been asked several times, from the perspective who some one who has been in the cycle trade for the last twenty plus years this is how I see how a LBS needs to compete in today’s market and benefits to consumers in general. I have also mentioned how the cycle retail industry has changed and how competition is having an impact on not only the LBS, but longer term how this may also effect customers. In all cases when I refer to a LBS I am referring to good ones who offer a good service and by the same applies to competition that I am comparing them to of course.
Although the traditional LBS has more competition now than ever before I am confident that the good ones will survive as they can offer something that their larger competition doesn’t. Of course the market share that the Mail order specialists now have will of course effect a LBS, some for example have changed direction to cater more for the mid range price market which is less effected by mail order.
Parents normally want their children to try bikes before purchasing, many want their bikes serviced by skilled mechanics and to be served by experienced, knowledgeable and helpful staff, local bike shops that offer all this, which many do. Often adults also need to try bikes before purchase, just as important many also need advice and prefer to do this face to face and not via email or telephone, many prefer to try on clothing and see products in the flesh so to speak.
Some of the ‘Mail Order specialists’ who operate from out of town less expensive premises make their profit by stocking an extremely large range and at competitive prices, making the shortfall up with high turnover. However like everything there are good and bad points relating to this. Part of me takes my hat off to them, some run very cleaver websites and provide a very efficient service, if the customers know what they want then of course it is they who in the short term win; with a cheaper purchase.
Long term there is a negative consideration that is a concern, one being that there are many Local Bike Shops that will now be reluctant to stock an item if the supplier has sold them to a discount specialist. Naturally this applies mainly to items bought by enthusiasts, who of course have the enthusiasm to search for items on the internet, as such they are often well aware of the price differences. The longer term effect of this could easily evolve into poor availability of products in the LBS, which in turn of course forces the customer to make their purchase from the larger outlets. This is before you take into consideration that it is far healthier for a manufacturer to have 10 of their products in 20 shops as apposed to 30 in 3. Already we are starting to see this happen to what are very established brands, to the extent that some are now only available from one outlet.
Many will ask why doesn’t a LBS simply reduce the prices to compete, most will not be able to, margins in the cycle trade are not high to start with, 25 years ago the LBS shop was where most had to purchase quality items, even back then most were never in city centres as they couldn’t afford to be. Of course it is not only the large mail order specialists that are competing with the LBS. Some of the multi outlet retailers have now also grown so large that they are indeed in expensive prime city centre locations, although worth noting that their more regular customer base will be somewhat different to those of the mail order giants, as there pricing structure is normally RRP, as such they are generally situated in the areas where their customers generally have a high level of expendable income, these customers often spend as much on products as an enthusiast would, but still need the services provided by what they believe to be a LBS.
The larger multi outlets have also introduced there own brands, although I note not using their own shop name, this achieves a less obvious branding exclusivity and the control of pricing that goes with it. They have evolved I believe in part as the nature of business has naturally changed, 25-30 years ago an independent bicycle dealer would look at a business and calculate what they needed to do to make a living, more often than not this will be a plan to offer long term security, perhaps with a view of passing that business down to the next generation, These days it is seems to be how much can they make their business worth, some have indeed gown to the extent that they are indeed attracting offers of several Millions of pounds; yet their net profit seems relatively low for their size and high turnover, showing just how high their operating costs must be; the rewards are it seems from a business point of view worth the high stakes.
Competition, no matter how good they are, or even bad, if they are selling anything at all then that is a sale that you haven’t made! Everything changes, retailing included, you just have to accept the challenges that go with it, but as I imply above it is not all doom and gloom for the LBS, they will of course need to compete to survive, but IMO the best still can. On a longer term and as far as I am concerned a worryingly negative note it is a concern that anyone wanting to open a LBS themselves will I believe find it increasingly difficult, this is a trend that IMO is not a healthy one. Independent greengrocers and butchers may be a rare sight these days as they struggle to compete with their large competitors, but a good LBS can still compete with theirs; easy it may not be, but achievable I am pleased to say, it is.
These are simply my observations that I have made over the course of my career as to how cycle retailing has changed. On a personal note as apposed to looking at it purely from a business point of view, I love the fact that customers can still be served by shops and by staff who are passionate about the service they provide and genuinely care about what they offer in every respect, a LBS can still offer a shopping experience that few can still offer; long may it continue.
pete75 wrote:I've been looking at this forum for a while now and one thing that keeps cropping up is LBS - always capitalised. Some seem to advocate using the LBS with almost religious fervour but why? What advantages do they offer?
Prices seem to be high, presumably to pay for high overheads and/or inefficient business practices. Whenever anything has to be ordered it takes longer to arrive than a web purchase and, of course, costs a fair bit more.
The idea of using LBS is superficially attractive but I'd like to hear logical reasons for doing so...