Big Bad "S".......at it again

[oldpotatoe]

Originally Posted by azrider

Specialized has just announced to all dealers that those shops that sell Specialized and Cannondale are eligible for an additional 5% on all Specialized sales if they stop selling Cannondale and cut ties with the brand. Not Trek, not Giant, not BMC or Cervelo............just C'dale.

Guess someone in particular has been cutting into their market share...... hence the release of the "ground breaking" new Al Allez........

Could be worse..they 'could' threaten to pull Spec-Ed if they don't drop C-Dale, like the gig with Scott. Are there any shops selling trek and spec-ed? Not around here but probably...

[oldpotatoe]

Originally Posted by bcroslin

I'm happy when companies are willing to point out what bastards they are so I can avoid them. I haven't shopped at Walmart in 15 years because of their shady business practices.

As for Specialized, the end is coming for any LBS that depends on selling big-name brands. I have friends that own and work at a few LBS's and the things they tell me are stunning. Cervelo, Specialized, Giant and Trek are all awful to deal with. Sounds like Raleigh is starting to play games as well. The only manufacturer that I consistently hear good things about is Moots and I can count the number of dealers in FL on one hand.

Just the opposite. 'Factory' stores is the future, in the car dealer model. Ya don't think a Chevy dealer would get flack if he wanted to sell Fords? Probably Kia is ok but he'll still hear about it.

[Dirtdiggler]

We have a shop here that carries the big 3 under one roof.. Eddys bike shop.

[summilux]

Originally Posted by oldpotatoe

'Factory' stores is the future, in the car dealer model.

The Giant/Liv store in these parts is pretty cool. It has really nice displays and has lots of stock. Neither Giant, nor Specialized my cup of tea but the Giant place seems pretty popular.

[bcroslin]

Originally Posted by oldpotatoe

Just the opposite. 'Factory' stores is the future, in the car dealer model. Ya don't think a Chevy dealer would get flack if he wanted to sell Fords? Probably Kia is ok but he'll still hear about it.

Never really thought about that. Aren't margins much tighter in the bike world?

[oldpotatoe]

Originally Posted by bcroslin

Never really thought about that. Aren't margins much tighter in the bike world?

Like car dealers, lots of factory 'incentives' to be had that makes this model viable.

[ColnagoFan]

Originally Posted by victoryfactory

There's nothing new about big companies trying to get more space at the
dealer. You should see the supermarket shelf battles between coke and Pepsi.
Dealing with only the "good" companies makes us feel better but does it really slow down the mega manufacturers? What do you say to the guy who wants a bike but only has $1000. to spend? Or a mom who has 3 kids who all need bikes?
Supporting small makers with better business practices is a good thing but not
everyone can afford this kind of political statement.
So, how not to be a hypocrite every time you shop around for a better price?
I have no answer, but I don't go to a Chevy dealer if I want a Ford either.
VF

There are plenty, well, enough, "smaller" brands that are offering this kind of stuff for both of those customers. Not the Big 3, so maybe harder to find a store, but if you're a shop owner who doesn't have Trek, Giant or Specialized, for sure you have one or two of them in your store. Some of them are more regional (I don't see too many Jamis bikes out west, or KHS back east, for example). Yeah they may not be as "sexy" as the others, but a lot of the time, especially at those lower "commodity" price points, they're packing even more value in than the big names might. Smart shoppers can find good bikes, but they may not get the respect of their friends based on the brand name.

[bcroslin]

Originally Posted by oldpotatoe

Like car dealers, lots of factory 'incentives' to be had that makes this model viable.

Most car dealership owners I've met have very deep pockets and if they know what they're doing they can absorb costs during a downturn, gas price spike, etc. The owner of the Honda/ VW dealer where my wife and I buy our cars recently was forced by Honda to relocate the dealership away from the VW lot. He had to build a completely new dealership 5 miles down the road or stop selling Hondas. I know he wasn't happy but he's loaded and he'll survive just fine. The few LBS owners I know seem to be constantly complaining about how tight their margins are and how the big brands are squeezing them.

I would think at some point the big brands will require a larger buy-in or saddle owners with even more debt. Maybe Trek has the right idea. Sell direct to consumers via a Trek dealer and then the dealer will make up what they lose on the sale of the bike by selling things like helmets, gloves, bibs, nutrition, etc. The one thing I was recently told about the new Trek model is that the owner would have to eat the cost of a bike if the buyer doesn't like it. So if someone buys a $10k Madone and then decides it's not the right size the Trek store owner eats it or is given some sort of in-kind credit. Not a big deal on a $400 hybrid but that $10k Madone could mean trouble.

[benb]

I agree they are all like this.

I can however think of several shops in the Greater Boston area that carry combinations of Trek/Specialized/Cannondale. When I lived in NH I believe the LBS there had all 3. Several of the places near me right now carry at least Trek + Specialized.

I've heard grumblings about Trek & lots of bad mouthing from shops that don't carry Trek.. it seems it can be harder to get Treks in your store than some of the other big brands as Trek limits the # of dealers in a geographical area.

I love some of the Specialized stuff.. helmets, shoes, gloves.. but they never really seem to make any bikes that attract me, at least on the road side. Partly a fit thing.

[ColnagoFan]

Originally Posted by bcroslin

I would think at some point the big brands will require a larger buy-in or saddle owners with even more debt. Maybe Trek has the right idea. Sell direct to consumers via a Trek dealer and then the dealer will make up what they lose on the sale of the bike by selling things like helmets, gloves, bibs, nutrition, etc. The one thing I was recently told about the new Trek model is that the owner would have to eat the cost of a bike if the buyer doesn't like it. So if someone buys a $10k Madone and then decides it's not the right size the Trek store owner eats it or is given some sort of in-kind credit. Not a big deal on a $400 hybrid but that $10k Madone could mean trouble.

The flip side of that is that the customer can order the helmet, gloves, shoes, etc, directly from Trek, and it will ship From Trek to their door.

I can't see Trek making them eat that bike, that's just beyond the pale.

[Mark McM]

So, let me see if I got that this right ...

Specialized will discount the prices of Specialized products to the dealers in an attempt to increase their sales to deaers (by cutting into sales to other makers).

But on the other hand, Specialized will not allow dealers to discount the prices of Specialized products to end customer in attempt to increase their sales to end customers.

So, how is one a restraint of trade, and the other not?

[djg21]

Originally Posted by Mark McM

So, let me see if I got that this right ...

Specialized will discount the prices of Specialized products to the dealers in an attempt to increase their sales to deaers (by cutting into sales to other makers).

But on the other hand, Specialized will not allow dealers to discount the prices of Specialized products to end customer in attempt to increase their sales to end customers.

So, how is one a restraint of trade, and the other not?

Neither are per se restraints of trade.

Retailers are free to set prices as they see fit with the caveat that Specialized may unilaterally terminate dealers who sell at below suggested retail. Antitrust problems may arise when manufacturers attempt to extract agreements as to pricing from retailers by adopting structured termination policies, whereby retailers are given notice and allowed to adjust resale pricing in order to avoid termination. Agreements in restraint of trade are prohibited by Section 1 of the Sherman Act.

Insofar as offering discounts to dealers, this is just not anticompetitive. "Predatory pricing" or "discriminatory pricing" may at times present issues (you can look these terms up -- this isn't the place for a discourse on competition law), but neither are present here.

[Mark McM]

Okay, so both are legal. But doesn't it seem hypocritical?

[thirdgenbird]

Originally Posted by Mark McM

Okay, so both are legal. But doesn't it seem hypocritical?

Not necessarily. Part of pricing structures like that are to drive brand consistency and customer experience from location to location.

[etu]

This thread reminds me of the law suit filed by Lagunitas Brewing Co vs Sierra Nevada regarding a new IPA from the latter that had a label that looked close to the Lagunitas brand IPA. I can't remember the exact details, but I believe local beer lovers basically told Lagunitas to stop the bs and play nice and they responded by dropping the suit.