OT-ish: Company Stores- Worth it?

[BobbyJones]

A lot of talk about Trek, etc buying up your LBS so I'm curious:

Does anyone on the "inside" know if these have been financially profitable moves for the respective corporations?

From my generation, the recollection is that Apple was the trailblazer in this idea (excepting the temporary pop-up or "flagship" store concept), and other tech companies have tried to replicate with no financial success.

I wonder how it's working out with the bike stuff.

[C40_guy]

Originally Posted by BobbyJones

From my generation, the recollection is that Apple was the trailblazer in this idea (excepting the temporary pop-up or "flagship" store concept), and other tech companies have tried to replicate with no financial success.

IBM did it twenty years earlier, with the IBM Business Centers.

Sears might have been an early example of a company selling their own brand, in an environment where competitors sold multiple brands.

[unterhausen]

A nearby shop is a Giant store and what I hear is their policies are quite repressive. And the benefits aren't very obvious. Otoh, they are doing fine. Lots of bikes in stock.

There used to be a Trek-only store here in town and I thought it was a decent shop, but they folded. They had a dealer here but tried to turn them into a Trek only store and that didn't work for the shop owners.

I think trek accessories are pretty good, no complaints there. I can see the appeal for a dealer that doesn't mind a corporation deciding what they should sell.

[2000CSI]

I think Trek buying LBS's is a move to maintain control. It also allows for a way to combat online sales.
Trek will able to control their product and prices from manufacturing to final sale. No need to give up margin to the LBS, they can keep it all for themselves. They can sell online and ship to a store that they own so no problems with LBS complaining of a loss of sale. They can have company wide branding and messaging with a little local flavor mixed in.
When I worked for a shop that carried Trek 15-20 years ago, they were already making moves toward more control, Forcing the shop to give Trek more shelf space or else, then starting franchise stores, which looking back on it was a way to ease into full ownership of the stores.
Granted they have more overhead now that they own/rent physical locations but those can also be assets.
It is already profitable or will be soon for these manufacturers to have their own stores. Margins are thin in the industry so if you can keep those dollars all the better for the company. If it is better for the consumer or the cycling industry is another question.

[Cbh]

I think this is an interesting question and I’m curious about the financial results too.

In my area we’ve lost two multi-location locally owned shop chains that were sold to Trek in the last six months. I was a fairly frequent customer of one shop before the sale but won’t be now that they have flipped to only Trek. We’ve also got a couple of Giant brand shops (that I believe are franchise locations) in the area but I’ve never visited.

It almost feels like things are starting to look more like the auto industry with singular brand stores. And on the flip side independent repair shops. For example, my mechanic of choice has a small independent shop with no real focus on bike sales (although he can order a few brands like Open and Bianchi) which makes online purchases easier.

[unterhausen]

Originally Posted by 2000CSI

They can sell online and ship to a store that they own so no problems with LBS complaining of a loss of sale.

That might not work out so well for them. With an independent bike shop, the customer quite often shows up and doesn't like the bike they ordered online. So then the shop has to sell it. Trek still made the sale.

I haven't seen them pushing online sales much, I always thought it was a bad idea.

[charliedid]

Originally Posted by unterhausen

That might not work out so well for them. With an independent bike shop, the customer quite often shows up and doesn't like the bike they ordered online. So then the shop has to sell it. Trek still made the sale.

I haven't seen them pushing online sales much, I always thought it was a bad idea.

Order online pick up at a shop the shop gets the sale.

[charliedid]

I think it's worth it and I believe we are just seeing the beginning of company shops.

[rwsaunders]

It happens in the healthcare business...hospitals with their own insurance network, buy out the independent medical practices to limit the competition.

[Ewiser]

Apple did this because they wanted to control the purchase experience and make sure users had the support that they needed. Classes and tech support.
The bike companies just want to give you the purchase experience since most own their own brands of all the helmets, gloves and all the other accessories.
The average cyclist might not like the only choice is Trek but a new rider would like the choice cut to just one brand of bike. They would know about all the other brands and may get confused and just not buy a bike at all.

[Mark McM]

When I was a kid, there were many Schwinn bike shops. These weren't actually owned by Schwinn, but were independently owned and were were somewhat like franchises, and usually only sold Schwinn bikes and accessories.

[2000CSI]

and look where Schwinn is now

[buddybikes]

Worked in one of those shops 1976, it was independently owned, but it is all we sold.

Went bankrupt in 1978

[Old School]

If the main reason for a "company store", privately subsidized with a contract, or actually company owned, is to continue to provide a supported system for Bike Riders, then I think we have to be happy with it.

Looking at it from askance, this seems like a scheme to create a direct-to-buyer situation, but inserting a middleman, to (hopefully) have customer satisfaction built in to the supply chain for that particular brand.

I mean there is not a lot of difference between buying a box from Bikes Direct, Canyon, or YT. And not a lot of difference between what happens if you have trouble assembling the bike.

[Old School]

When I say subsidized, these brands/chains have surprised me with their generous credit lines.

The first hit is free.