OT-ish: Company Stores- Worth it?

[oldpotatoe]

Originally Posted by 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.

Auto makers have been doing this for decades. IF the 'factory' helps you financially(all those cars on that BIG ford lot aren't all paid for)..then it isn't necessarily a bad idea, particularly for a struggling LBS..The 'owner', now maybe 'general manager', certainly loses all his flexibility and freedom but..dollars and cents, it may be a way to stay in the 'biz'.

LBS here, Giant dealer, financial trouble..now essentially a 'Giant Factory Store'...

[unterhausen]

Originally Posted by steveandbarb1

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

Shop I worked in picked up Schwinn in the late '70s. We sold a ton of World Travelers. We even sold some Varsities, but they were incredibly expensive by then. Like $1000 in today's dollars. That's what happened to Schwinn, 40 pound bikes for more money than a real bike. We were never a full Schwinn dealer. Shop is a Trek-only dealer now.

Originally Posted by charliedid

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

When a customer orders a bike online from Trek and gets it delivered to a dealer, the dealer has bought a bike -- even if they don't want it or stock that model. The customer may or many not buy the bike, but the dealer did. Locally, the % of internet bikes that actually sold to customers was quite poor, and it invariably was not one of the models the shop sold. A bike like that is difficult to get rid of.

[RoosterCogset]

Covid has opened the door for full online, delivery to home, e-tailing.

https://www.trekbikes.com/us/en_US/home-delivery/

https://www.giant-bicycles.com/us/homedelivery

https://www.specialized.com/us/en/home-delivery

[Mark McM]

Originally Posted by unterhausen

When a customer orders a bike online from Trek and gets it delivered to a dealer, the dealer has bought a bike -- even if they don't want it or stock that model. The customer may or many not buy the bike, but the dealer did. Locally, the % of internet bikes that actually sold to customers was quite poor, and it invariably was not one of the models the shop sold. A bike like that is difficult to get rid of.

I was speaking to the manager of our club's bike shop sponsor a while ago when this topic came up (remember back when we could socialize in bike shops?). He said that they did occasionally end up with a bike that a customer didn't end up buying, but at least at their shop this program generated enough extra business that in the end it being a net gain.

[Mark McM]

Originally Posted by RoosterCogset

Covid has opened the door for full online, delivery to home, e-tailing.

https://www.trekbikes.com/us/en_US/home-delivery/

https://www.giant-bicycles.com/us/homedelivery

https://www.specialized.com/us/en/home-delivery

This isn't quite the direct-to-consumer model, since all the bikes still have to go through a local retailer. But is another step in that direction.

Because bike shops have to spend a lot of time/money assembling and adjusting bikes, bike sales tend not to have a large profit margin for shops. Often, bikes were kind of a "loss-leader", to get customers into the shop where they might buy higher margin products like clothing and accessories. When these "buy online" programs started, the customer still had to go to the shop to pick up the bike, so the shops still had the opportunity for add-on sales. But if the bike is delivered direct to the consumer, then even though it goes through the bike shop will it result in a reasonable profit margin to the shop?

[jimoots]

Originally Posted by 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.

The really significant difference between say Apple and Giant, Trek or the big S is that Apple - in the minds of a minority-but-significant proportion of the market - is elevated above all others, and there is no direct substitute.

You do not find that sort of brand idolisation/loyalty with bikes, really it's far from it. Swathes of the market see bikes as a commodity, a minority of the market are 'into it' and even tinier sub-sections have any sort of brand loyalty to the big manufacturers.

That's not to say that a company store model can't or won't work, but it wouldn't be wise to look at Apple and then transpose that onto the cycling industry.

Outside of that discussion, my key thought here is that it is tough to completely vertically integrate from manufacture to retail. Lots of companies talk about it, few are able to walk it competently.

Manufacturers manufacture. Distributors distribute. Retailers retail.

There are core competencies in each field that can be tough to import into a business that is used to playing one position. It is not impossible, but it is tough and requires commitment, time, effort and money.

What I'm saying is that some brands may make the company store thing work because they have the right culture, mix of people and talent and resourcing.

Others may be missing elements of that and fail due to it.

As others have identified, there is a big pot of gold available for a manufacturer in any field that is able to successfully vertically integrate from start to finish... so they'll keep chasing that pot of gold in perpetuity.

The only other thing worth considering is the broader move around going D2C, largely enabled by ecommerce. Same arguments/considerations as above, if a company can really bring in the right team/talent and then embrace that talent culturally to facilitate the ecommerce push then it'll work. But a website with a store component does not make a successful D2C play. And how you support your online effort 'on the ground' is super important for high-consideration purchases like bikes... which brings us back to stores, who runs them, how they are funded/incentivised and all that.