Are retailers afraid to discuss the growing power of big brands?

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I didn’t attend the IBD Summit this year, but a journalist friend of mine did and after discussions over meals and beer and in the corners and hallways he came away with the distinct impression that bike shop owners in the U.S. are really worried about their businesses.

In addition, while they never came right out and said it in the meetings and roundtables, many, perhaps most bike shop owners view Trek’s move into online and omnichannel sales, with their authorized dealers becoming service and fulfillment centers as foretelling a dim and darkening future.

It also went unsaid in the public forums that there is a concern about the growing power of the so called “Big Three” in the U.S. bike shop trade – Trek, Specialized and Giant as this triarchy seems to gain control of more of the market and in the process too many of their authorized dealers.  This appears to be a fear shared by bike shops and suppliers alike, but none dared speak out publically and preferred instead to talk quietly on bike rides, over meals or drinks.

What this boils down to is a group of bike shop owners who could afford, or barely afford to attend a relatively expensive event in their channel of trade who listened politely and evidently quietly to speakers and presentations that were interesting and of good quality – but had little if any connection to the real issues and problems they are facing in the U.S. market.  As one attendee commented “heat” but no “light”.

In 2015 I was on a panel at the IBD Summit when a bike shop owner asked a question. I started to respond by asking ‘what about the need to change’. The bike shop owner didn’t understand, and that I was talking about “tough love”… then the moderator cut me off and I wasn’t allowed to either elaborate or finish.[1]

It seems then, as now, the American bicycle business simply doesn’t talk publically about the reality of change agents and the need to adapt to survive and eventually thrive. However, as writer Aldous Huxley said: “Facts do not cease to exist because they are ignored.”

Bike shop owners, at least those that talked in the shadows, outside of the public meetings and off the record to my journalist friend are worried about the present and the future, and they are concerned about the growing influence of the “Big Three,” and fear a market situation where prices and other factors are controlled by just a few brands – but they don’t want to talk about it in the light – in the public forum, with the rest of the American bike business. I believe this reluctance to speak out is motivated by fear.

This is a sad note, but it seems to me that it reflects the almost toxic atmosphere of intimidation, bullying and fear that has pushed frank and open discussion of the facts to the shadows and the fringes of the bike business.

This is also easy for me to say – because I do not have a legal tie or “authorized” dealer agreement with the “Big-Three” or any other brands that can be used as leverage, or out-right threat.

I submit that here-in lies the heart of Tough-Love!  Bike shop owners are simply afraid to stand up for themselves and terminate and separate themselves from the pieces of paper that they have allowed to take away their freedom as small businesses owners – the Authorized Dealer Agreements they have with the bicycle brands.

To be clear – I am not advising any bike shop owner to just terminate any Authorized Dealer Agreement they have enforce with a bicycle brand – without carefully examining any such legal document for its content and their rights and obligations, including the termination clause and its ramifications.

Each individual bike shop has to make the best decision for their business – after carefully considering their fears and concerns for the future – compared to the advantages and disadvantages to their business of having Authorized Dealer Agreements with the brands. Bike shops were advised by one of the speakers at the IBD Summit to support the brands and suppliers that support them – and this is the basic truth of Tough-Love!

If you want to learn more, contact your attorney and other business advisors about the Authorized Dealer Agreements you have signed and are enforce – and also contact Fred Clements at the National Bicycle Dealers Association (fred@nbda.com) and ask for a copy of the NBDA Guide to Authorized Dealer Agreements.

What you want to know is what are your obligations and rights under the agreements you are legally bound to – and are there clauses that, if modified or changed, would make your business better and more profitable.

Follow this by contacting the representatives of the brands and ask about negotiating the clauses you and your advisors would like to modify and change to help your business. If you can negotiate changes – great!  If you can’t, and you can put up with the pressure that might be focused on you by the brand during the process, you have the option at the end of the negotiation of terminating the agreement.

If enough bike shop owners wake up to Tough-Love and what the positives are for their businesses it is distinctly possible to make the changes that will result in a more positive business atmosphere – and perhaps issues like Authorized Dealer Agreements will be openly discussed at next years IBD Summit!

Contact me if you think I can answer any questions you may have: jay@gluskintownleygroup.com.

[1] After the 2015 IBD Summit, Bicycle Retailer And Industry News did publish a Guest Editorial from me titled “Tough-Love” where-in I was able to elaborate and finish.

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